Rollover (16-10-2010 NEW)
What is Rollover?
Restructuring of interest paid or accrued to hold a position overnight. Each of the exchange rate is tied, and because the Forex is sold in pairs, each operation is associated not only two different currencies, but two different rates. If the interest rate on the currency you bought is higher than the rate of interest in the currency sold, and the restructuring gain (positive roll). If the interest rate on the currency you bought is lower than the rate of interest sold currency to pay for restructuring (negative roll). Rollover can add significant additional costs or profit on the trade.
Rollover examples
When you buy EUR / USD, you buy Euros and sell dollars to pay for it. If the euro interest rate is 4.00%, and the U.S. share is 2.00%, you buy a currency at a higher interest rate, and you will earn rollover - about 2.00% year. If you sell EUR / USD, the currency you are selling a lower interest rate, and pay for a restructuring of about 2.00% per year, because you are paying interest rates of the euro and the U.S. to earn interests.
When running stand?
05:00 to New York is considered the beginning and end of day trading forex. The positions are open at 5 PM sharp deemed to be held overnight and is subject to renewal. An open position at 17:01, is not covered by the rolling until the next day, while an open position 4:59, subject traveling at 17 hours
If you receive a rollover?
FXCM track closely and are clearly visible in the exchange rate date. Note that the interest rates offered to FXCM by several banks in the world. We strive to show rollover rates for days to be in your account. However, times of extreme market volatility, prices subject to change during the day.
Rollovers in Forex (2-10-2010)
Even though the mighty U.S. dominates many markets, especially in Spot Forex is still listed on the London UK. So for our next description we use London time. Most Forex deals are made, such as Spot deals. Spot deals are nearly always due within two business days. This is called the value date or delivery date. On that day, in theory, the counterparty to take delivery of the currency bought or sold.
In Spot FX the majority of the time the end of the day is 21:59 (London time). All positions are still open at this time will be transferred automatically to the next business day, ending again at 21:59.
This is necessary to prevent the effective delivery of the currency. As Spot FX is predominantly speculative most of the time the merchant will not accept delivery of the currency. They instruct the brokerage to invest long position. Most brokers today and will be done automatically in its policies and procedures. Having run on the currency pair is known as tom.next, which is tomorrow and the next day.
Just to get back on this period, your broker will automatically rollover your position unless you teach him that you really want delivery of the currency. Another point to note is that most leveraged accounts are unable to actually deliver the money, because it is insufficient capital to cover the transaction. Remember, if you trade on margin you have in effect obtained a loan from your broker for the amount you are trading. If you had a 1 lot position you broker has advanced you $ 100 000 even if you do not really $ 100,000. The broker usually charge you interest rate differentials between two currencies if you move your position. This usually happens only if you drove on the situation, not if you open and close positions in the same business day.
To calculate the broker's interest that normally close your position at the end of the day and again reopen a new position almost simultaneously. You open a 1 lot ($ 100,000) EUR / USD position on Monday, June 15 11:00 at an exchange rate of 0.9950. During the day and the exchange rate at 22:00 the rate is 0.9975. The broker closes your position and reopens a new position with a different value date. The new position is opened at 0.9976 - a difference of 1 point. The 1 pip deference is the difference in interest rates between the U.S. dollar and the euro.
Now the good news. If you take the opposite position and you were short and long term Euro U.S. Dollars you win by 1 pip spread. If the first currency is called a rate is lower than the other currency, then you must pay the spread if you bought that currency. If the first named currency has an interest rate higher than the other currency, then you'll spread.To simplify the foregoing. If you are long (bought) a particular currency and that currency has a higher interest rate than you get at night. If you are short (sold) the currency with higher interest rates overnight, you lose the difference. I want to stress here that even if we go a little depth to explain how this works, your broker will calculate all this for you. The purpose of this paper is just to give you an overview of how the forex market.
Forex is a global market for trading currencies. The main difference between the Forex market and the volume of stock markets. There are lots of people who enter the currency trading market on a daily basis. They are more than two billion dollars every day. This volume is much larger than the volume traded on the stock market in a country on a daily basis. Currencies are traded, not only by private operators, but also from financial institutions, banks and even governments.
Another important difference between the liquidity of the stock market Forex. All that is traded on the Forex market can be easily liquidated. This allows you to convert any unit in cash, as it is already in cash, but in a different country. The availability of cash is always there. Position may be liquidated at any time, anywhere in the world.
Forex market is the natural is an international organization, the global market. This market needs a few countries currencies to be withdrawn. The stock market, on the other hand, a local market in a country. It is based on a product or business and do not need to involve other countries.
Another difference is the number of hours. The scholarship usually follows the hours of work per day, where you are. Forex as a global market is open twenty four hours a day except weekends. From buying and selling taking place in different countries in Forex should be open all the time. When the market closes in a country, it opens another. It has its most active hours. Forex is the most actively traded during the session in London and New York session.
A donation of a country is based on the currency of that country. For example, the U.S. stock market is based on the U.S. dollar, the Japanese stock market is based on the Japanese yen. The nature of the Forex is as it should be made that there are multiple currencies.
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What is a forex broker?
- First Spreads - Make sure the company is to provide tight spreads. A gap is the difference between purchase price and sale price at a given time, and the lower it is, the easier it is for you to enjoy.
- Currency Supported - Supports all forex brokers "big" - the currency with the highest turnover: U.S. Dollar (USD), euro (EUR) British Pound (GBP) Japanese Yen (JPY) and Swiss franc (CHF .) Most brokers also support other currencies, even exotic (like the Polish zloty, PLN and the Israeli Shekel, ILS). However, when the currency market than the majors, it is important to check the differences because they are often much higher than the margins of the majors.
- invetment required - some companies, like a professional Forex, you can leave your details and get the best price, so you can see which broker is best for you in terms of initial investment. It is not recommended to start with so little capital, but if you do not have much to invest in a forex account, see what is the minimum deposit before opening an account.
- Support - all traders, beginners and experts problems. It is very important to check whether a forex broker offers good technical support, especially if you are a beginner.
