Rollovers in Forex
Many times in trading it falls upon a person to learn something of the theory behind exactly what it is they do. The reason for this is either that the person is interested in learning the theory or alternatively surmises that learning the theory can actually help them in the long run. These are the two main reasons for someone thinking about learning the theory behind an aspect of trading to do so and because of that many people have learned the theory of a specific point of their Forex trading whether they wanted to or not.
The interesting thing about theory in general is that theory is a very dull and boring subject. How can something be interesting and boring at the same time? This mostly has to do with what was mentioned above; namely that some people might feel that it will help them to learn in the long run and therefore they will learn and be interested in material that is otherwise rather dull and boring. This is true for all forms of trading, not just Forex trading and it is also true that most of the theory is quite dull. Nevertheless, it can’t hurt you to learn it and it might help you to learn it, so in this article we will discuss the concept of rollovers in Forex.
Rollovers in Forex
The thing, more than anything else, which makes Forex trading unique, is that the Forex market is a 24 hour international market. Many people might say that there are other factors involved in making it unique and this is quite true but for the purposes of the actual trading that is taking place, the 24 hour international market that Forex is a part of accounts for a lot of the variation in Forex trading.
However, while the Forex market is a 24 hour international market, your broker is not. In other words, your broker has business hours just like the other brokers that you might find. Therefore, if you have an active trade that still needs to be resolved by the end of the business hours, what the broker will do is move your trade over to the next day. This is done to allow you the chance to continue with that open position rather than closing it as well as to allow the broker to collect a small amount of interest (usually something like 1 pip) on the money they have loaned you to allow you to leverage your money and invest on the margin.
How They Affect You
The interesting thing about rollovers in Forex is that they really won’t affect you. If you are ever in the position of actually needing a rollover, the broker will do it automatically for you. If you trade Forex online through platform software, then the broker might not even need to do it themselves as it might be automatically done by the software. So it is not really something you need to know about, but it is always nice to know the theory behind a specific concept.