FOREX Rollover Debits and Credits

Every individual who is interested in investing in the foreign exchange market needs to familiarize himself with the most common terms that he will be encountering in the trade. Two of these most common FOREX terms are rollover debit and rollover credit.

A rollover debit is a deduction of interest if the positions are maintained overnight. A rollover credit on the other hand, is the opposite, as interest is added to an account if positions are maintained overnight. Either debit or credit is established by the currency of the country as compared to the currency of another country.

Since debit or credit pertains to interest, it is also important to have a basic understanding of what rollover interest is. Rollover interest is the interest that is debited (or paid) to the trader who has an open currency position at 5:00 o’clock in the afternoon, Eastern Standard Time. If this currency position is maintained overnight, it is then subject to debits or credits, all depending on the trader’s currency position.

Rollover interest is added or debited based on the trade’s total value, not on the margin that was used for the trading. For instance, if a trader has $100,000 EUR/US, he either will be debited or credited interest on the $100,000, not on the margin that was put up for the trade. It is also important to know that a rollover debit or a rollover credit is subtracted or paid based on the currency that the trader has bought, and whether the currency has a lower or higher interest rate connected to it.

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