 | What is the definition of Rollover?
A rollover is moving a forex position to the following deliver date, or simply put, maintaining an open forex position overnight. In this instance, the rollover incurs a charge which is equivalent to the interest rate differential of both currencies in the pairing.
|  | TradersLaboratory decodes Rollover
Sometimes, a forex trader may see that his position in the forex market has the potential to make more money if allowed to run. This may warrant leaving the position overnight, or even for several days or weeks at a stretch. This is a forex rollover, as the position is allowed to remain open and be “rolled over” to the next trading day. Normally, a rollover incurs a charge. The interest rates of the countries whose currencies are represented in that trade are used to calculate the charge. So if a trader has a “Buy” position in a currency such as the AUDJPY (where the interest rate differential is 4.25 – 0.1 = 4.15%), the trader’s position will be credited with the corresponding interest calculation. If he held a “Sell” position, he would instead be debited based on the interest rate differential of 4.15%. |
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