How are the rollover rates determined in Forex?

Asked 4 years ago

Hey guys. I've started trading in Forex and have started learning about rollovers. I know what it is, but how does HFX determine the rollover fees? Do rollovers only take place only at a certain time? In order to prepare me better, I want t know if it is possible to calculate rollover fees? Thanks!

Rollover rate Forex market Swap

Andia Rispah Igobwa

Wednesday, September 22, 2021

Calculating the rollover rate involves:
Taking the base currency's interest rate minus the quote currency's interest rate.
Divide it by the base exchange rate, and you'll get the amount in pounds sterling divided by 365.
Understanding the Rollover Rate (Forex)
A rollover rate converts net currency interest rates, often given as a percentage, into a cash return for the position. The difference in the two interest rates of the traded currencies is used to calculate an interest fee based on the pair. A positive rollover rate is a benefit to the investor. A negative rollover rate is an expense for the investor.
A rollover is when a position is maintained after the trading day has ended and without settlement. Traders generally roll over their positions daily until they're closed out or settled. The majority of these rolls will be completed in the tom-next market. Therefore the rolls are extended to the next day.
While the interest rate premium or cost is minor, investors and traders seeking to maintain a position for an extended period should consider the difference in interest rates. It's conceivable that you could make money by buying currency X and selling it at a lower price over time, as long as the currency you had yielded a greater rate than the one you were short.