Forex Trading Details
There are several details you want to consider before trading forex. Check your platform for up-to-date details.
One of the major benefits of forex is the near consistent trading you can do. You can trade forex 24 hours a day, Monday through Friday, as global markets open and close.
What is rollover?
Rollover is the interest paid or earned for holding a position overnight. A credit or debit for each position open at the end of the day is applied directly to your account balance. Your trading platform automatically calculates your rollover amounts.
Each currency has an overnight interest rate associated with it, and because forex is traded in pairs, every trade involves not only two different currencies, but their two different interest rates.
Overnight interest rates will guide whether the trader will ultimately pay to hold the position or earn interest. Typically these interbank rates will track a central bank’s target quite closely, however sharp changes in the supply or demand for a specific currency can shift interbank borrowing rates away from the central bank rates.
Typically, if the interest rate on the currency you bought is higher than the interest rate of the currency you sold, then you will earn rollover (positive roll). If the interest rate on the currency you bought is lower than the interest rate on the currency you sold, then you will pay rollover (negative roll).
It is possible however that both rollover for buying and selling the same pair are negative. As both Banks and The Ridge charge a small spread on interest paid or earned.
Any client holding an open position at the end of the trading day (5pm EST) will be credited or debited rollover.
Rollover can add a significant extra cost or profit to your trade. Upcoming Rollover can be viewed in the Trading Station from the simple and advanced dealing rates windows.
The Trading Station automatically calculates and reports all rollover for you.
Margin is a portion of your account equity set aside as a deposit for your trade. Margin requirements are updated at least once a month to account for price fluctuations. You can keep track of your Used and Usable Margin on your trading platforms.