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Forex traders often hear the word “rollover” mentioned. This term is not of secondary importance for those who trade on the currency market. It invests any open transaction at the time of closing of the currency markets (the closing of the American market is usually taken into consideration). It is important to know what rollover means according to FXTM broker review (รีวิวโบรกเกอร์ FXTM which is the term in Thai)
The forex’s rollover is a closure and contextual reopening of a long or short position at a slightly different price than that of the closure itself. In this case, the difference between the closing and reopening prices is determined by the interest rate differential between the underlying currencies. This spread will result in a credit or a debt to be applied to the closing forex price.
As every novice trader well knows, every trading operation is carried out at a spot price, or at a price that physically provides for the request (long) or the delivery (short) of the uniform two working days after the trade date. If a long or short position remains open at the end of a trading day, the broker will automatically swap to avoid determining an effective currency delivery.
Rollover Timing
This rollover will take place every day until the trade closes. As previously mentioned, the following day’s opening price will be different from the closing price due to the rate differential between the reference currencies.
For those who operate on forex, from the spread between interest rates, the best situation is created when you are long on a currency with a higher interest rate than the currency on which you are short. For example, it is historically advantageous on the forex market to belong to Aud and short of Jpy precisely because of the net interest rate advantage that occurs in maintaining long positions in assets denominated in Aud. This is the classic carry trade, an activity in which the trader, with the theoretical advantage of appreciating the currency, combines a specific rate advantage reflected in a daily credit credited at the time of the rollover.
