Rollover Credit

DEFINITION of 'Rollover Credit'

Interest paid to a forex trader who holds a position overnight. An overnight position is one that is not closed on the same day, and is still open as of 5pm EST. If the interest rate on the currency that the trader purchased is higher than the interest rate on the currency that the trader is selling, she will receive a rollover credit based on the full value of the trade for the difference in interest rates.

BREAKING DOWN 'Rollover Credit'

If the trader is buying a currency that has a lower interest rate than the currency the trader is selling and the trader holds the position overnight, she will have to pay interest. This is known as a rollover debit. Brokers automatically apply rollover credits or debits to traders' accounts. Some investors take advantage of this aspect of forex trading and try to increase their returns by earning interest with rollover credits.

RELATED TERMS
  1. Rollover

    A rollover is when you do the following: 1. Reinvest funds from ...
  2. Rollover Rate (Forex)

    The net interest return on a currency position held by a trader. ...
  3. Rollover Debit

    In foreign exchange trading, a loss caused by an unfavorable ...
  4. Rollover Risk

    A risk associated with the refinancing of debt. Rollover risk ...
  5. Canadian Rollover Mortgage

    A home mortgage with an adjustable rate feature. The Canadian ...
  6. Overnight Rate

    The interest rate at which a depository institution lends immediately ...
Related Articles
  1. Forex Education

    Understanding Forex Rollover Credits And Debits

    Forex trades are subject to receiving interest or being debited interest if positions are held overnight.
  2. Options & Futures

    A Primer On The Forex Market

    Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers.
  3. Retirement

    Avoid the Most Common IRA Rollover Mistakes

    Avoid paying excess taxes by learning some simple transfer rules.
  4. Retirement

    Avoid Taxes on IRA Rollovers

    For years, IRA owners have been allowed to roll over their money from one IRA to another once a year without penalty, for each IRA account they had. A tax court ruling in January 2014 has brought ...
  5. Forex Traders

    A foreign exchange or Forex trader, also referred to as a retail Forex trader, is a person that seeks to obtain profit through buying and selling various currencies on the foreign exchange market. ...
  6. Professionals

    A Day In The Life Of A Day Trader

    Day trading has many advantages and, while we often hear about these perks, it's important to realize that day trading is hard work.
  7. Retirement

    The Dog Ate My IRA Rollover

    If you miss the 60-day rollover deadline, will the IRS be sympathetic?
  8. Forex Education

    Forex Tutorial: Fundamental Analysis & Fundamentals Trading Strategies

    In the equities market, fundamental analysis looks to measure a company's true value and to base investments upon this type of calculation. To some extent, the same is done in the retail forex ...
  9. Forex Education

    What Type Of Forex Trader Are You?

    Timing may be the key to uncovering your true strength as a forex trader.
  10. Forex Education

    10 Ways To Avoid Losing Money In Forex

    When approached as a business, forex trading can be profitable and rewarding. Find out what you need to do to avoid big losses as a beginner.
RELATED FAQS
  1. What does rollover mean in the context of the forex market?

    In the forex (FX) market, rollover is the process of extending the settlement date of an open position. In most currency ... Read Answer >>
  2. Why can't I have fixed rollover costs in forex?

    In the forex market, trades are made on many foreign currencies around the world. Much like in the equities market, in the ... Read Answer >>
  3. What is a 401(k) rollover?

    Find out what a 401(k) rollover is, when you might want to roll over a 401(k) and whether a direct or indirect rollover is ... Read Answer >>
  4. Are 401(k) rollovers taxable?

    Learn what parts are eligible for 401(k) rollover, the tax impact of a direct rollover or manual rollover, and the time limit ... Read Answer >>
  5. Can I return funds to my Traditional IRA after taking a distribution?

    If you take a distribution from your Traditional IRA, you can roll over the amount to the same Traditional IRA or another ... Read Answer >>
  6. Our broker switched firms in the middle of 2011. As a result we lost track of our ...

    It depends. The only way to defer including any of the amount in your income is to rollover the amount. However, amounts ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center