Stress-free trading: why Octa Broker's 0% swaps benefit every trader

In a dynamic and somewhat dangerous world of currency trading, it is critical to understand every element that impacts your potential profitability. While market spreads and brokers' commissions form an integral component of trading costs, Forex swap points also play a major role in everyday operations, and yet they are often overlooked and misunderstood by traders. Although sometimes, swap points can be positive and generate a stable income for a trader, most of the time, they represent a recurring cost and can be a serious drag on profitability, especially for traders who prefer to hold positions overnight. This is why Octa, a globally regulated and trusted broker since 2011, provides a significant convenience by offering swap-free accounts for traders.

Swap points explained

When opening a Forex trade, a trader essentially borrows one currency to buy another. However, each currency has an associated interest rate, set by the respective central bank. The difference between these two interest rates in a Forex pair is what makes a 'swap point'. In essence, a Forex swap point (also known as a 'rollover fee',  'overnight interest' or 'holding cost') is the interest rate differential between the two currencies. It is applied to positions held open overnight and is credited or debited automatically while being reflected in the final profitability of a trade. 

Let's consider an example with a transaction involving two currencies with significantly different interest rates: the Australian dollar (AUD) and the Japanese yen (JPY). The Reserve Bank of Australia (RBA) has set its policy rate at 3.85%, and the Bank of Japan (BoJ) at 0.5%.

Suppose you want to short (sell) AUDJPY at a 97.00 exchange rate and you initiate a full 1.0 lot position. A short one lot position means you sell 100,000 Australian dollars (AUD) against the Japanese yen (JPY). In order to sell something that you do not own, you need to borrow it first. So, you borrow 100,000 AUD and pay interest (cost). Then, you place the Japanese yen (that you bought) in a bank deposit for one day (overnight) and receive interest (income). If the interest rate on the Australian dollar loan is 3.85%, then you pay 10.55 Australian dollars per day (100,000 x 3.85% / 365). If the interest rate on the yen deposit is 0.5%, you will receive 132.9 yen per day (100,000 x 97 x 0.5% / 365), or just 1.37 Australian dollars at an exchange rate of 97.00. Thus, at the end of the day, the trader will incur a swap loss of 9.18 Australian dollars. And this will be a recurring cost every 24 hours. Not a very comfortable situation to be in, is it?

Furthermore, even if a trader decides to trade currencies with relatively similar rates of interest and buy a higher-yielding currency against a lower-yielding currency, the swap rate may still be negative as brokers often add their markup or discount to the interbank swap rates.

Why the absence of swap points at Octa Broker is so convenient

For many Forex traders, particularly those employing mid-term to long-term strategies, the accumulation of swap points can significantly eat into potential profits or exacerbate losses. This is where Octa Broker's '0% swaps' policy becomes a game-changer. Indeed, Octa Broker has been trusted by millions of traders around the world precisely for its transparent trading conditions, no hidden tricks, and honest and convenient trading without swap points. 

Here are the benefits of having a 0% swap rate: 

Reduced trading costsThe most obvious benefit is the elimination of recurring overnight fees. For traders who hold positions for days, weeks, or even months, these small daily charges can quickly add up to a substantial amount, impacting overall profitability. By removing swaps, Octa Broker helps traders keep more of their earnings.

Flexibility in trading strategiesTraders aiming to capitalise on longer-term market trends no longer have to worry about the mounting cost of holding positions overnight. 0% swap rate frees them and allows them to focus solely on market analysis and price action without the added pressure of daily swap calculations.

Simpler profit/loss calculationWithout swap points, calculating your net profit or loss on a trade becomes much more straightforward. You only need to consider the entry price, exit price, and any commissions or spreads, removing a variable that can complicate financial planning and risk management.

No unpleasant surprisesSwap rates can fluctuate based on central bank decisions and even market liquidity. Octa Broker's swap-free offering removes this element of uncertainty, providing a more predictable trading environment.

Accessibility for all tradersFor new traders, understanding and factoring in swap points can be an additional layer of complexity. Swap-free accounts simplify the learning curve, allowing them to focus on core trading principles. Furthermore, for traders whose religious beliefs prohibit earning or paying interest, swap-free accounts offer an ethical and compliant way to participate in the Forex market.

Conclusion

Octa Broker's commitment to offering 0% swaps on its trading instruments aligns with a trader-centric approach. This transparency is a cornerstone of how Octa builds trust with clients, empowering them with greater control over their trading costs and fostering more flexible strategy implementation. Ultimately, this contributes to a more transparent and convenient trading experience where traders can trust their broker to prioritise their success. For anyone considering holding forex positions for more than a day, the absence of swap points is a compelling advantage worth serious consideration. Along with other conditions benefiting traders, the zero-swap policy is one of the crucial tools that reliable brokers offer their clients to help them successfully navigate the markets.

Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk, and we and Octa do not accept any liability for any resulting losses or consequences.

Octa is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services used by clients from 180 countries who have opened more than 52 million trading accounts. To help its clients reach their investment goals, Octa offers free educational webinars, articles, and analytical tools. 

The company is involved in a comprehensive network of charitable and humanitarian initiatives, including improving educational infrastructure and funding short-notice relief projects to support local communities. Since its foundation, Octa has won more than 100 awards, including the 'Most Reliable Broker Global 2024' award from Global Forex Awards and the 'Best Mobile Trading Platform 2024' award from Global Brand Magazine.