What is Rollover?

In the spot forex markets settlement occurs in 2 business days. Most traders do not want to actually convert their spot currency positions, so client positions are automatically rolled from one day to the next. This is performed automatically in your trading account by simultaneously closing all positions and reopening new positions with the next day’s settlement date.

Rollover is the interest paid or earned for holding a forex position overnight. Each currency has an interest rate associated with it, and because forex is traded in pairs, every trade involves not only 2 different currencies, but their two different interest rates.

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). The difference between the two interest rates (the interest rate differential) is deposited in the account and can affect performance.