In Forex trading, a swap refers to the interest differential between the currencies being exchanged in a transaction. When traders hold positions overnight, they may incur or receive a swap fee based on the interest rates of the currencies involved. If a trader buys a currency with a higher interest rate and sells a currency with a lower interest rate, they potentially earn a positive swap. Conversely, if the situation is reversed, they could face a negative swap. Swaps can impact overall trading profitability and strategy, especially for those holding long-term positions.