Thanks for cleaning that up!!! I was confused about how much the SWAP was actually costing me. I never really could tell how much but I'm so new to FOREX that I kept thinking it could sneak up and bite in the associated one day...
I'm a little confused how a simple trader like us can charge any seller who are willing to buy our future with interests (we earn interest) in this example 2:57. Also how is interest earned if we hold money that's been borrowed through leverage. In a real life scenario banks charge interests for when money is borrowed (we buy currencies). Correct me if that's correct? I'm confused how it works...not what's happening.
Hi Jaime, let's say that, when you buy a currency, you are investing in the Economy of that country. A bit like when you buy shares of a company, you are investing in that company. When you buy shares, they pay you a dividend. When you buy the currency of that country, you get an interest rate. Let's say that you buy USD/CHF, so you are buying USD and selling CHF. At the moment, the interest rate for the Federal Reserve is 1.25%, while the interest rate for the Swiss National Bank is -0.75%. You are buying a currency that gives you +1.25% per year, while selling one that gives you -0.75%. This is why they pay you the SWAP rate. The formula for one lot is: 100,000 * (difference in rates) * Price / Days of the Year In case of USD/CHF, you have a SWAP that is: 100,000*0.02*0.97/365 = $5.31. They should pay you $5.31 per day, per every lot traded with a long position on USD/CHF. Obviously, there is the markup by the broker, so you get much less.
@@itstradingtime8500 I'll be honest at first when i looked at your comment it was hard to understand. One day looking up the formula of finding the swap price i realized where all the numbers were coming from thus how we earn interest. It's good to understand where some very minor bit of our money goes but I've heard this doesn't impact the trade by much, am i wrong?
I think that the swap in several cases is negative with major pairs and in 100 trades if swap+spread+commission is high you will not make a profit although you're a good trader.
Hi Otman, I just made a new video on some popular questions about the Swap rates. Starting from the formula, we see why Swap rates are negative sometimes, while other times are positive. The link is in the description box for this video :)
This video is superb. I dont know why u'all not liking!
Thank you so much, you're too kind :)
Thanks for cleaning that up!!! I was confused about how much the SWAP was actually costing me. I never really could tell how much but I'm so new to FOREX that I kept thinking it could sneak up and bite in the associated one day...
I'm glad it helped you to understand better the SWAP. I also was very confused at the beginning of my career :)
Perhaps the best explanation I've heard on swaps.... Good job 👏🏼
Thank you very much Sanford ❤️
I finally understand what this swap is! Thanks a lot!
Thanks Lind :)
fantastic video - well done, I agree with everything you have said
Thanks a lot James 😃
good job my friend .. countinue your vidios .. you speak very clearly
Thanks a lot Armin ❤️
great explaination thanks understand now. amazing some other videos on this topic can't explain this well
Thanks a lot for your feedback Max :)
thank you! Great explanation!!!
I'm a little confused how a simple trader like us can charge any seller who are willing to buy our future with interests (we earn interest) in this example 2:57. Also how is interest earned if we hold money that's been borrowed through leverage. In a real life scenario banks charge interests for when money is borrowed (we buy currencies).
Correct me if that's correct? I'm confused how it works...not what's happening.
Hi Jaime,
let's say that, when you buy a currency, you are investing in the Economy of that country. A bit like when you buy shares of a company, you are investing in that company.
When you buy shares, they pay you a dividend. When you buy the currency of that country, you get an interest rate.
Let's say that you buy USD/CHF, so you are buying USD and selling CHF. At the moment, the interest rate for the Federal Reserve is 1.25%, while the interest rate for the Swiss National Bank is -0.75%.
You are buying a currency that gives you +1.25% per year, while selling one that gives you -0.75%. This is why they pay you the SWAP rate.
The formula for one lot is: 100,000 * (difference in rates) * Price / Days of the Year
In case of USD/CHF, you have a SWAP that is: 100,000*0.02*0.97/365 = $5.31.
They should pay you $5.31 per day, per every lot traded with a long position on USD/CHF.
Obviously, there is the markup by the broker, so you get much less.
@@itstradingtime8500 I'll be honest at first when i looked at your comment it was hard to understand. One day looking up the formula of finding the swap price i realized where all the numbers were coming from thus how we earn interest. It's good to understand where some very minor bit of our money goes but I've heard this doesn't impact the trade by much, am i wrong?
that was great. good job
Thanks a lot :)
Great explanation keep it up. Subscribe already
Thank you so much :)
Grazie!
Ciao Gabriele, grazie a te :)
Perfect
Thanks
I think that the swap in several cases is negative with major pairs and in 100 trades if swap+spread+commission is high you will not make a profit although you're a good trader.
Hi Otman, I just made a new video on some popular questions about the Swap rates. Starting from the formula, we see why Swap rates are negative sometimes, while other times are positive. The link is in the description box for this video :)
🤔 comments are good watch video