SWAP, or swap, in the context of the forex market, is a percentage for carrying an open position to the next trading day. When a position remains open after the close of the trading day (usually at 5:00 p.m. New York time), the broker charges or debits a certain amount depending on the interest rate differential between the currency pairs that make up the position. Swap is an integral part of the operation of the foreign exchange market. It reflects the cost of holding a currency position overnight and is related to borrowing and lending transactions. Central banks set interest rates, and those rates affect the cost of money borrowed overnight. Swaps are thus a consequence of these fundamental financial mechanisms. SWAPs help to maintain liquidity in the market. By charging or debiting swaps, brokers offset their own costs of borrowing and lending currencies. This allows them to provide clients with the ability to leave positions open for long periods of time. They reflect the difference in the economic situation between countries. For example, if one country’s central bank raises its interest rate, it makes that country’s currency more attractive to investors. Swaps allow these economic differences to be taken into account when trading currencies. SWAPs help manage the risk associated with holding positions for long periods of time. They encourage traders to close short-term positions during the day, which reduces the risk of large rate fluctuations and helps stabilize the market. SWAP is an important and unavoidable element of forex trading. It reflects interest rate differentials between currencies and is related to borrowing and lending arrangements in the market. Swaps cannot be avoided as they are the result of fundamental economic processes and maintain liquidity and stability in the foreign exchange market. Understanding how swaps work and taking them into account when developing trading strategies will help traders make better informed decisions.