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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