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Trade Rollover

The forex market is active 24 hour a day which makes for some unique market dynamics, like rollover. 

Why Rollover Exists

Trade rollover occurs when a broker swaps a trader's positions the day an order would actually have to be fulfilled.  So, instead of your market position being closed and you being given the actual money, the broker rolls your position over to the next day. 

It used to be that you'd have to ask a broker to roll over your position.  Nowadays, however, it's largely assumed that a trader wants a rollover, and unless they specify otherwise, a rollover will be automatic.

Paying and Receiving Money For Trade Rollover

Traders both receive and pay rollover fees.  Rollover fees are the difference between the interest rate of the two currencies that make up the currency pair.  Basically, that money is earning interest, even over a single night, and if you are making more interest on that currency than in the other currency, the broker will credit your account with that interest rate differential.  Likewise, if the rate is lower, the broker will debit your account that amount. 

Some brokers require a slightly higher margin level – sometimes 2% instead of 1% – for a trader to claim rollover fees. 

In most cases, rollover fees are quite small and are insignificant amounts of money for most traders, but if a bank or broker were to keep the rollover cost/benefits, the thousands or millions of accounts that the bank holds would all add up, and that would be a whole lot of money being shifted around – as far as the bank or broker is concerned – at random.