Forex and Rollover Interest

When it comes to the forex market, especially the spot market, all trades that are conducted must be settled within two business days. When there is a rollover involved, this refers to the process of closing any open position for the current value and the opening of that same position on the next day’s value. The price will reflect the difference between the interest rates of the two currencies that are being traded. Based on banking practices, all Forex brokers will roll over any open positions to the following date, which will close at 5 PM EST for a final settlement.

Rollovers will involve the exchange of the position that is being held for a position that will be expiring on the next day. Let’s say a trade is executed on Tuesday. The value date for this trade will then be Thursday. There is an exception to this. If the position is opened on Tuesday and then help overnight, the value date will then become Friday. The only time this differs is when any position is held overnight on a Wednesday. The typical value date would be Saturday, but since there is a weekend involved. The value date will be set for Monday. Any position that is held overnight that will go into the weekend will automatically incur an additional two days of interest.

Should a trade fall on a holiday, additional days of interest will be involved as well. It is possible for traders to earn quite a bit on interest, but it will all depend on the direction of the position as well as the differential of interest rates between the currencies that are being traded. For example, in Great Britain, the interest rates are higher than they are in Japan. If a trader is purchasing GBP, they will earn the interest at 5 PM EST. However, if they are selling the GBP, they will pay interest at the same time.

Any interest or rollover that is earned will be paid to the account after purchasing any currency with a higher interest rate. On the other hand, an account will be charged is the country’s currency being issued has a lower interest rate. Interest rates can be an important part of trading and should be something that all traders are aware of so they can plan on making extra money or having to pay more when a trade is settled.

Forex Related Articles

There's a lot that to know when it comes to Forex trading which is why WorldForex.org will continue adding articles and new information to this website on a regular basis. Please visit us and come back to our website from time to time for the latest Forex technicals, charts and other information.

  • Review of OANDA

    When it comes time to start trading Forex online, traders will start by selecting a broker, which will facilitate the trades being conducted. One of the great names in the business is OANDA, a pioneering brokerage that has been operating since the mid 1990s. With this broker, traders will benefit from many tools, useful tutorials and other great perks that can make trading even more exciting and rewarding. The online platform was launched in 2001 and since that time, it has been a preferred platform for traders from all over the world.

  • The 1 Minute Scalping Strategy

    Forex traders who have experience in trading will be aware of many different strategies and techniques that can help generate successful trades and profits. One of the common strategies that is used is the 1 minute scalping strategy. In regards to the Forex market, scalping refers to method of trading specific currencies based on technical analysis. Traders will have the goal of making a profit by buying or selling while holding positions for a very limited amount of time and closing the trade to earn small profits. Most trades with the 1 minute strategy will be held for one minute or less.

  • Selecting Forex Platforms

    When new traders make the decision to start investing online, they will have to make an important decision to begin, which is selecting a trading platform. A platform is the software that will be used to send information between the trader and their selected broker. This software can offer a large amount of information including charts and quotes and it is also used to enter orders that will be executed. There are different types of platforms, such as local platforms, which are installed on the computer by the trader and web based platforms, that are run with Java. The advantage of a web based platform is that it can be used by any operating system, so it is accessible to more traders.

  • Forex Strategies that Work

    Forex trading has become one of the most popular forms of investing and since it can all be done online with ease, it is simple for traders to access brokers and conduct trades at any time. While the Forex market may seem easy to enter, there are many things that must be considered before trading. There is a risk involved and traders who enter the market with little knowledge or no information on proven strategies will have a difficult time enjoying any success. Here, we discuss some strategies that have been used over the years and continue to provide traders with the tools they need to conduct successful trades and start generating profits.

  • Price Action Trader Mistakes

    Investing in the Forex market can be quite exciting and there are many options that can generate amazing profits. Unfortunately, many traders enter the market without the knowledge they should have and they often make common mistakes that can lead to unnecessary losses. Making mistakes while trading is part of the learning process, but there are some mistakes that can easily be avoided. For those that are price action traders, there is not as much information available online, so common mistakes are often made because traders cannot find the right information to help them conduct these tyupes of trades. Here, we discuss the top three price action trading mistakes that are made.