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    What is Overnight Funding?

    4 Minutes
    Updated March 15, 2023 09:22

    What is overnight funding?

    Financing charges such as overnight funding or sometimes also referred to as swap fees.

    It refers to the fees that you pay to hold the trade position overnight. This fee is essentially an interest payment to cover the cost of borrowed capital that you’re using.

    For the currency you buy, you may receive interest, and for the currency you sell, you need to pay interest. The difference in interest on the currency pair will determine whether you will be charged or receive overnight interest corresponding to the product.

    image showing how overnight funding is charged


    How is overnight funding calculated?

    The formula for calculating the daily overnight funding of the daily position
    trading lot * contract size * opening price * daily overnight funding rate (%).


    Overnight Funding fee percentage rate is derived from several factors including amongst others, whether the Transaction is a buy or a sell, interest rates, instrument differentials, daily price fluctuations, and other economic and market-related factors. 

    You can check on the daily overnight funding rate here at Mitrade Market Data.

    an image showing the overnight funding specification on mitrade market data


    When is the overnight funding charged?

    Overnight funding will be charged daily on GMT 2200hrs

    First of all, as the name suggests, the fee is charged on a daily basis.

    When you hold positions through the settlement time (GMT 2200hrs), overnight funding adjustment will be incurred on your account.

    This means that the moment the clock strikes 10 pm (2200hrs). A charge will be applied to all open trades that you have at the moment.

    How can I see what I’ve been charged?

    This charge will be updated and reflected in your trading platform daily.

    Example;

    an example of a overnight funding charge on trading platform daily

    Any client may be charged/deposited overnight funding corresponding to the product for holding a currency pair position through the settlement time at Mitrade each day. The settlement time is GMT 22:00. Generally, overnight funding applies if you hold a position until this time. Please note that the time zone varies depending on your settings.

    * The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.