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We are excited to announce an update that will significantly enhance your trading experience. This update focuses on increasing positive swaps on key trading instruments, offering you a unique opportunity to optimize your strategies and earn more effectively. In this article, we will delve deep into what swaps are, how they work, and how you can leverage this update to maximize your trading profits.
What are swaps?
Swaps are fees or income incurred for rolling an open position over to the next trading day. They are automatically applied by brokers at the end of a trading day and depend on several factors:
Interest rate differentials | Position direction | Instrument & broker policies |
The gap between central bank interest rates of the traded currencies. | Whether your trade is long or short determines if you earn a positive swap or incur a negative swap. | Swap terms vary by broker and the instrument being traded. |
How do swaps work?
Swaps can either be positive or negative, depending on the interest rate differential and the direction of your trade.
Example:
Hedging strategy for swap income
One of the most effective ways to capitalize on swaps is through a hedging strategy. This approach minimizes market risk while allowing you to earn from positive swaps.
How it works:
Open a long position. Choose a broker that offers high positive swaps.
Open a short position. Use another broker that offers zero (or small negative) swaps.
Neutralize market risks. By holding both positions, you can focus solely on earning from swaps.
Calculation example (XAUUSD):
1 Lot short now:
1 Lot short after update (5x Swap):
Instruments with increased swaps
The upcoming update will significantly increase positive swaps on several key instruments. Here’s a breakdown:
Positive swap (long):
USDJPY: 2.5x increase
GBPJPY: 2.5x increase
EURJPY: 2x increase
AUDJPY: 4x increase
USDCHF: 3x increase
Positive swap (short):
XAUUSD: 4x+ increase
EURUSD: 5x increase
USDZAR: 6x increase
USDBRL: 12x increase
Why this update matters
This update transforms swaps from a minor trading feature into a substantial income source. By integrating swaps into your trading plan and employing strategies like hedging, you can maximize profitability and stay ahead in the market.
Detailed analysis of key instruments
Let’s take a closer look at some of the key instruments that will benefit from this update:
USDJPY
The USDJPY pair is one of the most traded currency pairs in the world. With a 2.5x increase in positive swaps for long positions, traders can now earn significantly more by holding long positions on this pair. The interest rate differential between the US and Japan makes this pair particularly attractive for swap income.
GBPJPY
Similar to USDJPY, the GBPJPY pair will also see a 2.5x increase in positive swaps for long positions. The British pound and Japanese yen have a substantial interest rate differential, making this pair another excellent choice for traders looking to capitalize on swaps.
EURJPY
The EURJPY pair will benefit from a 2x increase in positive swaps for long positions. The euro and Japanese yen have a notable interest rate differential, and this increase makes the pair more appealing for traders focusing on swap income.
AUDJPY
With a 4x increase in positive swaps for long positions, the AUDJPY pair stands out as one of the most lucrative options. The Australian dollar and Japanese yen have a significant interest rate differential, and this substantial increase in swaps makes it a top choice for traders.
USDCHF
The USDCHF pair will see a 3x increase in positive swaps for long positions. The US dollar and Swiss franc also have a notable interest rate differential.
XAUUSD
Gold, traded as XAUUSD, will benefit from a 4x+ increase in positive swaps for short positions. Gold’s high borrowing costs make it an excellent instrument for earning swap income, especially with this significant increase.
EURUSD
The EURUSD pair will see a 5x increase in positive swaps for short positions. The most popular forex pair will provide excellent carry trading opportunities
USDZAR
With a 6x increase in positive swaps for short positions. This substantial increase in swaps can help traders achieve high performance on the swaps.
USDBRL
The USDBRL pair will benefit from a 12x increase in positive swaps for short positions. One of Latin America’s most liquid pairs will open up an opportunity to play on the difference in interest rates.
Strategies to maximize swap income
To fully capitalize on this update, consider the following strategies:
Carry trade strategy
A carry trade aims to profit from the interest rate differential between two currencies, which is paid out daily in the form of a positive swap.
For example, a trader may open a long position in a currency pair such as AUDJPY, where the Australian dollar typically has a higher interest rate than the Japanese yen. The trader earns interest on the long position as long as the position remains open and the interest rate differential is favorable.
For efficient carry trades, you can use two brokers to minimize market risk while focusing on swap gains. For example, at broker A you open a long position in AUDJPY and receive a positive swap daily. At the same time, you open a short position in the same pair with broker B (offering zero swaps or minimal costs). In this way you hedge the market risk, as the profit from one position compensates for potential losses from the other position due to price movements. In this case, the net profit comes from the positive swaps earned on the long position with broker A, while the short position with broker B neutralizes market volatility. This approach ensures a constant income from interest rate differentials and at the same time reduces exposure to currency fluctuations.
Risk management
While swaps can be a significant source of income, it’s essential to manage risks effectively.
Here are some tips:
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Monitor interest rate changes. Central bank interest rate changes can impact swap rates. Stay informed about monetary policy decisions.
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Use stop-loss orders. Protect your positions from adverse market movements by using stop-loss orders.
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Diversify. Spread your investments across multiple instruments to reduce risk.
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Leverage wisely. While leverage can amplify profits, it can also increase losses. Use leverage cautiously.
Summary
The upcoming update presents a unique opportunity to transform swaps from a minor trading feature into a substantial income source. By understanding how swaps work and employing strategies like carry trade, you can maximize your trading profits. The significant increase in positive swaps on key instruments like USDJPY, GBPJPY, AUDJPY, XAUUSD, and others makes this update a game-changer for traders.
Join us in turning swaps into a consistent income stream and stay ahead in the competitive world of trading.
