What's a rollover?

I read this part in a book of mine:

One market convention unique to currencies is rollovers. A rollover is a transaction where an open position from one value date (settlement date) is rolled over into the next value date. Rollovers represent the intersection of interest-rate markets and forex markets. In short, you will either earn or pay interest on open positions held overnight.

So, if I keep a position open for, at least, 24 hours, the next time there’s a price fixing there will be a rollover?


That’s a rollover!

Ok. In fx a rollover is the difference of the currencies interest, plus a broker fee, paid or withdrawn at the time a broker defines. Usually each day and Wednesday three times, because of the weekend rollover all mingled into the Wednesday rollover.

For instance, lets say the rollover time is 11 pm gmt, then if you open an order with filling 1 minute before that time, you get or pay rollover at 11 pm. Then the next rollover will only be paid if you keep it open for another 24 hours.

I hope that helps. :slight_smile:


Why during those times? Also, call me dense, but I still don’t understand how I would run into this.

Say I trade USD/CAD and GBP/USD. I buy 20,000 USD/CAD and sell USD/GBP. Wouldn’t those transactions just go through and proceed to go through until sold/bought back? How would interest rates come into this equation?

Just curious, do you automatically make money from a rollover or lose?

Still learning :slight_smile:

Just read this part:

Rollovers should be considered a cost of doing business and rarely influ-
ence overall trading decisions.

Seems like an irrelevant part of trading in FX.

As I wrote already, the time is dependent of your broker. Ask your broker. The fee what you have to pay is also broker dependent. If interest differences plus broker rollover fee gives you a positive rollover, it will be paid to you and if it gives a negative rollover you have to pay.

Your mentioned pairs have no huge interest rates, so I’d assume you have to pay there, no matter if you go short or long. Because the broker rollover fee could be higher than the difference of interest.

Take another example: audusd.

If you go long audusd then the interest paid is much higher than the interest to pay. If the broker fee is not too high, you should get positive rollover paid.

There’s some good information on this in the baby pips school (which is well worth reading if you are new to all this stuff).

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