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.

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RELATED FAQS
  1. How is rollover interest calculated?

    In the forex market, all trades must be settled in two business days. Traders who want to extend their positions without ... Read Answer >>
  2. 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 >>
  3. 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 >>
  4. What is an overnight position in the forex market?

    Overnight positions represent all open long and short positions that a forex trader possesses as of 5:00pm EST, which is ... Read Answer >>
  5. 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 >>
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