What is swap?

Swaps are derivative contracts in which two parties exchange financial instruments, such as interest rates, commodities, or foreign exchange.
 
CALLumbus said:
https://www.investopedia.com/terms/s/swap.asp

A classic example for a swap is an interest rate swap. For example, I have a bond portfolio with fixed interest rates. I dont like this and would prefer variable rates, but I dont want to sell my whole bond portfolio.

So I exchange my fixed interest rate for your variable interest rate. Based on the discounted cash flows of your future payment streams and my future payment streams the value of the Swap is calculated.

Swaps never affected my trading in any way.
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its a good reply from all with exact information , got some fine lines. thank you for nice post.
 
socool said:
In short, if you want to keep your trade open overnight, you pay extra charge for it. Think of interest that you are paying back
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Exactly;
a bit like insurance , good premium to be earned in over nite holds......................................................NOT suitable for all investors/traders.
 
Swap fee (also called rollover fee in this context) is the interest rate difference between two currencies of the Forex pair you are trading. Clients will pay and earn interest for both currencies (for borrowing one and lending the other). It is charged when you keep a position open overnight.
 
A foreign currency swap is an agreement to exchange currency between two foreign parties. The agreement would be consisting of swapping principal as well as interest payments on a loan which would be made in one currency for the principal as well as interest payments of a loan of equal value in another currency.
 
Esha.J said:
A foreign currency swap is an agreement to exchange currency between two foreign parties. The agreement would be consisting of swapping principal as well as interest payments on a loan which would be made in one currency for the principal as well as interest payments of a loan of equal value in another currency.
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its a very fine reply from all about swap. nice post. thanks
 
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