Sunday, July 21, 2024

Rollover

Rollover is the process of transferring open positions from one trading day to another.

Most brokers and trading platforms automatically perform rollovers by closing any open positions at the end of the day while opening the same position on the next business day .

rollover

During this rollover period, swaps are calculated.

Swap is a fee that is paid or charged to you at the end of each trading day if you trade overnight.

If you pay the swap fee, the cash will be added to your balance.

If you are charged overnight interest, cash will be deducted from your balance.

Swap fees are also known as “overnight financing fees” or “overnight financing fees.”

Unless you are trading a very large position size, these swap fees are usually small but can add up over time.

For EUR/USD, with a long position of €10,000 if the swap rate is 0.637/1.05, you will pay an overnight holding fee of $1.05.

If you sell EUR/USD at €10,000, you will receive $0.64 overnight.

These amounts are then converted back to your base currency.

In the spot foreign exchange market, transactions must be settled within two working days.

For example, if a trader sells £100,000 on Monday, the trader must deliver £100,000 on Wednesday unless the position is rolled over.

All open FX positions at the end of the day (5:00 PM New York time) are automatically rolled over to the next settlement day.

The rollover adjustment simply calculates the carrying cost on a daily basis.

If you want to learn more foreign exchange trading knowledge, please click: Trading Education.

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