About Rollover/Swap Policies
Foreign exchange trading at Alpari (US) is dealt on a "Spot" basis only. This means that all trades settle two business days from inception, as per market convention. The settlement date is referred to as the value date. Alpari (US) does not arrange physical delivery of currencies hence, all positions left open from 23:59:45 p.m. to 23:59:59 p.m. (server time) will be rolled over to a new Value Date.
As a result, positions are subject to a swap charge or credit. Please read our Swap Policy.
The cost of rollover is based on the interest rate differential of the two currencies. Let’s assume that the interest rates in the EU and USA are 4.25% p.a and 3.5% p.a respectively. Every currency trade involves borrowing one currency to buy another. If you have a buy position of 1.0 lot in EUR/USD, then you earn 4.25% on your Euros and borrow USD at 3.5% per year.
In other words:
- If you have a long position (i.e. bought) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you receive a gain.
- If you have a short position (i.e. sold) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you lose the difference.
- If you have a long position (i.e. bought) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you lose the difference.
- If you have a short position (i.e. sold) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you receive a gain.
Notes:
- If you open and close a position before 23:59:45 p.m. (server time) you will not be subject to a rollover.
- The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.
- When you roll an open position from Wednesday to Thursday, then Monday next week becomes the value date, not Saturday; therefore the rollover charge on a Wednesday evening will be three times the value indicated on the "Swap Policy" webpage.
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