Overview
Rollover in forex is the daily process that keeps a spot currency position open from one trading day to the next. Because most spot FX trades have a short settlement window, brokers and liquidity providers “roll” positions forward rather than settle and redeliver the actual currencies each day. That roll creates a small interest adjustment — sometimes called a swap or financing charge — which is either credited to or debited from your trading account depending on the interest-rate relationship between the two currencies in the pair.
Why rollover exists and how it works
When you open an FX position you are effectively borrowing one currency to buy another. Each currency has an associated overnight interbank rate (the short-term rate banks pay or receive). If you are long the currency with the higher rate while shorting the currency with the lower rate, the net effect is usually a small interest credit. If the situation is reversed, you will generally pay a small interest debit. Brokers perform the bookkeeping for this by closing the position at the daily value date and simultaneously reopening an identical position for the next value date — the adjustment for interest is the rollover.
In practice you do not need to physically deliver currencies; the process is an accounting entry that appears as a daily rollover (swap) amount on your account. The amount is usually small for one day, but it compounds if you hold the position for many days or weeks.
Credit versus debit: who pays and who gets paid
Whether a rollover becomes a credit or a debit depends on which currency you are long and which you are short, and on their respective overnight interest rates. If you buy (go long) a currency that pays a higher overnight rate than the one you sold, you will typically earn rollover. If you buy a currency that pays a lower rate than the one you sold, you will typically pay rollover.
Brokers sometimes show two rollover figures for a pair: one for a long position and one for a short position. Those numbers already include any mark-up the broker applies, so the amount you actually see in your account may differ slightly from a pure market interest differential.
A simple calculation and worked example
A straightforward way to think about rollover is to convert the annual interest-rate difference into a daily cash amount and apply it to the notional size of your position.
Imagine you are long 100,000 units (one standard lot) of EUR/USD and the EUR overnight rate is 0.5% while the USD overnight rate is 2.0%. The interest-rate differential from the perspective of holding EUR (long) versus USD (short) is 0.5% − 2.0% = −1.5% per year. Applied to the 100,000‑euro notional, the annual interest shortfall would be about 1,500 euros. Dividing by 365 converts that to a daily amount: roughly 1,500 / 365 ≈ 4.11 euros per day. Because the differential is negative, you would pay about €4.11 for each day you hold that position. Brokers will usually convert that euro amount into your account currency before posting it.
Different brokers may calculate the exact figure differently (they may use 360 days, include a spread, or add a small fee), and the published rollover for a pair is what most traders use rather than doing the math themselves.
Timing: when rollover is applied and special cases
Most retail platforms apply rollover once per day at a fixed market close time; for many U.S.-based quotes this is 5:00 p.m. Eastern Time. If you still hold a position at that time it is treated as an overnight position and the rollover is applied. Because spot FX normally settles on a T+2 basis (trade date plus two business days), brokers account for weekends by charging three days’ worth of rollover on Wednesday nights so that positions held through the weekend have the correct total interest applied.
Holidays can change the schedule: if a bank holiday affects one of the currencies in a pair, rollover for that pair can be booked differently in the run-up to the holiday. Brokers typically publish a rollover calendar, and the exact mechanics can vary, so checking your broker’s rollover rules is important.
How brokers implement and why rates differ
Brokers usually display rollover (swap) rates on their platforms. Those published rates reflect the market’s interbank swap, the current spot price, and any broker mark-up. Some brokers apply rollovers only once a day at a fixed time, while others may apply financing continuously. That difference can affect costs, particularly for frequent traders. During periods of market stress, quarter-end, or low liquidity, rollover rates can widen or shift quickly because the underlying market swap levels change.
If you trade through brokers that offer Islamic or “swap-free” accounts, they may alter how rollover is charged (often replacing interest credits/debits with a fixed administrative fee), but rules and implementations vary by provider and jurisdiction.
How traders use rollover: carry trades and avoidance
Some traders design strategies to earn rollover rather than pay it. The classic carry trade is an example: a trader borrows in a low-yielding currency and goes long a high-yielding currency, collecting the positive daily rollover while hoping the exchange rate remains favorable. Over time, successful carry trades can generate small daily returns from rollover in addition to any price movement.
Conversely, traders who want to avoid rollover costs often close positions before the daily rollover time and reopen them after the rollover window. Day traders and scalpers typically do this, but it can be operationally inconvenient and exposes them to re-entry risk if the market moves sharply during the interval.
Risks and caveats
Rollover amounts are usually small for a single night but can add up or become significant during periods of high interest-rate dispersion or market stress. Changes in central-bank policy, sudden moves in short-term rates, shifts in liquidity, broker-specific mark-ups, and holiday scheduling can all alter the expected rollover. Rollover credited in one currency will often be converted into your account currency, and conversion rates can affect the final posted amount. Because brokers differ in both calculation and timing, the rollover you see may differ from a theoretical calculation.
Always check your broker’s published rollover/swap rates and calendar before holding positions overnight. Remember that trading carries risk; the presence of positive rollover does not eliminate the possibility of losing money on exchange rate movements. This article is educational and not personalized trading advice.
Key takeaways
- Rollover (swap) is the daily interest adjustment for keeping a spot FX position open overnight; it reflects the interest-rate difference between the two currencies.
- Whether you pay or receive rollover depends on which currency you are long and the relative overnight rates; brokers may add mark-ups.
- Rollovers are usually applied at a fixed daily time (commonly 5:00 p.m. ET for many platforms), with three days’ interest booked on Wednesdays to cover weekends.
- Check your broker’s rollover policy and remember that trading carries risk; this information is educational and not personalized advice.
References
- https://www.investopedia.com/ask/answers/06/rollover.asp
- https://www.investopedia.com/terms/r/rollover-rate.asp
- https://www.forex.com/en-us/about-us/financial-transparency/rollover-rates/
- https://www.babypips.com/forexpedia/rollover
- https://www.ig.com/en-ch/learn-to-trade/ig-academy/a-look-at-forex-trading-strategies/understanding-forex-rollover
- https://b2prime.com/news/how-do-brokers-charge-forex-rollover-rates
- https://www.chathamfinancial.com/insights/what-is-an-fx-swap-rollover