Rollover and Swap in Forex

When you hold a spot forex position past the daily cut off, usually 5:00 p.m. New York time, your broker rolls it forward to the next value date. Because you are effectively borrowing one currency and holding another, you either earn or pay the interest rate difference between them. This charge or credit is called rollover, swap or overnight financing. For short term traders it is small; for positions held for weeks or months, it can add up to a meaningful gain or cost. The general concept is in Rollover.

Why rollover exists#

Spot forex trades normally settle two business days after the trade date (T+2; USD/CAD settles in one). Retail brokers keep positions open indefinitely by rolling them each day, using a short tom next swap, which closes the position for today's value date and reopens it for the next. The swap price reflects the interest rate difference between the two currencies. See FX Swaps and Currency Swaps.

Positive and negative swap#

Brokers add a markup, so the swap you earn is less than the pure rate difference, and the swap you pay is more. In some cases both long and short swaps are negative.

Calculating rollover#

A simplified estimate:

daily rollover ≈ position size × (rate of currency held - rate of currency owed) / 365

The figure is converted into your account currency, and brokers publish daily swap rates per lot in their platforms.

Triple swap Wednesday#

Because spot trades settle two business days later, a position held over Wednesday's cut off rolls from Friday's value date to Monday's, covering Saturday and Sunday. As a result, most brokers apply three days of rollover on Wednesday night. Some instruments, such as certain CFDs, apply the triple charge on Friday instead. Holidays in either currency's country can also create extra days.

Rollover and carry trades#

Earning positive rollover is the basis of the currency carry trade: holding high yielding currencies funded by low yielding ones. The steady interest income can be wiped out by exchange rate moves, which is the main risk of carry. See Carry Trades in Forex and Interest Rate Differentials.

Swap free accounts#

Some brokers offer swap free (often called Islamic) accounts for traders who cannot earn or pay interest for religious reasons. These usually replace swaps with fixed administration fees or wider spreads after a set number of days. Read the terms carefully.

Rollover in forex futures and CFDs#

• Currency futures: there is no daily rollover; the interest difference is built into the futures price, and traders roll contracts quarterly. See Currency Futures.
• CFDs: similar overnight financing charges apply, often based on a benchmark rate plus a markup. See What Is a CFD?.

Practical tips#

1. Check swap rates in your platform before holding positions overnight.
2. Include rollover in the expected return of swing and position trades.
3. Watch Wednesday for triple swaps.
4. Remember that rates change when central banks adjust policy. See Central Banks Explained.

Common mistakes#

• Ignoring negative swap on long term trades against the carry.
• Assuming positive swap is a reliable income without considering currency risk.
• Forgetting broker markups.

Frequently asked questions#

What is rollover in forex?#

The interest earned or paid for holding a forex position overnight, based on the interest rate difference between the two currencies.

Why is rollover tripled on Wednesday?#

Because positions held over Wednesday's cut off settle on Monday instead of Friday, covering the weekend, so three days of interest apply.

Can rollover be positive?#

Yes. If you are long a currency with a higher interest rate than the one you are short, you may earn rollover, minus your broker's markup.

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