Cryptocurrency swap, and is it worth paying attention to?
When trading on the exchange, a certain commission called a swap is paid for carrying a transaction over to the next day.
Swap - in simple terms, a swap is the difference between the interest rates on a deposit in one currency and a loan in another.
This means that when you make a trade on the EUR/USD currency pair, you borrow one currency at interest, while you own the other and receive a reward in the form of interest on the deposit.
The interest rate itself is determined by the national banks' interest rates for a given currency. Learn more about swaps at https://time-forex.com/praktika/svop-fx
Is there a swap on cryptocurrencies?
If the overnight fee for regular currencies depends on the national bank's interest rate, what about cryptocurrencies? Do I need to pay a swap fee when rolling a cryptocurrency trade overnight?
Surprisingly, it is necessary if you trade cryptocurrency through a trading platform using CFD contracts .
You can view the swap rate for cryptocurrencies both on the broker's website and in the trading platform itself by opening the specification for the selected asset:
On average, the fee for rolling a transaction is around 20% per annum, which is approximately 0.055% per day; a triple swap is traditionally charged on Friday.
How much does cryptocurrency swap affect the outcome of a transaction?
The easiest way to understand the impact of a swap on the financial outcome of a long-term transaction is to use a specific example:
Over the 13 days of the existence of a 1-lot BTC/USD order, the commission for carrying over positions amounted to $130, i.e. $10 per day.
Considering that Bitcoin can easily rise or fall in price by hundreds, or even thousands, of dollars in a single day, it's safe to say that swaps have virtually no impact on the financial outcome of a transaction when trading cryptocurrency pairs.
With this in mind, you can use both short-term and long-term trading strategies in your trading, although I personally prefer intraday trading.
Cryptocurrency brokers - https://time-forex.com/kriptovaluty/brokery-kriptovalut
