A swap is payment for keeping a position open overnight. The swap exists due to variances in national banks’ interest rates in different countries. For example, you open a position to purchase EURUSD. To complete the trade, you sell USD, earning around 0.25% interest, and purchase EUR, whose interest on deposits is 0.05%. When carrying the position overnight the swap can add (if the interest on deposits is greater than the lending rate) or take away (if the lending rate is greater than the interest on deposits) funds from your account.
You can find out more information on holding a position open overnight and how the swap is calculated on our site.
By using this discount as part of the Alpari Cashback Program you can get back up to 30% of funds spent on negative swaps.
How does it work?
Let’s consider an example for a purchase made on EURUSD of 10 lots.
Say that you opened a position on Monday and closed it on Wednesday.
The cost of the negative swap in this circumstance would be 30 USD.
If you are using the 30% discount then you will save 9 USD1.