How long can a trade stay open?

Hi, I was wondering, how long can a trade stay open.

Can I enter LONG today and close that very same trade in one or even two years? (As long as I can affort it with my account size if the trade goes against me of course).

But the question here is: can I leave a trade open for month or even years? Does the broker allow that?

Thanks!

Every day, your broker will close your position and re-open it at about the same price. This gives your position a new settlement 1 day into the future, or 3 days into the future if the roll-over is on a wednesday.

You will either earn or pay to have that position rolled over every day, depending on the overnight interest rates involved in the currency pair you’re trading.

This process can go on forever, and as long as you can handle the drawdowns, your broker won’t have a problem closing and re-opening that trade because they are making money every time this happens. Right now interest rates are fairly close across the globe, so the cost/reward of “carrying” a position for many days is relatively low for most pairs.

First, thanks for your reply!

Can you tell me more about those interest rate? For example, if im at -1000$US in a EUR/USD trade just before it close. Do you know how much interest will I have to pay to leave that trade open?

Thank you very much!

The answer to your question can vary from broker to broker, and also depends on your account size (they give better rates to bigger accounts in general). So if you want details, I’d ask your broker for their current roll-over rates.

My personal estimation would be about $0.50-1.00 a day to be short 1 minilot of EUR/USD. If you were saying you are short 1microlot (1000euros worth), then I’d guess the cost should be 5-10 cents a day.

So about 5$ or 10$ a day for a 1 standard lot, right?

Well, it’s not “that bad”, but… It’s still very important to know… How come nobody talk about that here… That’s weird.

Thanks for yours answers and time Akeakamai. I appreciate it.

No problem, it’s a good sign that you’re actually looking into long-term trades. A lot of new traders are interested in the shorter timeframes because it appears like more money can be made if you trade more often. But they also think that it is somehow less risky, because their stoplosses can be much tighter than someone trading a daily chart.

But then you wonder…more money, less risk? Sounds good, but the reality is that higher rewards are going to take higher risks. Trading more often actually hurts your account if you’re not making money on your average trade, and most new traders don’t even bother to track what they make on their average trade!

Then you have commission and/or spread costs for each round trip and this is another disadvantage to the day-trader. The guy who earns 100pips one 1 trade is doing way better than the guy who earns 100pips in 10 trades because he’ll have to pay that spread 9 more times than the other guy!

Some traders even realize this, but make the excuse that their account is too small to trade a 4hr chart or a daily chart. They are too eager to get in the game, rather than save up the money and have a fighting chance on a more forgiving playing field. And some just don’t have the patience!

I see it talked about from time to time and the babypips school has a section on it…just so you know.!

Carry Trade: The Forex Currency Carry Trade

I think you’re right.

May I ask what time frame you personally trade most of the time?

I look at 3. I’ll look for opportunities on the daily chart, then work down to a 2hr for further confirmation, then finally to the 20min for specific entries. I use daily and weekly pivots (daily pivots plotted on the 20min and weekly plotted on the 2hr), as well as daily highs/lows and the trends on all 3 timeframes.

I think it’s important to have an encompassing perspective on a particular pair because you can get similar setups on a 20min chart, but looking higherup, you’ll realize that one of them probably has a better chance than the other. I mean, if you’re running into a resistance level from 20 days ago, you’re just not going to see that if you’re only looking at a 5min/15min chart, and that is good info to know!

Alright, I just found this very well made video witch one explain how rollover work:
https://admin.acrobat.com/_a205571165/p86829575/

To see the interest rate, look at the bottom right of this web site:
Forex News | Forex Trading News | Currency Trading News

Finally, as I trade EUR/USD, it look like i’ll make 1.25% instead of paying interest rate.

Of course it’s not the way I want to make money… But still, it’s better to get pay instead of just pay… :slight_smile:

If you’re only trading Long, then you’ll be earning, but if you ever go Short, you’ll be paying! Also, what those rates don’t say is that there is a spread inherent in those interest rates and so you’d actually be earning less than 1.25% and paying more than 1.25%. This is where your broker can make some more money off you (by widening the interest rate spreads they get from larger banks)

lol, dude, I just thought about that and I came back here to correct my mistake… But you already did… :wink:

Still, right now the interest rate are:
0,25% for the USD
1.50% for the EUR

That mean that going long with a standard lot, it pay 0,03424…$ “about 0,04$,” a day [B]OR [/B]cost that very same amount a day if you go short for every single standard lot.

It’s not that bad, not that bad at all…

the swap in the night, for many day, i think give at brokers many money…

What a cool sentence! You should make it your “signature”, and include it in all of your posts.

Reminds me of Darkstar’s signature, over on ff: [B]All your stop are belong to us[/B].

he he… joking…:):slight_smile:

That, “All your stop are belong to us” has reworded from its original form. It originally came from a computer game, and has been used many times over since then. Just for any trivial pursuit fans, it is also used in Rome: Total War.

Interesting background info, Betting. Did the Romans use stop-losses?

I was never any good at [I]Trivial Pursuit[/I] (or at [I]Jeopardy[/I] either, for that matter). That’s why I’m just a lowly forex trader.

Clint

That was a good a read…

I have one question here: What if I keep my trade open for less than 24 hours lets say 23 hours will there be a roll over? :confused:

Another question: What will happen if I got disconnected suddenly? or I logged off? :confused:

The position stay open.

Be sure to have a Stop Lost, just in case…

Hi, NEW FXer,

The rollover happens at a particular time of day, not after so-many hours in the position.

Let’s say your broker rolls open positions forward at 2200 GMT (that would be 6pm EDT for U.S. east coast folks). If you enter a position a few minutes before 2200 GMT, and leave it open until 2200 GMT, it will be rolled over, resulting in an interest credit (or debit) to your account. This credit (or debit) will be determined by (1) which pair you are trading, and (2) the size of your position — not by how long you were in the position.

Now, let’s say you enter a position a few minutes after 2200 GMT, and leave it open for almost 24 hours, closing it just before 2200 GMT the next day. In this case, there is no rollover, and there is no interest credit (or debit) to your account.

Check with your broker to find out exactly what time of day they do the rollover, and what the interest differentials are for the pairs you are trading.

If I understand your second question, you are asking what would happen to your open position if your internet connection goes down, or you log out of your trading platform.

After a trade is entered, it resides on your broker’s server; and it sits there until (1) you re-connect to the server and close the trade manually, or (2) you phone the broker to manually close the trade for you, or (3) your take-profit (t/p) or stop-loss (s/l) is triggered. That’s why you should ALWAYS have your broker’s phone number handy, and that’s why you should ALWAYS have your trade protected with a stop-loss order. Note that t/p orders and s/l orders reside on the broker’s server, along with your open position, and will trigger when pre-set prices are hit, whether or not you are logged in.

Note, also, that this description may not pertain to web-based trading platforms, which I don’t use and know nothing about.

I hope this answers your questions.

Clint