In plain English
What Forex rollover means
Because spot forex positions are normally settled on a short-dated basis, holding a position overnight requires moving it forward to the next value date. Brokers and dealers do this through rollover. The cash effect to the trader is typically a financing credit or debit tied to the interest-rate differential and the broker’s pricing rules.
Why it matters
Rollover can add to or subtract from trading costs, especially for positions held for several days or longer. It can turn a trade that looks profitable on price alone into a smaller win or a loss after financing. The timing and amount depend on the broker, instrument, and market convention.
Example
A trader is long a currency pair after the market close. At rollover, the open spot position is shifted to the next settlement date and a financing adjustment is posted. If the long currency has a lower interest rate than the short currency, the trader may pay a rollover charge.
Quick answers
Common questions
Why do forex positions have rollover?+
Because spot forex settles on a short-dated basis, open positions must be moved to the next value date if held overnight.
Is rollover always a fee?+
No. Depending on the currency pair and rate differential, it can be a debit or a credit.
Sources