What is Swap Exchange on Forex?
Currency swap has two meanings. We consider these in more detail separately. On the site Forex is a term often used as a currency swap . This term can also be seen in the trading conditions put forward by the brokerage company . Here, this value is used as a specific commission , the trader has to pay for currency trading .
Currency swap – a combination that is based on two transactions , opposite in direction , but having the same currency, and one volume . Value date for this operation is also different.
Such transactions may be concluded for sufficiently long periods up to 1 year . Over long periods of virtually the same can not be any forecasts , and this greatly complicates the calculation of the financial result of such transactions.
Swap on the Forex market is divided into two types depending on the stage of the operation. Buy- swap – such a scenario implies that the first purchase of currency to be realized , and after – its sale. In the second case, a Sell- swap – the first time there is an operation selling currencies , then the deal closes its purchase.
The amount of commission depends on the type of transaction carried out , this option is not constant . About this aspect also not be forgotten. In addition to this swap is designed and clean. In pure form operation is performed with a single counterparty . If, however, its implementation to attract additional participant , then swapped will be constructed nature .
Depending on the time swaps are divided into the following groups :
1. – On forward conditions settlement date for the first transaction is realized on forward conditions for last – on a spot .
2 . Intraday – Commission for the position will not be charged , the operation is closed for one day .
3 . Standard – distant date calculations performed on forward terms , and the nearest – on a spot .
In transactions important role calculates cost swap. In this case, the following factors : the current exchange rate and interest rates. Usually brokers fix the value of swap for each currency pair , so the trader can learn without preliminary calculations, cost of carrying positions .
Also charged the commission may have different signs positive / negative . With a positive swap trader charged a certain percentage.