Rollover at Trading.com
Competitive & transparent swap rates. 3-day rollover strategy.
Competitive Swap rates
Transparent Swap Rates
3-day rollover strategy
Rollover – What you need to know
Rollover is the process of keeping trades open overnight and carrying them over into the next trading day.
When you maintain an open position overnight, interest may apply. This is known as a rollover rate.
The settlement for currency trades is usually two business days, to account for physical delivery. However, as this isn’t a concern in margin trading, open positions must be closed at 22:00 GMT every day and re-opened the next trading day.
At Trading.com, rollover is agreed through a swap contract which comes at a cost or gain for traders. Therefore, we don''t close and re-open positions, instead we debit/credit trading accounts for positions held overnight, depending on the current interest rates.
Rollover at Trading.com
We apply rollover at 22:00 GMT, the standard time that marks the beginning and end of a currency trading day.
We don’t close and re-open positions at the end of the trading day. Instead, we either debit or credit client accounts depending on their position and in line with the latest interest rates.
Even though the markets are closed on Saturdays and Sundays, banks charge interest on positions held open over the weekend. However, Trading.com levels this time gap with a 3-day rollover, which takes place on Wednesdays, and our rollover rates are adjusted to the current market conditions.
How Rollover Is Calculated
Depending on the prevailing interest rates, rollover may either mean a cost or a gain to online investors who keep positions open overnight.
We calculate rollover using the tom-next rate (tomorrow into next day rate), to which we add a small admin fee. Tom-next rates are determined by the exchange rate differential between currencies.
Because currencies are traded in pairs (i.e. base currency vs quoted currency), traders borrow money to buy another currency. This means that interest is paid on the borrowed currency and earned on the bought currency. Rollover interest is the net result of this.
Rollover interest can be calculated with 3 details at hand: the short-term interest rates on both currencies in the currency pair, the current exchange rate of the currency pair, the quantity of the currency pair that was purchased.