When you could fuck your friends hot girlfriend but you choose not to, that's swag.
Swag is when you say you don't care what people think about you, and mean it
Swag is not only how you carry yourself, it is something that you are born with. you either have it or you don't, it cannot be taught or learned until you realized that it is all in your head.
Darrel: You got so much dick in your ass
Assface Magee: Fuck you, SWAG
Me: 'That's because you're a fucking retard trying to be like the rest of the try hards thinking their dumb ass have swag.'
The word quickly made its way to the states and has ever since become the catchphrase of douchbags and tools everywhere.
Person 2: "You're a dick"