Forex
Rollover
Rollover is the procedure of moving open positions from one trading day to another. During this rollover, a swap is calculated.
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— What is forex Rollover/Overnight Positions?
Forex rollover, also known as "swap" or "overnight interest," refers to the interest or fees that are paid or earned for holding a position in the foreign exchange (forex) market overnight. The forex market operates 24 hours a day, five days a week, but trading positions are typically settled at the end of each trading day. When a trader holds a position overnight, they are essentially borrowing one currency to buy another. Since different currencies have different interest rates, there can be a difference in the interest rates between the two currencies being traded. This interest rate differential is what leads to the concept of rollover.
Long Position
If a trader holds a long position (buys a currency pair), they are essentially borrowing the currency with the lower interest rate to buy the currency with the higher interest rate. In this case, the trader will typically earn interest.
Short Position
If a trader holds a short position (sells a currency pair), they are essentially borrowing the currency with the higher interest rate to sell the currency with the lower interest rate. In this case, the trader will typically pay interest.
How rollover calculated
The rollover amount is calculated based on the interest rate differential between the two currencies and the size of the position being held. Rollover rates can be positive (earning interest) or negative (paying interest).
It's important to note that forex rollover is typically not a significant factor for intraday traders who open and close positions within the same trading day. However, for traders who hold positions overnight or over the weekend, rollover can impact the overall profitability of the trade.
Booking Rollover
22:00 GMT is considered to be the beginning and the end of a trading day. Any positions which are still open at 22:00 GMT sharp are subject to rollover and will be held open overnight. Positions opened at 22:01 are not subject to rollover until the next day, but if you open a position at 21:59, a rollover will take place at 22:00 GMT. For each position open at 22:00 GMT, a credit or debit will appear on your account within an hour.