What are End-of-Day Rollovers in Forex

Overview

• An end-of-day rollover – also known as a rollover swap – is used by brokers to process open positions so they can be held over to the following day.
• Rollovers implement a cut-off point for the day's business, after which any new business is dated the following day and becomes part of the next day's business.
• Rollovers are necessary to determine a daily valuation for open transactions in order to calculate interest for the positions.
• When trading in a margin account, you receive interest on your long positions, while paying interest on short positions.
• The net interest difference is known as the carry.
• Positive carry results when you receive more in interest than you are required to pay, and is added directly to your account. If the carry is negative, it is subtracted from your account.
• Most brokers perform the rollover automatically by closing open positions at the end of the day, while simultaneously opening an identical position for the following business day. This is also known as a "tomorrow next" transaction, or simply a "tom next".
• Intra-day trades are not included in the interest calculation for those brokers who use rollovers in this manner. If you open and close a trade within the same day and do not hold it open at the time your broker performs the end of day valuation, the trade has no interest implications.
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