Rollover

This is from FXCM. I'll post another article from FXCM about Understanding foreign exchange rollover.

Rollover
Conventionally, 17:00 New York Time is considered the end of the international trading day, so when you hold open positions through 17:00 New York Time you have technically held them overnight. As a service to our clients, positions are automatically rolled over every day at 17:00 New York Time to prevent physical settlement. When rolling positions overnight, rollover interest is either added or subtracted from your account.

Every currency you buy or sell has a certain overnight interest rate associated with it. The interest amount varies based on the interest rate differential between the two currencies you are buying and selling, and fluctuates day to day with the movement of prices. These rollover rates or swap rates are determined at the Interbank level based on money market rates.



For instance, on any given day, the rollover can be $0.26 per lot for GBP/USD and $0.80 per lot for EUR/USD. Rollover fees are posted in the “INTR columns” of the Simple Dealing Rates Window every day at 12:00 New York Time. For day traders that never hold a position overnight through 17:00 New York Time, rollover will not affect trading.

17:00 New York Time, funds are automatically subtracted or added to accounts with open positions because of the automatic rollover.

Note: For positions that are open on Wednesday and held overnight, 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.

Next post will be about Understanding Foreign Exchange Rollover.