Swing and position trading
What you learn in 3 minutesA swing trade holds a position for days or weeks, and a position trade holds it for longer still. That changes the cost. Instead of paying the spread once, a multi-day trade also pays or receives a swap each night the position stays open. On USD/INR, one pip on one standard lot is ₹10, so a few pips of swap can quietly take a slice of the profit you were counting on.
Four days on USD/INR: 40 pips gross, ₹400, minus ₹90 swap
| Step | Amount | Note |
|---|---|---|
| Entry price | 83.2500 | the price at which the position is opened |
| Exit price | 83.2540 | the price at which the position is closed four days later |
| Price move | 0.0040 | 83.2540 minus 83.2500 |
| Pips gained | 40 pips | 0.0040 divided by 0.0001 |
| Position size | 1 standard lot | 100,000 units of USD/INR |
| Value per pip | ₹10 | 100,000 x 0.0001 = ₹10 per pip on one standard lot |
| Gross profit | ₹400 | 40 pips x ₹10 per pip |
| Swap charged per night | ₹30 | an illustration only; the actual rate varies between brokers |
| Nights held | 3 | the position is open for four days and three nights |
| Total swap | ₹90 | 3 nights x ₹30 |
| Net profit | ₹310 | ₹400 gross profit minus ₹90 swap |
The broker may also charge a spread at entry and exit, and may round the swap. Swap rates vary between brokers and can change daily, so always check the rate quoted on your platform.
The mistake people make here
The common mistake is to look only at the price move and ignore the swap. A trade that gains 40 pips looks like ₹400, but three nights of swap at ₹30 a night leaves ₹310. If the swap were ₹140 a night, the same trade would end at a loss. Before holding overnight, check the swap rate on your platform and subtract the total swap from your expected profit. If the remaining amount is not worth the risk, the trade is not worth holding.Check yourself
A USD/INR position of one standard lot gains 25 pips and is held for four nights. Swap is ₹25 per night. What is the net profit in ₹?
Gross profit is 25 pips x ₹10 = ₹250. Total swap is 4 nights x ₹25 = ₹100. Net profit is ₹250 - ₹100 = ₹150.
If the same trade gains 10 pips instead of 25, and swap is still ₹25 per night for four nights, what is the net result?
Gross profit is 10 pips x ₹10 = ₹100. Total swap is ₹100. Net result is ₹100 - ₹100 = ₹0, before any spread.