Rollover / Prem. Rates
Forex Rollover / Premium automatically occurs each evening between 4:58 and 5:06 p.m. EST (Monday through Friday). During this time, users will temporarily be unable to trade.
During the rollover period, interest is added to or subtracted from accounts with open positions based on the annual Buy or Sell Premium rates.
Daily Premium Formula
Volume (in USD) * [ (Premium Rate / 100) / 360 ]
100,000 EUR/USD | Premium Rate of -1.83
(100,000*1.3426) * [( -1.83 / 100) / 360] = ($6.82)
or
(100,000*1.3426) * (-1.83% / 360) = ($6.82)
What is Rollover?
Rollover interest arises from holding a currency pair overnight, which may result in debit or credit interest posted to an account. Foreign currency trading involves borrowing one currency to buy another whereby the borrowed currency is charged debit interest and the purchased currency is paid interest. The net difference of the two numbers results in a credit or debit interest charge (rollover), if held overnight.
"Spot Forex market transactions have a value date that is two business days forward. Rollover involves exchanging the current position for a position expiring the following settlement. Industry practice is if a trade is executed on Tuesday, then Thursday would be considered the value date. An exception occurs if a position is opened and held overnight on Wednesday. The normal value date for Wednesday would be Friday at 5:00 PM ET, however, since the market closes at 5:00 PM ET the value date is extended to the following Monday. Positions that are held overnight on Wednesdays will earn or incur an extra two days of interest (due to the weekend). Additionally, positions with a value date that fall on a holiday also incur or earn additional interest."
To avoid rollover interest debits or credits on your positions, simply make sure your position is closed prior to 5pm EST (the established end of the market day).
Premium Rates
Annual premium rates can be found by adding the "Buy Prem." and "Sell Prem." columns to your Positions or Watchlist windows.
