Swing and position trading
What you learn in 3 minutesSwing and position trading means holding a trade for days or weeks instead of hours. That changes what you pay. The spread is charged once when you open and once when you close, but a swap fee is charged for every night you keep the trade open. On EUR/USD at 1.0850, one pip on one standard lot is 10 units of the quote currency, which is about ₦16,500 at that rate. So a few pips of swap can quietly eat a large part of a small profit. This lesson shows how to work out that cost before you decide to hold.
Four days on EUR/USD: the swap takes ₦49,500
| Step | Amount | Note |
|---|---|---|
| Instrument and price | EUR/USD at 1.0850 | The example rate used throughout this lesson. |
| Position size | 1 standard lot | One standard lot is 100,000 units of the base currency. |
| Value of one pip | 10 units of the quote currency | 100,000 x 0.0001 = 10. At 1.0850, that is about ₦16,500 per pip. |
| Price move over four days | 20 pips in your favour | A modest move for a multi-day hold. |
| Gross profit | ₦330,000 | 20 pips x ₦16,500 per pip. |
| Swap per night | ₦16,500 | One pip equivalent per night, charged when the position rolls over. |
| Nights held | 3 | Four days means three overnight rollovers. |
| Total swap | ₦49,500 | 3 nights x ₦16,500. |
| Net profit before spread | ₦280,500 | ₦330,000 gross minus ₦49,500 swap. |
| Spread cost | varies by broker | Charged once on entry and once on exit; the amount depends on the broker and the session. |
The broker may round the swap, charge a wider swap on Wednesdays, or quote a different spread at the open and close. Check the contract specification before you hold overnight.
The mistake people make here
The common mistake is to plan a multi-day trade using only the spread and the price target. People forget that every night adds a swap charge, and that a weekend can add two or three nights at once. Instead, work out the swap for the whole holding period first. If the expected move is small, the swap may turn a winning trade into a losing one. If you cannot see the swap rate in your platform, ask the broker for the contract specification in writing.Check yourself
You hold a 1 standard lot EUR/USD trade for 5 days. The swap is ₦16,500 per night. How many nights are charged, and what is the total swap?
Five days means four overnight rollovers, so 4 nights are charged. 4 x ₦16,500 = ₦66,000.
The same trade makes 30 pips. One pip is worth ₦16,500. What is the gross profit, and what is the net profit after ₦66,000 of swap?
Gross profit is 30 x ₦16,500 = ₦495,000. Net profit before spread is ₦495,000 minus ₦66,000 = ₦429,000.
Why does a position held over a weekend usually cost more in swap than one held over a single weeknight?
Because the weekend covers more than one rollover. Brokers often charge for the days the market is closed, so a weekend can add two or three nights of swap at once.