By Matthew Vint
Trading rollovers occur in Forex trading and they are quite common. A trading rollover occurs when a broker switches a Forex trader's position in the market, extending the same position's settlement date. This means that, instead of receiving your money and having your position in the market closed, your market position is rolled over to the next day by your broker.
Typically you will receive a rollover whether you are for one or not, however you can specify if you want one or not. However, generally brokers make rollovers automatic since they like to assume that every trader and investor wants one.
Rollovers can cause a trader or an investor to have to pay a rollover fee, but on the other hand trading rollovers can also cause a trader or an investor to receive a rollover fee. So, with rollovers, you either win or lose - but really, you don't win or lose, because you either pay back the interest you wouldn't have received without the rollover or you receive the interest you would have received without the rollover.
Rollover fees are simply calculated by finding the difference between the interest rates of two particular currencies that make up a currency pair.
Even over one night the money can earn interest and your Forex broker will credit your account with difference between the two currencies' interest rates that you are trading - that's if you're making more interest on the base currency than you are on the quote currency. However, if the interest rate is lower for the base currency than it is for the quote currency, you will be charged the rollover fee and this fee will be deducted from your account by your Forex broker.
Forex brokers typically offer a margin level of 1%, however occasionally some Forex brokers may require a margin level slightly higher (perhaps of 2%) for a trader or an investor take advantage of claiming rollover fees.
Although it is good to know about rollover fees and understand how they work, rollover fees are generally very small and not very significant to the majority of Forex traders and investors. On the other hand, both Forex banks and brokers work with many traders and investors and all of their rollover fees would really add up if they account for them.
In conclusion, Forex trading rollovers and Forex trading rollover fees work in a simple fashion. They allow traders and investors to benefit from their wise decisions in buying high interest currencies and they also allow traders and investors to account for their mistakes in buying low interest currencies fairly. However, it isn't always a mistake buy into a low interest currency since the benefits may of course outweigh the costs when you look at the actual values of the currencies. As mentioned before, interest rates and rollover fees and generally insignificant in the eyes of the majority of traders and investors in the FX market. Currency trading is focused on making money with currencies and not just with interest rates.
How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone.
Article Source: http://EzineArticles.com/?expert=Matthew_Vint
Typically you will receive a rollover whether you are for one or not, however you can specify if you want one or not. However, generally brokers make rollovers automatic since they like to assume that every trader and investor wants one.
Rollovers can cause a trader or an investor to have to pay a rollover fee, but on the other hand trading rollovers can also cause a trader or an investor to receive a rollover fee. So, with rollovers, you either win or lose - but really, you don't win or lose, because you either pay back the interest you wouldn't have received without the rollover or you receive the interest you would have received without the rollover.
Rollover fees are simply calculated by finding the difference between the interest rates of two particular currencies that make up a currency pair.
Even over one night the money can earn interest and your Forex broker will credit your account with difference between the two currencies' interest rates that you are trading - that's if you're making more interest on the base currency than you are on the quote currency. However, if the interest rate is lower for the base currency than it is for the quote currency, you will be charged the rollover fee and this fee will be deducted from your account by your Forex broker.
Forex brokers typically offer a margin level of 1%, however occasionally some Forex brokers may require a margin level slightly higher (perhaps of 2%) for a trader or an investor take advantage of claiming rollover fees.
Although it is good to know about rollover fees and understand how they work, rollover fees are generally very small and not very significant to the majority of Forex traders and investors. On the other hand, both Forex banks and brokers work with many traders and investors and all of their rollover fees would really add up if they account for them.
In conclusion, Forex trading rollovers and Forex trading rollover fees work in a simple fashion. They allow traders and investors to benefit from their wise decisions in buying high interest currencies and they also allow traders and investors to account for their mistakes in buying low interest currencies fairly. However, it isn't always a mistake buy into a low interest currency since the benefits may of course outweigh the costs when you look at the actual values of the currencies. As mentioned before, interest rates and rollover fees and generally insignificant in the eyes of the majority of traders and investors in the FX market. Currency trading is focused on making money with currencies and not just with interest rates.
How Forex Trading Works is a resourceful website that serves to deliver free, online content relating to Forex trading, to anyone and everyone.
Article Source: http://EzineArticles.com/?expert=Matthew_Vint
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