HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
MultiBank Group information and reviews
MultiBank Group
84%

Beginner’s Guide to Forex Rollover Rates


In the forex trading industry, traders exchange one currency for another, with the exchange rate determined by the supply and demand for the traded currencies. According to the BIS Triennial Central Bank Survey, daily OTC FX market trading reached $7.5 trillion in April 2022, a 14% increase from $6.6 trillion in April 2019. It’s important for traders to understand forex rollover rates, as it can potentially impact your trading earnings. This beginner’s guide will help you understand what forex rollover rates are and how they work. 

What is Rollover Rate 

Rollover rate is a crucial aspect of forex trading that relates to the interest earned or paid on a currency position held overnight by a trader [2]. This rate is influenced by the disparity in interest rates between the two currencies in the traded pair. Factors such as central bank policies, global economic conditions and fluctuating interest rates are a few examples of elements that can impact the rollover rates. 

Typically, any currency position that remains open after 17.00 EST will be held overnight, and the rollover rate is calculated [3]. As the rollover rate can affect trading costs, and consequently impact profits or losses (especially for positions held over an extended duration), it is crucial for traders in the forex market to gain a comprehensive understanding of this concept. 

Understanding Rollover Rate 

To understand the rollover rate, traders must first identify the base and quote currencies in a currency pair and their corresponding interest rates. The interest rate differential can be calculated by subtracting the quote currency’s interest rate from the base currency’s interest. This differential is then converted into a daily rate to account for overnight-held positions.  Read more about the different types of currency pairs available for you to trade here. The rollover amount is determined by multiplying the daily interest rate differential by the position size.  

Based on whether a trader holds a long position or short position on a currency pair, they will either receive or pay the rollover amount, respectively [4]. It is worth noting that brokers might impose a spread or additional fees, which can slightly modify the actual rollover rate. 

Rollover Rate Formula 

The first currency code in the currency pair is referred to as the base currency. The second currency is called the quote currency. Base and quote currency interest rates refer to the short-term lending rate among banks in the country of the currency. 

How to Calculate Rollover Rate 

Here’s a step-by-step guide to calculate the rollover rate for a forex position: 

Rollover Rate vs Swap Rate 

Swap rate refers to the interest rate differential between two currencies that are being traded. It determines the cost or revenue that will be generated when holding a currency pair overnight. Simply put, it is the rate at which interest in one currency is exchanged for interest in another currency. On the other hand, rollover rate is also known as a swap fee, which is charged or credited to a trader’s account when they hold a position open overnight. Rollover rate is a result of the difference between the interest rates of the two currencies being traded. 

In summary, swap rate and rollover rate are closely related, but they have different meanings. Swap rate is the interest rate differential between the two currencies being traded, while rollover rate is the fee charged or credited to a trader’s account for holding a position open overnight. 

Here’s a table to show the difference between rollover rate and swap rate: 

Aspect  Rollover Rate  Swap Rate 
Definition  The interest earned or paid on a currency position held overnight by a trader.  The interest rate differential between two currencies that are being traded. 
Relation  Rollover rate is a result of the difference between the interest rates of the two currencies being traded.  Swap rate is the interest rate differential between the two currencies being traded. 
Fee  Rollover rate is charged or credited to a trader’s account when they hold a position open overnight.  Swap rate impacts the cost or revenue generated when holding a currency pair overnight. 

 If you prefer not to pay the fees, Vantage offer swap-free accounts as an alternative. If you want to learn more about swap-free trading accounts, you can read our article here. 

Final Thoughts 

Rollover rates can have a significant impact on trading profits and costs, especially for positions held over an extended duration. By learning how to calculate rollover rates, traders can have a better understanding when opening and closing their trade position. Now that you’ve gained a clear understanding of forex rollover rates, it’s time to elevate your trading experience with a live account. Get started with Vantage today and enjoy the advantages of trading forex. With a minimum deposit of just $50 and spreads from 0.0, our live account offers you the advantage of low spreads. Take action now and seize the opportunity to start trading! 

