Calculating Rollover for Forex Positions
The base and counter currencies determine the amount of rollover. In the EUR/USD pair, the base currency is the Euro, while the counter currency is the US Dollar. Here, the trader buys Euros and sells US Dollars. Now, let’s see what happens if this trader holds a long position overnight.
If the EUR has an interest rate of say 0.25%, compared to 2% for the USD, the trader’s account would be debited the 1.75% interest rate differential on an unleveraged trade. However, if the EUR had an interest rate higher than 2%, the trader’s account would be credited with the positive differential.
The published central bank interest rates are ballpark estimates for short term traders to calculate the actual value of rollover rates for forex positions. In practise, the actual interest rate applied to overnight positions is the spot rate for the currency pair, adjusted by a certain amount of “forward points.” These are a basis point adjustment to the exchange rate, primarily used to account for interest rate volatility.
Forexzones swap rates are calculated each day at 4.59pm EST / 11.59pm MT4 platform time (GMT+2). Rates are tripled on Wednesdays, to account for the weekend. The swap rate structure can be changed to take holidays into account.