Can I make money from swap in Forex trading?

Can I make money from swap in Forex trading?

After traders learn that they can actually earn on swap in Forex trading, they start to look for pairs with positive swap in order to avoid high risk choices such as trading with CFDs. And there are enough of them, but with one caveat. There are no pairs where all swap rates are positive, but there are pairs where the swap is positive depending on the type of operation.

Below, I have listed the pairs with positive Forex swap. Under certain conditions, we can earn on swaps trading these pairs.

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At the moment, this is the entire list of instruments with positive forex swaps that my broker provides. However, their number may vary depending on market conditions. For example, if one of the central banks changes its underlying interest rate or your broker changes the markup value.

In general, if you know that a country has a negative net interest rate, this is the sign that positive Forex swap rates may appear in currency pairs containing the currency of this country. However, traders should remember that a small positive swap in Forex trading will be easily eaten up by a spread and can lead to a high risk of losing money rapidly.

But even if such situations are rare, there are some very simple Forex trading strategies to earn on interest and Forex swap rates differences.

Carry Trade

The most popular trading strategy for making money on swap rates is, of course, the carry trade.

LiteFinance: What is swap in Forex trading? | How to Calculate FX Swaps: Examples | LiteFinance

The principle of the strategy is to find the largest difference in interest swap rates of different countries. After that, we group the currency pairs that include the currencies of these countries and find a pair where the swap in one direction is greater than in the others.

After a quick look, I have highlighted the CADCHF pair. Forex buy swap on it is 0.528 points. Therefore, if we buy this currency pair, we will be making money on a positive swap. Since the position must be held for a long time to make a profit, we need to analyze the global chart for growth prospects. This particular pair has a growth potential. Now all that remains is to buy and wait, making a profit from the growth of the rate and a positive swap. However, the strategy requires that we keep the position open for quite a long time.

Swap and Fly

There is another strategy that resembles the previous one — Swap and Fly. The strategy appeared after most forex brokers began to provide the trailing stop option.

LiteFinance: What is swap in Forex trading? | How to Calculate FX Swaps: Examples | LiteFinance

We choose an instrument similarly to the first strategy. After we’ve found the pair, we need to find a pattern that’s highly likely to be realized. Candlestick patterns are used more often, but geometric patterns will also work. In our case, this is a flag pattern, after which we expect growth. It’s important not to use mathematical indicators.

After that, order levels are placed with standard rules, which makes the ratio approximately 1:1. After the price starts to grow and goes above the entry point, you need to move Stop Loss to breakeven, I.e. at the level that a position opens. And that’s it. Then you just keep the position until the stop loss is triggered. Of course, you can use a trailing stop and also increase your profit by the rate difference. But this is not the essence of the strategy.

The essence of the strategy is to make money on a positive swap. In our case, it is equal to 0.834 points for a buy position. For a 1 lot trade, it’s about 80 cents. If we can maintain the position for a month, when closed by stop loss there will be no exchange rate difference, but the swap will bring us 21 * 0.8 = 16.8 dollars.

Currency futures strategy

LiteFinance: What is swap in Forex trading? | How to Calculate FX Swaps: Examples | LiteFinance

There is another good strategy. I sometimes use it myself. The essence of the strategy is to create an ordinary locked position but with different types of contracts. You know that besides currency pairs, there are also futures, options, trading CFDs, and many other contracts. So, futures are essentially no different from a currency pair. Their most important difference is the absence of a swap. Did you already guess what I’m getting at?

Exactly. I create a locked structure by buying a currency pair with a positive buy swap when trading Forex on market and at the same time selling futures for the same pair on another exchange. The currency pair and futures quotes are usually the same, as are the fluctuations. Therefore, wherever the price goes, I will always have 0 because one side is bought and the other is sold.

The profit will be formed from the positive swap when you trade Forex. Of course, there are nuances, such as the size of the spread and the commission. But you can always account for them in the strategy and compensate either by the duration of the position or by a short-term play on price fluctuations and their future performance.

If you want to know more strategies, learn more about trading CFDs for making money on swaps without a higt risk of losing money rapidly, I recommend that you get specialized training from your broker.

What is swap fee in Forex — islamic accounts

Forex brokers also have special swap-free accounts. They are also called Islamic accounts. An Islamic account is a trading account that does not have any swap charge or fees in the form of an interest rate. According to the laws of Islam, Muslims are prohibited from receiving or giving interest on any kind of activity. So Islamic accounts were created in order for Muslims to be able to use the services of the Forex brokers.

Despite the fact that this type of account was created for Muslims, anyone can open it now. In order to open an Islamic account for yourself, you need to submit an application to your broker.

However, we all understand that brokers are not charity organizations. And if the account is swap-free, the broker will get their money in other ways. Usually this means larger spreads or a fixed commission per trade.

Start trading right now


The topic of swap is quite important on the exchange. Many large investors make money not on the difference in exchange rates, but rather on the difference in net interest rates. When you trade Forex in the financial markets, most traders view forex swaps as another type of commission that brokers use to get rich. But if you understand how swap works, you can turn it from an enemy into a reliable ally that will bring you profit regardless of exchange rate fluctuations. Thus, using swap trading first on a demo account with a nominal position will help you understand how this efficient tool works with no need to risk money on complex instruments like trading cfds, or even avoid the high swap charges.

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