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May 16, 2016

Question:What is "Roll Over" and "Swap Interest (Overnight Financing)" in Forex?

Answer:

What is Rollover Cost?

If you trade Forex on a “spot” basis, all trades settle two business days from inception, as per market convention.

The settlement date is referred to as the value date.

Many Online Forex Brokers offer “rolling spot” Forex.

This means they don’t arrange physical delivery of currencies and therefore, all positions left open from 23:59:45 to 23:59:59 (MetaTrader time, EET) will be rolled over to a new value date.

As a result, positions are subject to a swap charge or credit.

Please read FXPro’s rollover/interest policy to find out more.

The rollover cost is based on the interest rate differential of the two currencies.

Let’s assume that the interest rates in the EU and USA are 4.25% and 3.5% per annual respectively.

Every currency trade involves borrowing one currency to buy another.

If you have a buy position of 1.0 lot in EURUSD, then you earn 4.25% on your euros and borrow US dollars at a rate of 3.5% per year.

Go to FxPro Official Website

How Swap (Roll Over) works?

  1. If you have a long position (buy) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you receive a gain.
  2. If you have a short position (sell) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you lose the difference.
  3. If you have a long position and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you lose the difference.
  4. If you have a short position and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you receive a gain.

Check the Latest Swap Points

Swap Points are charged/credited at midnight

If you open and close a position before 23:59:45 (MetaTrader time, EET) you will not be subject to a rollover.

The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.

When you roll an open position from Wednesday to Thursday, then Monday next week becomes the value date, not Saturday.

Therefore the rollover charge on a Wednesday evening will be three times the value indicated on the rollover/interest policy page.

On FXPro’s trading platforms, all Swap rates are calculated automatically at 00:00 trading server time.

The swap charge is calculated with the below formula.

Current long/short rate * number of lots = swap debit/credit in second currency

Depending on the Swap Points, you may be charged or credited by the swap charges.

Go to FxPro Official Website

Checking Swap Points

If you like to find out the Swap Points, please check the latest data on your trading platforms.

After logging into your MT4/MT5 trading account, right click in the “Market Watch” and then select “Symbols”.

MT4 Market watch symbols

Then select a symbol in the list and click on “Properties”.

MT4 Properties selecting symbols

You can see all information of the trading symbol, also the swap rates for both Long and Short positions.

Symbol Properties swap points rates

*Demo MT4/MT5 accounts might have not up-to-dated swap information.

You can also use FXPro’s calculator in the Official Website.

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