#source


RELATED

How to trade forex currency pairs?

Forex gives so many possibilities: a trader can work with shares, commodities, currencies and so on. There is a great diversity in every category, and a trader can choose...

Top 5 Black Friday scams and how to avoid them: make your holidays stress-free

OctaFX has prepared a list of security tips that will come in handy during this year’s Black Friday and Cyber Monday...

Five things about Forex every trader needs to know

OctaFX have prepared an essential guide for traders beginning their Forex journey, followed by a workshop by the professional trader and coach Cikgu Danie...

Predicting a Forex Market Direction

Forex market is changing, and changing cyclically. It means that usually there are such situations on Forex when the price behaviour becomes as predictable...

Stock Buybacks: Why Do Companies Buy Back Shares?

In recent years, buyback programs have become one of the growth drivers of U.S. stock markets, creating demand and reducing supply. Corporations have proved to be quite prominent buyers...

Common Stock Market Myths

Trading can be a daunting endeavor for anyone, even without the added misconceptions and myths of the stock market. There are many reasons that people disregard the financial opportunities...

Exploring The Advantages Of Trading Minor Forex Pairs

In the vast and dynamic world of forex trading, minor currency pairs often hold untapped potential for traders. While major currency pairs dominate the forex market...

Why forex traders lose money?

In the era of high technologies and financial prosperity, many people dream to earn more and do less. Many of them are qualified specialists. They are ready...

Forex vs. Crypto Trading: A Comprehensive Analysis

In the world of trading, the debate between Forex and cryptocurrency has been an ever-evolving topic. Through a closer examination of market stability, regulatory landscape...

I can constantly make 1-2% on my money daily. Should I look at day trading as my full-time job?

If so, then obviously you should! Just think in the best case that if you began with $10,000 and were able to earn 1% of your money daily, you could become a millionaire or a billionaire in less than six years...

CFD trading made clear: an Octa guide

In keeping up with its clarity principle , the international broker Octa makes clear one aspect of trading at a time. Learn everything you need to know about CFD trading, simply and transparently...

Trading Secrets: Mastering Trends, Breakouts, Pullbacks, and Corrections with Trading Volumes

Embarking on the journey of financial market trading – be it in Forex, stocks, commodities, or the crypto market – requires more than just an understanding of the basics...

Why traders shouldn’t underestimate an Economic Calendar

Brace yourselves for the ultimate weapon in your trading arsenal - an Economic Calendar, revealing the future of financial markets. So, why should you care?

Copycats: How social trading is changing the game

The landscape of investing has undergone a remarkable transformation. Traditional investment strategies are being challenged...

A Guide to Portfolio Diversification: Don’t Put All Your Eggs in One Basket

Most of us have heard of the saying "Don’t put all your eggs in one basket". In essence, this phrase warns us not to invest all our capital into a single trade, market, or product because we...

Forex Trading Myths

In this article, we’ll look at some of the most common myths associated with forex trading. Forex trading involves the buying and selling of currencies in a decentralised market...

Maximizing Trading Performance: Strategies to Overcome Distracting Factors

Trading in the financial markets is akin to a high-stakes chess game, requiring a multifaceted approach that extends beyond traditional market analysis...

Black Swan Event: Definition And Examples

The black swan is difficult and sometimes impossible, to predict. And yet, if the markets are falling, it means that someone has started to sell. It means that someone...

What does soaring inflation mean for the markets?

The US CPI rose to a 40-year high of 7.5% in January as inflation keeps running hot despite economists expecting a print of 7.3%. This is the second time the index...

Mastering Risk Management: Techniques for CFD Trading

Read this article to discover practical risk management techniques for successful CFD trading. Learn about setting stop-loss orders, position sizing, risk-reward ratios, and more...

XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
Octa information and reviews
Octa
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.