Below is a link to a very good explainer of swaps which become increasingly important as countries continue to raise interest rates.

In addition to the article I would make a few added points.

Basically swaps refers to the interest you pay, if you hold a trade overnight, for your leverage loan on trades using the spot (cash) market. A long trade with leverage means you are borrowing money from your broker, they charge interest at the central banks day rate day rate plus an admin fee and debit from the trades profit or loss. Traditionally for a short trade you are borrowing from the market and selling on so you would expect a credit of interest instead of a debit but with recent very low interest rates and the admin fee shorts often meant a debit as well.

But now interests are rising the cost/credit of holding trades overnight becomes significant and a long trade held for a long time can become very expensive. Also, if the trade is held over the weekend you will be charged for 3 days on Friday night and if there are bank holidays you will be charged for them as well.

Rule of thumb says that 5 days is the limit for the cost effectiveness of a spot/cash trade. After that it is generally cheaper to use the Futures market instead (in forex is called the Forwards market). In Futures/Forwards you don't pay overnight fees but pay a larger spread instead. Most Futures contracts run for a month though you can exit at any time, if you want to keep the trade running at the end of a month you 'rollover' the contract and pay the spread over again.

The quick witted might spot an opportunity of taking a short just before the broker implements the overnight credit/debit swap and exiting the trade immediately after pocketing the interest payment. But brokers have seen it all before and what will happen is that the broker will contact you to say they are not happy with your 'style' of trading and if you don't stop they will just cancel your account without further notice (I've seen it done).

Anyway, best of luck and check out the article below.

https://www.colibritrader.com/what-is-s ... x-trading/