Swap ICMarkets and Swap Rates ICMarkets are two terms that often cause confusion for traders. However, you may know that these are all important factors. Helps you more easily control transactions and manage risks. Let Learn Forex Trading answer for you in the article below.
What are ICMarkets Swap Rates?
Swap Rates ICMarkets is a phrase in English that is understood according to Forex knowledge as Swap Rates. Readers can understand that the swap rate on ICMarkets is the ratio of fixed cash flows in a swap contract. They will be determined based on important factors such as the market or other stakeholders.
In particular, the swap rate in the interest rate swap contract will be fixed. They will be exchanged using a standard rate such as the exchange rate plus or minus the spread; Or like the Libor interest rate.
>>>See more: What is ICMarkets? Is it a leading forex platform?
What are the characteristics of Swap Rates on ICMarkets?
To help readers better understand the term ” ICMarkets Swap Rates “. We will outline its basic and most outstanding features in the information below. Please take a few minutes to read and refer to it to equip yourself with new knowledge when participating in the foreign exchange trading exchange.
- ICMarkets swap rates can be used for many different types of swap contracts. Interest rate swaps involve the exchange of floating interest rates for a fixed interest rate.
- According to the provisions of the interest rate swap contract. There will be one party who has to pay a fixed interest rate and vice versa, the other party is the one who receives a fixed interest rate. The cash flow generating fixed interest rates in the contract will be established when the transaction is initiated.
- When a currency swap contracts exchange interest payments in one currency for another. Then in the case of those two types of contracts, the fixed rate will be called the swap rate.
- Interest payment fees between floating rate and fixed rate currencies per payment period. All are closely monitored and the two sides can only exchange the difference.
- The floating rate cash flows will be set periodically on rate-setting dates, which will be dictated by the floating rate-setting timeline.
How to calculate Swap Rates ICMarkets
The general ICMarkets Swap fee formula will have to be based on many different factors in the market. In which you must have the interest rate, low trading volume or difference, order holding date… The formula will be summarized as follows:
| ICMarkets Swap = Lot Size x Overnight Fee x 0.0001 pip x number of days the position is held |
In there:
- Overnight fee: Swap fee for Buy or Sell orders
- Lot Size: According to the exact standard of 100,000 currency units
Swap fee at ICMarkets for Buy orders
However, to calculate overnight fees at ICMarkets for all types of orders. Readers are required to apply different formulas.
It can be understood that when you buy any currency pair of ICMarkets, the ICMarkets Swap fee will be calculated by: Taking the deposit interest rate of the first currency in the pair (Called the base currency) and then subtracting the loan interest rate of the second currency in the pair (also known as the quote currency).
The general formula is as follows:
| Swap Buy A/B = A’s deposit interest rate – B’s loan interest rate |
Then, the Swap fee will be positive if the deposit interest rate of the first currency in the pair is higher than the borrowing interest rate of the second currency in the pair. And vice versa, the swap will be negative if the deposit interest rate of the first currency in the pair is lower than the borrowing interest rate of the second currency in the pair.
Swap ICMarkets for Sell orders
Completely opposite to the way ICMarkets Swap Rates are calculated for Buy orders. ICMarkets swap for a Sell order will be calculated by: Subtracting the deposit interest rate of the second currency in the pair (Called the quote currency) from the borrowing interest rate of the first currency in the pair (also known as the quote currency). basis).
The general formula is as follows:
| Swap Sell A/B = B’s deposit interest rate – A’s loan interest rate |
Then, the swap Sell will be negative if the deposit interest rate of the second currency is lower. Compared to the loan interest rate of the first currency. And vice versa, swap Sell is positive when the deposit interest rate of the second currency is higher. Compared to the borrowing interest rate of the first currency in the pair.
Example of how to calculate swap fees on ICMarkets
If readers do not clearly understand the formula and how to calculate swap fees on ICMarkets. Then please immediately refer to the illustrative example below from Learn Forex Trading.
Let’s say you are buying a currency pair EUR/USD. At that time, we have information:
- The EUR deposit interest rate is 1.75% and the loan interest rate is 2%.
- The USD deposit interest rate is 0% and the loan interest rate is 0.5%.
Applying the above formula, we can calculate the overnight fee of the EUR/USD currency pair on ICMarkets as follows:
|
Swap Buy EUR/USD = 1.75 – 0.5 = +1.25% |
|
Swap Sell EUR/USD = 0 – 2 = -2% |
It sounds lengthy, but when you practice and apply overnight fees, it’s really simple and easy to understand, right? However, it can save a lot of time and calculation effort. At the same time, to bring the most accurate results and ensure effective trading, we recommend that you use the computer tools provided by ICMarkets. At that time, Swap ICMarkets or Swap Rates ICMarkets will be resolved as quickly as possible.
Is ICMarkets Swap fee high?
One of the questions we have received the most recently. Surely: “Is the Swap fee on ICMarkets high or not?”.
In fact, it is possible to calculate the overnight fee at any foreign exchange exchange. We need to determine based on many important factors such as Currency pair, interest rate difference, trading volume, and number of days holding the order position. Furthermore, these factors are not fixed but are constantly fluctuating in the market. Therefore, the Swap fee calculated by ICMarkets will also change frequently. If you have additional questions, do not hesitate to contact ICMarkets live chat for support.
Therefore, we cannot conclude that overnight fees on ICMarkets are high or low. However, according to the general assessment of experienced traders at ICMarkets. They think this fee is quite reasonable compared to other forex exchanges.
>>>See more: Instruct with an ICMarkets open account swiftly
Summary:
Through the above article, Learn Forex Trading has brought readers the most useful information about Swap Rates ICMarkets. Thereby helping you clearly understand how it works and understand the rules for calculating overnight fees on ICMarkets. Thanks to that, it is easier to make investment and trading decisions or manage risks in the most effective way. In addition, you can also learn more about ICMarkets spreads here!
FAQs:
Are overnight fees at ICMarkets expensive?
To calculate the ICMarkets Swap fee, we need to rely on many factors in the market. Therefore, the swap is not fixed and it is difficult to determine whether it is expensive or cheap.
Is ICMarkets free of overnight fees?
There are a number of special subjects who will receive free overnight fees from ICMarkets. To learn more, please refer to other articles on our official website.
Are ICMarkets Swap and ICMarkets Swap Rates the same?
These are two terms with completely different concepts and definitions in the Forex world. Therefore, make sure you have the most solid knowledge to avoid unnecessary risks.
