Risk warning: Trading in CFDs and generally leveraged products can involve losses that exceed the initial investment
Rollover is the action taking place at end of day, where all open positions with value date equals SPOT, will be rolled over to the next business day. This happens since in FX trading the trader doesn’t want to actually buy the traded currencies but to continue to trade until position is closed.
For example, on Monday all position with value date of Wednesday (in case of T+2) will be rolled over and the value date will be updated for Thursday. Position with value date of Friday will be updated with value date of next Monday.
Trading platforms offer rollovers but the process involves a rollover interest fee which is calculated according to the difference between the interest rates of the traded currencies. If the interest rate on the trader’s long position is higher than the rate on the short position, the trader receives the interest. If the interest rate on the trader’s short position is higher than the rate on the long position, then the trader pays the interest. For weekends and holidays, the rollover is multiplied by the number of days of rollover.
COMPETITIVE SWAP RATES
TRANSPARENT SWAP RATES
3-DAY ROLLOVER STRATEGY
FOLLOWING CURRENT INTEREST RATES
CLUBFX ROLLOVER POLICY
A rollover is the interest paid or earned on an open position held past the close of the 21:00 GMT. reflecting the interest rate differential between the two currencies. ClubFX debits or credits clients’ accounts, and handles rollover interest at competitive rollover rates for all positions held open after 21:00 GMT. The spot forex market is traded on a two-day value date.
For example, for trades executed on Monday, the value date is Wednesday. However, if a position is opened on Monday and held overnight (remains open after 21:00 GMT), the value date is now Thursday.
The exception is a position opened and held overnight on Wednesday. The normal value date would be Saturday; because banks are closed on Saturday the value date is actually the following Monday.
If we assume that the interest rates in Japan and the US are 0.3% p.a. and 3% p.a. respectively, and you have a buy position of 1 lot in USDJPY at 120, you will earn 3% per year on your USD and pay 0.3% per year on your borrowed JPY.
This means that with an open position you gain USD 7.4 per day [100,000* (3%-0.3%)/365]. This amount is credited to your account and equivalent to 0.89 pips per day [120* (3%-0.3%)/365]. Similarly, if you have a short position in USDJPY, you lose USD 7.4 per day. Thus rollover interest can provide an added stream of profit or loss for you.
21:00 GMT is the beginning and the end of a trading day. Any positions that opened at 21:00 GMT are subject to rollover. Positions opened at 21:01 will be subject to rollover on the next day at 21:00 GMT (If they are still opened). Overnight positions will be directly credit or debit to your account.