Rollover Credit

AAA

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.

INVESTOPEDIA EXPLAINS '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 Risk

    A risk associated with the refinancing of debt. Rollover risk ...
  2. Major Pairs

    The four forex pairs which are considered to be the most heavily ...
  3. Rollover

    A rollover is when you do the following: 1. Reinvest funds from ...
  4. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  5. Base Currency

    The first currency quoted in a currency pair on forex. It is ...
  6. Forex - FX

    The market in which currencies are traded. The forex market is ...
Related Articles
  1. Forex Education

    The Fundamentals Of Forex Fundamentals

    Charting is not the only way to analyze the foreign-exchange market. Learn how to apply fundamental analysis to the economic indicators.
  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. Forex Education

    Forex: Wading Into The Currency Market

    We go over the ground rules and available resources needed for this undertaking.
  4. Forex Education

    Understanding Forex Rollover Credits And Debits

    Forex trades are subject to receiving interest or being debited interest if positions are held overnight.
  5. Forex Education

    Top 7 Questions About Currency Trading Answered

    Whether you're puzzled by pips or curious about carry trades, your queries are answered here.
  6. Options & Futures

    Getting Started In Forex

    Before entering this market, you should define what you need from your broker and from your strategy.
  7. Forex Education

    Forex: World's Biggest Market A Relative Newcomer

    Unlike the stock markets, the forex market is a truly new market. We’ll take a brief look at its origins and how it works today.
  8. Forex Strategies

    How do I create a Forex Range-Bound trading strategy?

    Discover how to create a range-bound trading strategy with forex currency pairs, and learn which kinds of pairs are most conducive to ranges.
  9. Forex Strategies

    How do I implement a forex strategy when spotting a Pennant Pattern?

    Understand the basics of the forex pennant pattern and how to use this indicator to create an effective trading strategy, including optimal setup, entry and exit.
  10. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center