A foreign currency swap, also known as an FX swap, is an agreement to exchange currency between two foreign parties. The agreement consists of swapping principal and interest payments on a loan made in one currency for principal and interest payments of a loan of equal value in another currency. One party borrows currency from a second party as it simultaneously lends another currency to that party.
We are offering a leveraged trading environment, where our clients can trade spot and CFD products with up to 1:500 leverage. Basically leverage is loan that is provided to an investor by the broker. Based on 1:1 trading where there is no leverage in place, for example 1 lot XAUUSD (100 ounce of gold) Would mean 1800 * 100 = 180,000 USD margin requirement (depending on market price). On the other hand, for the same position, our clients are actually paying 1800 * 100 / 100 * 1= 1800 USD. Therefore, the difference between the two margin requirements would be financed by our company, which we have to pass on to the client in the form of swap. Therefore, if a spot position is held overnight, the clients will pay or earn swap. Nevertheless, we are also offering swap free account type to help you our clients get rid of this swap cost only if they meet certain lot criteria.
To give more detailed information clarifying our swap free policy:
• We are offering lot based swap free accounts and every month the clients need to reach certain trade volume so the swaps can be returned to the account.
• For example if, on a particular month, 100 USD swap has been paid by the client, then there is a lot requirement of 30 lots Round Turn to get the full swaps back. If less volume is made, then proportional adjustment will be made.
• Every spot position the clients will hold overnight will be subject to swap charge.
• At the beginning of each now month, swaps charged in the previous month will be checked.
• Based on above logic, instead of paying swap, if the client has earned swap, naturally our expectation is that you again same lot requirement is met so that this time earned swaps would not bededucted.