Overnight funding
When you hold a CFD position overnight a fee will be applied to keep it open. This is the cost of maintaining a leveraged position. Overnight interest will be applied to positions open or remaining open at 22:00 GMT.
For every night a position is open, an overnight funding fee will be applied.
Why is overnight funding charged?
When trading CFD’s, you’re using leverage. This means that you are effectively lent the funds required to finance your open position alongside the initial deposit. To keep your position open after 10pm (UK time), an interest adjustment will be made to your account to reflect the cost of funding your position overnight.
How can I see what I’ve been charged?
Overnight funding charges appear on your trading statement.
How is overnight funding calculated?
Overnight interest is dependent on market conditions, liquidity & interest rates and includes a fixed mark-up applied per instrument type.
Warning: on Matched or Hedged Positions: If you hold opposite, fully off-setting positions on the same CFD instrument simultaneously (e.g. maintaining an open Buy contract and an open Sell contract on the GER40), your market risk exposure may be neutralised, but your ongoing costs are not. Eightcap charges independent daily overnight holding fees (Swaps) on both legs of a hedged transaction. Maintaining fully matched positions will result in continuous, dual-sided cost adjustments that will actively erode your account balance over time.
Calculation formulas for overnight interest
FX - calculated on position size (base currency units)
- Long (Buy): Quantity × Long overnight interest rate
- Short (Sell): Quantity × Short overnight interest rate
Non-FX products - calculated on notional value
- Long (Buy): Quantity × Price × Long overnight interest rate
- Short (Sell): Quantity × Price × Short overnight interest rate
Long and short overnight interest rates are subject to daily fluctuations and change every day.
Day traders who close out their trades before the market cutoff completely avoid paying these fees.
Calculating the overnight Interest for a GBP/USD Position
In this example, the instrument is GBP/USD and the position type is Long (Buy). The position size is 10,000 units (GBP). The daily long overnight interest rate is -0.0256%. Daily overnight interest:
Daily overnight interest = £10,000 × (-0.0256%) Daily overnight interest = £10,000 x (-0.000256) Amount charged (daily) = £2.56
Calculating the overnight holding cost for indices
In this example, the instrument is GER40 and the position type is Long (Buy). The instrument price is EUR 25,000, the position size is 2 contracts (lots), and the daily short overnight interest rate is 0.014%.
Calculate the position value:
Position Value = EUR 25,000 × 2 Position Value = EUR 50,000
Calculate daily overnight interest:
Daily overnight interest = 50,000 × (0.014%) Amount charged (daily) = EUR 7
Calculating the overnight holding cost for stocks
In this example, the instrument is Lloyds Bank Plc and the position type is Short (Sell). The instrument price is £1.00, the position size is 1000 shares, and the daily short overnight interest rate is 0.05%.
Calculate the position value:
Position Value = 1000 × £1.00 Position Value = £1000
Calculate daily overnight interest:
Daily overnight interest = £1000 × (0.05%) Amount received* = £0.50
*In this scenario overnight financing is credited.
