Overnight swap will be generated when a London Gold position is held past the settlement time. Lucky Gold calculates overnight swap based on the closing price, contract unit, trading lot size, number of holding days and corresponding annual interest rate. Different interest rates apply to long positions and short positions. Charges naturally differ between closing a trade on the same day and holding the position for several consecutive days.
Many traders focus on the spread when opening trades, yet overnight charges become part of real trading costs as holding time extends. It is advisable to calculate these costs before opening positions intended to be held for several days.
Calculation of Overnight Swap
The formula currently used is: Overnight Swap = Closing Price × Contract Unit × Trading Lot Size × Holding Days × Annual Interest Rate ÷ 360
The contract unit for one lot of London Gold is 100 troy ounces. For overnight interest rates, the annual rate for long positions is 1.25%, and 0.75% for short positions. Relevant parameters are subject to adjustment per trading rules; actual values follow the prevailing trading specifications.
Let us use hypothetical figures for demonstration. Assume the closing price of London Gold for the day is $4300, and you hold 0.1 lot of a long position overnight: 4300 × 100 × 0.1 × 1.25% ÷ 360 ≈ $1.49
With the same $4300 price and 0.1 lot short position: 4300 × 100 × 0.1 × 0.75% ÷ 360 ≈ $0.90
The $4300 price here is merely for calculation illustration and does not represent the actual gold quote of that day.
Calculation for a Three-Day Hold
The formula includes the variable "holding days", so charges accumulate as holding time increases. Using the prior example of the 0.1 lot long position: Approximately $1.49 per day. Using the same closing price for simple estimation, the three-day charge totals roughly $4.48.
In live trading, the daily closing price of gold fluctuates, so final overnight charges will change accordingly. You cannot simply multiply the first day’s figure indefinitely for subsequent days.
Larger position sizes bring higher corresponding charges. Under identical conditions, charges for 1 lot are about 10 times those for 0.1 lot; charges for 0.01 lot are roughly one-tenth of those for 0.1 lot.
When Does Overnight Swap Start Accruing?
Lucky Gold’s current rules are based on settlement time. For Daylight Saving Time, settlement runs from 05:00 to 06:00 Beijing Time. For Standard Time, settlement falls between 06:00 and 07:00 Beijing Time. Overnight swap is charged per rules once a position crosses this settlement cutoff.
The phrase "open today and close tomorrow" is only a rough description. The key factor is whether the position crosses the settlement time.
For example, a position opened in the evening and closed before the overnight settlement will be treated differently from one kept open past settlement, with different charge handling.
Why Charges Differ for Long and Short Positions
Long and short positions adopt separate annual interest rates, leading to different charges under the same price, lot size and holding duration. Currently the annual rate stands at 1.25% for long positions and 0.75% for short positions.
This difference usually has limited impact on short-term trades. However, when holding positions for multiple days or longer, the cumulative gap becomes worth calculating. It is best to decide your planned holding period before opening a trade.
Distinguish Spread from Overnight Swap
Spread normally affects your cost the moment you open a trade. Overnight swap is tied to how long you hold the position.
The actual cost of an order cannot be judged by a single figure alone. Intraday trades closed the same day are mainly impacted by spread. As positions are held longer, overnight charges account for a larger share of total costs.
If you originally planned to close the trade the same day but decide to carry the position overnight, recalculate this extra cost.
Common Oversights for New Traders
One frequent mistake is calculating only margin while ignoring holding costs. Margin defines how much capital is locked for the position; overnight swap covers fees incurred when holding positions across settlement days. They serve different purposes.
Another easily overlooked detail is position planning around weekends and public holidays. If you intend to hold positions across weekends or ahead of trading hour adjustments, check the latest trading notices before placing trades. Longer holding periods require more detailed trading plans.
Risk Warning: London Gold is traded on margin. Market prices and trading parameters are subject to change. The calculation examples are provided only to demonstrate the calculation method. Actual charges shall follow your account records and prevailing trading rules.