Resolved Question
What are the swaps and rollover interests? How and when are they used??
plz i need a detailed answer
about 1 year ago
Best Answer - Chosen by Voters
Rollover is the interest earned or paid for holding a position overnight. Rollover happens at 5 pm est. If you go long on for example eur/usd it means you're buying euros and selling dollars. If you got short it means your selling euros and buying dollars. If the currency you bought has higher yield than the currency you sold then you earn interest on the rollover. If the currency you bought has lower yield than the currency you sold then you pay interest.
about 1 year ago
Answers (1)
For positions open at your broker's "cut-off time" usually 5pm est (check with your broker), there is a daily rollover interest rate that a trader either pays or earns. Remember since every position you take involves borrowing one currency and buying another, interest is paid on the currency that is borrowed, and earned on the one that is bought. If you are buying a currency with a higher interest rate than the one you are then the net differential will be positive (i. E. Aud/jpy currently). You will earn interest as a result. On the other hand, buying a currency with a lower interest rate than one you are selling, the net differential will be negative (i. E. Eur/aud).
about 1 year ago
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