Rollover

Benefits of Rollover with GeneTrade
Low & Transparent Swap Rates
Defined by the interest rate differential of a pair and spot price
Maximize credit when you earn on overnight positions

Rollover is an aspect of trading that will affect your bottom line, for better or for worse. The key is to fully understand the mechanics and make sure you are on the side that is affected for the better. So what is rollover? Basically, as forex is the borrowing of one currency to buy another, when the day ends and the position is rolled over into the new trading day, there is an interest that is applied on the borrowed currency and also paid on the purchased currency. GeneTrade makes it easy to reap the benefits of rollover with transparency and low swap rates.

Rollover Wednesdays

When calculating your rollover, it is important to note the 3 day rollover for trades that remain open on Wednesdays. The standard settlement period for forex positions is 2 business days. Positions open at 22:00 GMT on Wednesday are rolled over to Thursday, and then set on a 3 day rollover to account for the weekend. Utilizing these rollover interest rates, some traders may want to try carry trade techniques by buying higher yielding currencies whilst selling the lower yielding currencies.

Calculation of Rollover

Although you may prefer the usage of tools to calculate rollover, you might also benefit from understanding the calculation in the background.

The basic formula for calculating rollover is as follows:

Lot size x (short term interest rate for base currency – short term interest rate for quote currency)/ (365 x exchange rate)

Let’s look at an example. Say that you buy 1 lot of USD/CHF whereas the short term interest rate for USD is 1.75, the short term interest rate for CHF is 0.25, and the exchange rate is 0.935.

{100,000 x (1.75% – 0.25%)}/(365 x 0.935)=4.395

You will now have a rollover debt or credit of USD $4.40 into your account based on on your position.

Although the market is open 24 hours, we will consider 22:00 GMT to be the beginning and the end of a trading day. If your positions are open at 21:59 GMT it will be subject to rollover.

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