Every forex quote you see on a platform actually contains two prices, and every position you hold past a certain time of day triggers a small interest adjustment. Understanding both mechanics helps you read prices correctly and avoid surprises on your account statement.
Bid and Ask
Every quote shows two numbers: the bid, which is the price at which you can sell, and the ask, which is the price at which you can buy. The ask is always slightly higher than the bid. If EUR/USD shows 1.0850/1.0852, you'd buy at 1.0852 and sell at 1.0850.
The Spread
The difference between the bid and ask is the spread, which is essentially the cost of entering a trade. Spreads are usually measured in pips and tend to be narrower for major pairs during liquid trading hours and wider for exotic pairs or during low-liquidity periods like major news releases.
What Is Rollover?
Forex trades technically settle two business days after the trade date. If you hold a position open past the daily cutoff, usually around 5pm New York time, your position is rolled over to the next settlement date, and an interest adjustment called a swap is applied.
How Swap Is Calculated
The swap reflects the interest rate difference between the two currencies in the pair. If you're long the higher-yielding currency and short the lower-yielding one, you typically earn a small credit. If it's the other way around, you typically pay a small charge. Brokers add their own markup on top, so actual swap rates vary between providers.
Because forex settlement is two business days, the swap charged on Wednesday nights is usually triple the normal amount, to account for the weekend when markets are closed but interest still accrues.
Why This Matters for Your Strategy
- ▸Day traders who close positions before the rollover cutoff generally avoid swap charges entirely.
- ▸Swing and position traders holding for days or weeks should factor swap costs into their expected return, especially on pairs with a large interest rate differential.
- ▸Carry traders deliberately seek out pairs with favorable swap rates as part of their strategy.
Checking your broker's swap rates for the specific pairs you trade, and factoring the spread into your entry cost, are small habits that make your performance numbers more accurate and your expectations more realistic.