Cryptocurrency swaps and are they 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
