The Rollover is the interest that is gained or lost on any open position held overnight, i.e. around 10 pm GMT. Each currency has a specific interest rate, based on the interest rate of that particular country. Normally, if the interest rate of the currency you bought is the higher of the two currencies, you will earn a positive Rollover; whereas if the interest rate of the currency is the lower of the two currencies, you will pay the Rollover. These amounts will obviously fluctuate day to day, as interest rates change.
If you are trading EUR/USD; The base currency is the EUR, and the quote currency is the USD.
Now let’s say hypothetically:
- The USD, has an interest rate of 2.75%
- The EUR, has an interest rate of 2.00%
Using this example, if you were to buy $1,000 USD, this is what would happen:
Since the USD has a higher interest rate, you will earn a positive rollover of 0.75% (2.75%-2.00%). On the other hand if you were to buy 1,000 Euros you will pay a rollover of around 0.75%.
This interest is calculated daily, by the difference in the 2 interest rates. If there is a 0.75% difference, as in the example above, if you buy the EUR/USD, this would amount to annual profit of $X, $Y*1.075 (earned in the rollover, assuming market conditions stayed at a fixed rate).
At XForex we automatically roll over all of your open positions around 21:00 PM GMT to the next settlement date (i.e. the next trading day). We will automatically calculate and report any roll over you have gained or lost, this will be displayed in your account.
The settlement day will be two days after the trading day as deals are settled the next two business days (T+2) from the trading day (opening/closure of a position). This day is also called the value day. For example, if your deal was opened on Wednesday the 23rd of April the value day will be the 25th of April. If the deal was opened on Wednesday and closed on Thursday, then automatically the system will charge for 3 nights rollover as the value date of the opened deal was Friday and of the closed deal was Monday (next week). Therefore the charge of the rollover will be 3times the price of the rollover. In case of weekends and holidays, the rollover is multiplied by the number of these days.
* The spread is also charged in swap points. Rollover can be charged for both currencies if the interest rate difference is too small. Swap points can be seen in the platform.