Maximize Your Trading Profits with Increased Swaps: A Comprehensive Guide

How do swaps work?

Swaps can either be positive or negative, depending on the interest rate differential and the direction of your trade.

• Positive swap: You earn income when the interest rate differential favors your position.

• Negative swap: You pay fees when the interest rate differential is against your position.

Example:

• A long trade on USDJPY earns positive swaps due to higher US interest rates than Japan.

• A short trade on XAUUSD benefits from gold’s high borrowing costs.

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:

1. Open a long position. Choose a broker that offers high positive swaps.

2. Open a short position. Use another broker that offers zero (or small negative) swaps.

3. Neutralize market risks. By holding both positions, you can focus solely on earning from swaps.

Calculation example (XAUUSD):

1 Lot short now:

• 6.05/day

• 42.35/week

1 Lot short after update (5x Swap):

• 30.25/day

• 211.75/week

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 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:

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.