What is Rollover?
Rollover is the interest paid or earned for holding a position
overnight. Each currency has an interest rate associated with it, and
because forex is traded in pairs, every trade involves not only 2
different currencies, but their two different interest rates. If the
interest rate on the currency you bought is higher than the interest
rate of the currency you sold, then you will earn rollover (positive
roll). If the interest rate on the currency you bought is lower than the
interest rate on the currency you sold, then you will pay rollover
(negative roll). Rollover can add a significant extra cost or profit to
The Trading Station automatically calculates and reports all
rollover for you.
When you buy the EUR/USD pair, you are buying the Euro, and selling the
US Dollar to pay for it. If the Euro interest rate is 4.00%, and the US
rate is 2.25%, you are buying the currency with the higher interest
rate, and you will earn rollover -- about 1.75% on an annual basis. If
you sell the EUR/USD pair, you are selling the currency with the lower
interest rate, and you will pay rollover -- about 1.75% on an annual
basis, since you are paying the Euro interest rate and earning the US
One of the most popular forex strategies
in the twenty first century has been the Carry Trade. The "Carry Trade"
takes advantage of both the differences in interest rates between
countries and the high available leverage of the forex market.*
*Leverage is a double-edged sword, and
can dramatically amplify your profits. It can also just as dramatically
amplify your losses. Trading foreign exchange with any level of leverage
may not be suitable for all investors.
When is rollover booked?
5 pm in New York is considered the beginning and end of the forex
trading day. Any positions that are open at 5 pm sharp are considered to
be held overnight, and are subject to rollover. A position opened at
5:01 pm is not subject to rollover until the next day, while a position
opened at 4:59 pm is subject to rollover at 5 pm.
A credit or debit for each position open at 5 pm appears on your account
within an hour, and is applied directly to your accounts balance.
Weekends and Holidays:
Most banks across the globe are closed on Saturdays and Sundays, so
there is no rollover on these days, but most banks still apply interest
for those two days. To account for that, the forex market books 3 days
of rollover on Wednesdays, which makes a typical Wednesday rollover
three times the amount on Tuesday. There is no rollover on holidays, but
an extra days worth of rollover 2 business days before the holiday.
Typically, holiday rollover happens if any of the currencies traded has
a major holiday. Therefore, Independence Day in the USA, July 4, closes
American banks, and an extra day of rollover is added at 5 pm on July 1
for all US dollar pairs.
Where is rollover shown?
The FCM closely tracks and clearly displays rollover rates. Please be
advised, interest rates are provided by multiple global banks.
Every effort is made to display rollover rates one day before they are
posted to your account. However, during times of extreme market
volatility, rates may change intraday.
Here is an example of the rollover rates.
You can see today's rollover rates by Opening a Demo Account.
To view today's rates, use the Simple
Dealing Rates view. Click on the Simple Dealing Rates tab at the top of
the Dealing Rates window. The rollover rates for all the currency pairs
are in the Roll S and Roll B columns. Roll S will show you how much
rollover you will pay or earn if you sell 1 lot of the currency pair
(and have the position open at 5pm). If the number shown is negative,
you pay that amount. If the number is positive, you earn that amount.
The amount shown is denominated in the currency used by the account,
which means that if the trading account is in US dollars, the rollover
amount is shown in US dollars.
Do rollover rates and policies vary from
broker to broker?
Yes. In addition to the policy of complete transparency in reporting
rollover, our FCM is one of the worlds largest Forex Dealer Members, with
over 125,000 live accounts traded through the FCM's trading platforms.
Because it generates over $365 billion per month in notional trading
volume to the banks it deals with, the FCM is able to pass to its clients
outstanding rollover rates on both sides of every currency pair.