Forex Rollover Fee

If you hold a spot forex position overnight, that is the position is “rolled over”, then you may pay or receive what’s called the rollover fee.

And the rollover fee is calculated by the difference in the interest rates that apply to the two currencies in the currency pair that you’re trading.

If you buy a currency pair where the base currency has a higher interest rate than the terms currency, then you’ll receive interest, and vice versa. For example if you buy the AUDUSD, and the interbank interest rates are higher in Australia than in the US, then you may recieve a rollover fee. On the other hand, if the interest rates are higher in the US, then you may have to pay a rollover fee. Usually the rollover fee is a relatively small amount, compared to the profits and losses of a system.

What you'll see on your statement, is something like this during the Rollover:

For a short position in 3 standard contracts ($300 000) in the EUR/USD:

14th June 2006 6:18 am : Buy: Rate 1.2542 : Counter amount 376 260 DB

14th June 2006 6:18 am : Sell: Rate 1.25425: Counter amount 376 275 CR

In this situation, the rollover fee as you can see is 0.5 pips, which is $5 per contract.

Because we're in 3 contracts, this is 1.5 pips or $15 for that day.

Currently the trade is 31 pips in profit per contract (profit of $930).

One difference with some brokers, is that you may need to have a certain amount of margin, say 2% margin, before the amounts are paid to you. Less than this, you may have to pay the rollover fee in both situations. This is different with different brokers though.

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