// TRADING TERMINOLOGY
What is Swap Rate?
The interest rate differential between the two currencies in a forex pair, applied to positions held overnight.
In-Depth Explanation
Also known as "Rollover." If you hold a currency with a higher interest rate than the one you are shorting, you receive a "positive swap." If the opposite is true, you pay a "negative swap."
Practical Example
"A trader earns a positive swap by holding a long position in a high-yielding currency like the Mexican Peso."
Related Terms
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