The most common costs associated with trading currencies are the spread and rollover rates.
Rollovers are only applied to positions that are open at market close in New York – 5pm ET. You can either earn or pay when a rollover is applied to your position.
When trading a currency you are borrowing one currency to purchase another. The rollover rate is typically the interest charged or earned for holding positions overnight. A rollover interest fee is calculated based on the difference between the two interest rates of the traded currencies.
If the currency you are buying has a higher interest rate than that which you are selling, you will typically earn rollover fees. If the currency you are selling has a higher interest rate than that which you are buying, you will typically pay rollover fees.
You’re trading EUR/NZD (Euro/New Zealand Dollar). The EUR has a low interest rate whereas the NZD has a relatively high interest rate. You are borrowing the high-rate currency to buy the low-rate one, so you are trading at a premium: you will pay rollover fees on this trade if held overnight. If you sell EUR (i.e. go short) to buy NZD, you will be trading at a discount and earn rollover rates on this trade.
You can find rollover rates in the Market Information Sheets on any of our trading platforms . Displayed charges use prevailing prices. These may vary at the time financing is applied. In the example above, you would pay $1.11 on a long 10,000 position and earn $0.58 on a short 10,000 position for a typical one day roll. Rollovers are tripled on Wednesdays to account for the weekend. There are no rollovers on Fridays. Holidays and quarter end can also result in a multi-day or zero rollover.