Swing and position trading
What you learn in 3 minutesThis lesson shows how a trade held for several days shifts your main cost from the spread to the swap, which is the daily interest adjustment for keeping a position open overnight. On EUR/USD, one pip on one standard lot is 10 units of the quote currency, so at a rate of 1.0850 that pip is worth about ₱10.85. You will see a four-day trade where the swap takes a bite out of the profit.
Four days, one pip at ₱10.85
| Step | Amount | Note |
|---|---|---|
| Instrument and size | EUR/USD, 0.10 lots | One tenth of a standard lot, so each pip is 1 unit of the quote currency. |
| Entry price | 1.0850 | The rate shown on the schematic chart at the start. |
| Exit price after four days | 1.0880 | A move of 30 pips in your favour. |
| Gross profit | ₱32.55 | 30 pips x ₱1.085 per pip, using the 1.0850 rate. |
| Swap for four nights | ₱8.00 | A hypothetical cost of ₱2.00 per night; your broker sets this and it varies. |
| Net profit | ₱24.55 | ₱32.55 minus ₱8.00. |
Your broker may round the swap, charge it on a triple day, or quote it in points rather than pesos, so the exact figure varies.
The mistake people make here
Many beginners check only the spread before entering a multi-day trade and forget the swap entirely. They then wonder why a winning position pays out less than the chart suggests. Before you hold overnight, look up the swap rate for the pair and multiply it by the number of nights you expect to stay in. If the swap is large compared with your target move, a shorter hold or a smaller size may suit you better.Check yourself
You hold 0.10 lots of EUR/USD for three nights. The swap is ₱2.50 per night. What is the total swap cost?
₱2.50 x 3 = ₱7.50.
Your trade gains 20 pips on 0.10 lots at a rate of 1.0850, and the swap costs ₱7.50. What is the net profit?
20 pips x ₱1.085 = ₱21.70 gross. ₱21.70 minus ₱7.50 = ₱14.20 net.