When you're focused on strategy, market direction, and timing, it's easy to overlook the smaller costs of trading—especially those that happen quietly in the background. One of the most common (and most misunderstood) is the swap fee.
If you’re a prop trader managing risk within strict limits, ignoring overnight fees can be the silent reason behind failed challenges or unexpected drawdowns.
A swap, also known as an overnight fee, is the cost (or credit) applied when you hold a trading position overnight. It’s calculated based on the interest rate differential between the two currencies in a forex pair.
If you’re holding a long position in a currency with a higher interest rate than the one you’re selling, you may receive a credit. But most of the time, especially when trading major pairs or using leverage, you’ll pay a fee.
Swap fees are applied daily and can vary depending on the asset, the direction of your trade, and the broker or prop firm’s pricing model. While they may seem minor at first glance, they can accumulate quickly, especially if you:
For prop traders, where rules around drawdown and risk are non-negotiable, overlooking swap costs can be a deal-breaker.
Let’s say you open a 1-lot long position on EUR/USD and decide to hold it overnight.
Pip value: $10 (for a standard lot)
Swap rate for long EUR/USD: -4.2000
Swap formula: (Pip value × Swap rate × Number of nights) / 10
Calculation:
(10 × -4.2000 × 1) / 10 = - $4.20
That means just by holding the position overnight, you’ll be charged $4.20.
If you keep it open for three nights, that becomes $12.60 in swap fees—even if the market moves in your favor.
Now imagine doing that with multiple positions or holding longer. The costs add up fast.
In prop trading, holding positions overnight always comes with risk—but holding them on a Wednesday night can be even more costly. That’s because most brokers apply a triple swap fee from Wednesday to Thursday to account for the weekend rollover.
This happens due to the way forex settlements work. A position held overnight on Wednesday settles on Monday, covering three days at once—Friday, Saturday, and Sunday. Since markets are closed on weekends, that cost is applied mid-week.
If you’re trading on a challenge or managing a funded account, this can affect your PnL more than you expect. A swap fee that’s normally $4 could become $12 overnight.
Don’t let triple swaps throw you off. Always plan ahead if you’re holding positions through mid-week.
Before opening a trade you plan to hold overnight, check the swap rate for that specific instrument. Many prop firms display this in the trading platform or account portal. If not, ask for support directly.
And when designing your strategy, especially for challenges, factor in swap fees as part of your risk/reward calculation.
Swap fees are one of those trading costs that are easy to ignore—until they start chipping away at your profits. In prop trading, where precision and discipline are everything, understanding and managing swap exposure is non-negotiable.
