Lesson 12. Swap and rollover
Rollover is a procedure of moving open positions from one trading day to another. If a trader extends his position beyond one day, he/she will be dealing with a cost or gain, depending on prevailing interest rates.
Let’s study an example. Every central bank sets interest rate and these rates may significantly differ.
At the time this video was made, the New Zealand dollar had a higher interest rate than the US dollar.
If you were to buy NZD/USD, you would earn the interest difference between the NZD and the USD or so-called swap on your position every day you held that trade overnight.
However, if you sold NZD/USD, you would pay the swap for your position every day you held that trade overnight.
You can look up swaps long and short at your broker’s website. The trading terminal automatically calculates and reports all swaps for you.