FX · FX specialist topics · lesson 1 of 9 · 8 min read · David Alexander
Interest-rate differentials: the price of holding overnight
interest-rate differential
Every FX position is two positions: long one currency, short the other. Held overnight, the currency you are long earns its interest rate and the currency you are short costs you its rate. The difference between the two, after your broker takes a margin from both sides, is the swap that appears on your account.
This lesson is part of the advanced modules.
Modules 6 to 8 are included with a paid account. The definitional summary above is the whole of this page until then.