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How Rollover Works in Forex Trading?

In the Forex market, rollover is the process of extending the settlement date of an open position. In most currency trades, a trader is required to take delivery of the currency two days after the transaction date. However, by rolling over the position – simultaneously closing the existing position at the daily close rate and re-entering at the new opening rate the next trading day – the trader artificially extends the settlement period by one day.

Often referred to as tomorrow next, rollover is useful in Forex because many traders have no intention of taking delivery of the currency they buy. Rather, they want to profit from changes in the exchange rates. Since every Forex trade is transacted by borrowing one country’s currency to buy another, receiving and paying interest is a regular occurrence. Go to http://www.forex.com/rollovers.html to check Forex competitive rollover rates.

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At the close of every trading day, a trader who took a long position in a high yielding currency relative to the currency that he or she borrowed will receive an amount of interest in his or her account. Conversely, a trader will need to pay interest if the currency he or she borrowed has a higher interest rate relative to the currency that he or she purchased. Traders who do not want to collect or pay interest should close out of their positions by 5pm ET.

The video presented clearly explained how rollover works on Forex market. It clearly discussed what is rollover and how will it works on Forex.

For further understanding about foreign exchange rate rollover, visit this site.

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