Why is Wednesday an expensive day in FX – Forex Mentor Pro

Hi FMP members.

Last week Wednesday I took a counter short on the Euro/JPY pair from the WR2 pivot point – the chart above. The trade setup had everything going for it and I was happy taking it. Double top – We had MACD divergence and and and…….multiple reasons in my book.

Big was my surprise on Thursday morning when I open my platform to see that a 1/4 of my profit went to overnight swap fee…… all $ 250.00 of it. 

Mother Buffer that’s not cool………….

But what is swap fee and what happens Wednesdays if you have overnight open trades?

Think of a swap fee (or “rollover”) as the “overnight rent” you pay or earn for holding a currency. In the Forex world, you aren’t just buying one currency; you are technically borrowing one to lend another.

• Why do you pay it at all?                                                                                                                                              
• Every currency has its own interest rate set by its central bank. When you hold a pair overnight, you are essentially juggling two different bank accounts:
• The “Borrow” Side: You pay interest on the currency you sold.
• The “Lend” Side: You earn interest on the currency you bought.

If the currency you bought pays less interest than the one you sold, your broker charges you the difference—that’s the swap fee. If it’s the other way around, you might get paid to sleep!

2. Why is Wednesday “The Big Boss” night?

• Wednesday is famous (or infamous) for the Triple Swap.
• The 2-Day Rule: Most Forex trades take two business days to actually “settle” (the T =2 RULE).
• The Weekend Ghost: Banks are closed on Saturdays and Sundays, but interest never sleeps.
• The Math: A trade held over Wednesday night would normally settle on Friday. To “roll” it to Monday (skipping the closed weekend), the broker charges you for three days of interest at once: Wednesday, Saturday, and Sunday.

It’s like a landlord who doesn’t work weekends, so they make you pay Friday, Saturday, and Sunday’s rent all on Wednesday night just to keep things moving.

……………………………………………………. 

Example:

Think of trading Forex like a long-distance relationship where you are constantly borrowing money from one person to lend it to another.

Here is the breakdown of why your “roommate” (the broker) keeps asking for gas money at 5 PM.

1. The “Banker’s Barter” (Why fees exist)

Imagine you want to buy some British Pounds (£), but your wallet is empty. You go to your friend, Uncle Sam ($), and say, “Hey, let me borrow $1,000 so I can go buy some Pounds.”

Uncle Sam says, “Sure, but I’m charging you 5% interest for the favour.”

You take that $1,000, buy the Pounds, and put them in a British savings account that only pays 2% interest.

• The Problem: At the end of the day, you owe Uncle Sam 5%, but you only earned 2% from the Brits.
• The Swap Fee: That 3% gap is the swap fee. Your broker charges you that “rent” every night you keep the deal open because you’re technically holding a loan.

2. The “Triple Wednesday” Madness

This is where it gets weird. In the banking world, most trades don’t actually “finish” (settle) the moment you click the button; they take two days to process.

• Monday night: You pay for Wednesday.
• Tuesday night: You pay for Thursday.
• Wednesday night: You pay for Friday… AND Saturday AND Sunday.

Since banks are closed on the weekend, they can’t process the “rent” on Saturday or Sunday. So, like a landlord who wants to go golfing on the weekend, the banks decide to collect three days of interest all at once on Wednesday night.

The Result: If you leave a trade open past 5 PM EST on a Wednesday, you get hit with a “Triple Swap.” It’s the financial equivalent of “Buy one day, get two extra charges for free!”

Quick Example: The “Sushi vs. Burger” Trade

Let’s say you are trading the USD/JPY (US Dollar vs. Japanese Yen).

1. The Setup: You “Buy” the Dollar (which has high interest, like 5%) and “Sell” the Yen (which has tiny interest, like 0.1%).
2. The Result: Because you are “lending” the high-interest currency, the broker pays you a little bit of money every night.
3. The Wednesday Bonus: On Wednesday night, you get paid triple the bonus. It’s like finding out your boss accidentally hit the “pay” button three times on your Friday pay check.

But beware: If you were selling the Dollar and buying the Yen, Wednesday night is when your account takes a triple-sized punch to the gut.

To find the best (and worst) swap rates, we look at the “Interest Rate Differential.” This is just a fancy way of saying “The gap between the country that loves high interest rates and the country that keeps them in the basement.”

Here are the current “Wall of Fame” and “Wall of Shame” for Wednesday night swaps:

1. The “Sugar Daddies” (Positive Swaps)

These are pairs where you get paid to keep the trade open. If you “Buy” (Long) these, Wednesday night feels like a mini-Christmas.

Currency Pair	Why it pays out	The Vibe
USD/JPY	The US has high rates; Japan has near-zero rates.	Like lending money to a high-stakes gambler and borrowing it from a monk.
USD/CHF	The US Dollar vs. the Swiss Franc.	The “Safe Haven” play that pays you to stay safe.
GBP/JPY	The British Pound vs. the Japanese Yen.	This pair is volatile (The “Widowmaker”), but the interest payout is juicy.

2. The “Wallet Vampires” (Negative Swaps)

If you “Buy” (Long) these, the swap fees will suck your account dry, especially on a Wednesday.

Currency Pair	Why it hurts	The Vibe
EUR/USD	Usually a small fee, but it’s the most common way people lose money slowly.	Like a leaky faucet in your trading account.
AUD/USD	If the Aussie central bank is feeling “cheap” compared to the US.	A slow, steady “rent” payment you didn’t ask for.
Exotic Pairs (e.g., USD/MXN or USD/TRY)	WARNING: These are the bosses. The fees here can be 10x higher than normal pairs.	Like paying for a VIP table at a club you aren’t even enjoying.

Pro-Tips for Surviving Wednesday:

The 5:00 PM Ghost: In the FX world, the “day” ends at 5:00 PM EST. If you close your trade at 4:59 PM, you pay nothing. If you hold it until 5:01 PM, you get hit with the triple fee.

• Check the “Contract Specs”: Inside your trading platform (like Meta Trader), right-click a currency and select “Specification.” It will show you the exact “Swap Long” and “Swap Short” numbers.
• The “Carry Trade”: Some people make a whole career out of just buying high-interest currencies and holding them for years just to collect the daily “rent.”

So, take care if you hold trades over a Wednesday

Regards

Pierre