Rollover Rates

What is Rollover?

Rollover is the interest paid or earned for holding a position overnight. Because Forex is traded in pairs each currency therefore has an interest rate associated with it. 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 your trade.

Rollover Example

When you buy the EUR/USD pair, you are buying the euro, and selling the U.S. dollar to pay for it. If the euro interest rate is 2.00%, and the U.S. rate is 0.25%, you are buying the currency with the higher interest rate, and you will earn rollover which in this case will be 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 or 1.75% based on the above on an annual basis. This is because you are paying the euro interest rate and earning the U.S. interest rate.
 
When is Rollover Booked?
 
The beginning and end of the forex trading day is considered to be 22:00 GMT. Any positions that are open at 22.00 GMT sharp are considered to be held overnight, and are subject to rollover. A position opened at 22:01 p.m. (GMT) is not subject to rollover until the next day, while a position opened at 21:59 (GMT) is subject to rollover at 5 p.m. A credit or debit for each position open at 22.00 (GMT) 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 three days of rollover on Wednesdays, which makes a typical Wednesday rollover three times the amount on Tuesday. There is no rollover on holidays, but extra days worth of rollover are booked two 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 22.00 (GMT) on July 1 for all U.S. dollar pairs.
 
 

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