Swap is another basic term in the forex market. It represents the difference between the interest rates of different countries. For example, the bank of Japan's interest rate is 0.5%, whereas the Australian interest rate is 6.25% . This means that it is much more profitable to deposit money with an Australian bank rather than with a Japanese one. The difference between the interest rates is of importance in the Forex market and is expressed in terms of SWAP. When opening a new trade position, you sell one currency and buy another one. Let us get back to the national currencies of Australia and Japan, and give you an example with the Australian dollar and the Japanese yen. When we open a position in AUD/JPY, the swap is positive and we take profit
Thanks for relating us to this term. As a forex trader, I depend on Forex Signals provided by my broker and thus can not get familiar with this terminologies.
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