How does XM process rollovers (overnight positions)?

Overnight positions incur a swap interest rate due to rollover. For Forex stocks, whether a positive swap or a negative swap applies depends on both the position you hold (long or short) and the interest rate difference between the currency pairs you are trading. For equities and stock indexes, whether positive or negative applies depends on whether the position you hold is short or long.

Swap rates due to rollover apply only to physical stocks. There is no overnight fee for futures contracts that have a due date.

  • Competitive swap rate
  • Clear swap rate
  • 3-day rollover strategy
  • Correspond with the current interest rate

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What is a rollover in Forex?

Rollover is the process of extending the settlement date of an open position (that is, the date on which the executed transaction must be closed). In the Forex market, all spot trades must be settled after 2 business days. Settlement is the delivery of currency in kind.

However, physical delivery does not occur in margin trading. Therefore, all open positions must be closed daily at the end of the day (22:00 GMT) and reopened the next trading day. This will extend the settlement by another trading day. This method is called rollover.

Rollover is carried out by a swap agreement, and traders will have receivables and debts (profit and loss). XMTrading will not close and then reopen open positions and will debit or credit your trading account for positions held at night according to current interest rates.

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How do swap points, rollover, and overnight interest work on XM?

XM’s Rollover policy

XMTrading will debit or credit your trading account at a competitive rate for all positions opened after 22:00 GMT, the daily bank settlement deadline.

The market is closed on Saturdays and Sundays, so there are no rollovers on weekends, but banks calculate interest on positions they hold on weekends. To address this procedure in the Forex market, XMTrading will apply a three-day rollover on Wednesday.

22:00 GMT is considered to be the start and end of the trading day. Positions that are open at exactly 22:00 GMT will be subject to rollover and will be held open until the next day. Positions opened at 22:01 will not be subject to rollover until the next day, but positions opened at 21:59 will be rolled over at 22:00 GMT. Receivables or debts for each open position as of 22:00 GMT will appear in your account within one hour.

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Example of Rollover – FX and spot metal (gold and silver)

The rollover interest rate for Forex stocks and spot metal positions is calculated at the interest rate of the next 2 business days (the next business day and the next business day after the contract date), including the XM Trading fee for holding an overnight position. .. The rate for the next two business days is not determined by XMTrading, but is determined by the interest rate difference between the currency pairs in which the position is opened.

Suppose the next two business day rates when trading USDJPY are:

+ 0.5% for long positions

-1.5% for short positions

In this scenario, the US interest rate is higher than the Japanese interest rate.

Therefore, you will receive a + 0.5% –XM Trading fee for long overnight positions of this currency pair.

On the contrary, the calculation in the short position is -1.5% –XM Trading fee.

More generally, the formula is:

Number of trading lots X (+/- next 2 business days rate – XM Trading fee) *

+/- here is determined by the rate difference between the two currencies of the target currency pair.

* Amount is calculated in currency points of the main currency.

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Example of rollover – Stocks and stock indexes

The rollover rate for a stock or stock index position is determined by the interbank rate on which the stock or index is based (for example, for Australian listed stocks, it is the Australian interbank interest rate for short-term lending), long positions and shorts. XMTrading fees will be added / deducted for each position.

Suppose you are trading Unilever (a UK listed stock). If the UK short-term interbank rate is 1.5% per annum, the overnight long position calculation will be:

-1.5% / 365 – XMTrading daily fee, as opposed to the short position calculation + 1.5% / 365 – XMTrading daily fee.

More generally, the formula is as follows (at the daily rate shown below):

Number of trading lots X Settlement price X (+/- Short-term interbank rate – XM Trading fee)

The +/- here depends on whether you have opened a short position or a long position for the stock.

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