• Market Analysis Guide
  • Intro
  • Technical Analysis Guide
  • Bill William’s Chaos Theory
  • Japanese Candlesticks Theory
• Video Tutorials
  • Intro
  • Alpari Research: Technical Reports
  • What is Forex and How Does It Work?
  • Introduction to Charting
  • Introduction to Technical Analysis
  • Risks
  • Using Technical Indicators
  • Introduction to Fundamental Analysis
  • Gold and Silver
  • Money Management
  • Position Sizing
  • Understanding and Trading the News
  • Earning Interest in Forex
  • Introduction to Fibonacci Analysis
  • Economic Indicators
• Autochartist
  • Intro
  • Download Autochartist
  • Autochartist Tutorials
• Glossary

What is Forex?

Rollover and Interest PolicyForeign exchange trading at Alpari is dealt on a "Spot" basis only. This means that all trades settle two business days from inception, as per market convention. The settlement date is referred to as the value date. Alpari does not arrange physical delivery of currencies hence, all positions left open from 10:59:45 p.m. to 10:59:59 p.m. (London time) will be rolled over to a new Value Date.

As a result, positions are subject to a swap charge or credit. Please read our Rollover and Interest Policy.

Please note that since 03 June 2007 Alpari Limited no longer closes and reopens the positions which are open at 11:00 pm London time. Instead we have introduced a more convenient method of rollover which involves debiting or crediting a customer’s trading account when he/she holds open positions overnight.

The cost of rollover 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% p.a and 3.5% p.a respectively. Every currency trade involves borrowing one currency to buy another. If you have a buy position of 1.0 lot in EUR/USD, then you earn 4.25% on your Euros and borrow USD at 3.5% per year.

In other words:

• If you have a long position (i.e. bought) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you receive a gain.
• If you have a short position (i.e. sold) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you lose the difference.
• If you have a long position (i.e. bought) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you lose the difference.
• If you have a short position (i.e. sold) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you receive a gain.

Notes:

• If you open and close a position before 10:59:45 p.m. (London time) 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" webpage.

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