Rollover Interest on Forex Positions
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 two 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 your trade.
Timing of Rollover
5 p.m. in New York is considered the beginning and end of the forex trading day. Any positions that are open at 5 p.m. sharp are considered to be held overnight, and are subject to rollover. A position opened at 5:01 p.m. is not subject to rollover until the next day, while a position opened at 4:59 p.m. is subject to rollover at 5 p.m.
A credit or debit for each position open at 5 p.m. 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. Likewise, there is no rollover on holidays, but an extra day’s worth of rollover two business days before the holiday. Typically, holiday rollover happens if any of the currencies traded has a major holiday.
Note: On Wednesdays, the amount added or subtracted to an account as a result of rolling over a position tends to be around three times the usual amount. This "3-day" rollover accounts for settlement of trades through the weekend period.
The FXCM Trading Station automatically calculates and reports all rollover for you.
Do rollover rates and policies vary from broker to broker?
Yes. In addition to our policy of complete transparency in reporting rollover, FXCM is one of the world's largest Forex Dealer Members, with over 150,000 live accounts trading through FXCM's trading platforms. Because it generates over US$365 billion per month in notional trading volume to the banks it deals with, FXCM is able to pass to its clients outstanding rollover rates on both sides of every currency pair.