Rollovers are accompanied by the accrual of swap points. Forex is essentially a trade with a fixed settlement date, and in order to carry over an open position, it must be closed at the end of the day (22:00 GMT) and re-opened on the next trading day.
No actual settlement takes place in a SvoFX trading account, but rather a debit/credit transaction of the position depending on the current interest rate. The rollover allows you to continue to hold open positions.
The debit and credit records of SvoFX at client accounts, for all the positions opened after GMT 22:00, the rollover interests are handled based on rollover rate of bidding price.
There is no rollover when the market is closed on Saturdays and Sundays, but the bank would calculate interest over the positions opened on weekends. In order to equalize such time difference, SVO will apply to the rollover strategy of 3 days on Wednesday.
Calculation of Rollover
The basis of all currency transaction is that in order to purchase other currency, borrow 1 currency. Pay interest through the already borrowed currency, earn interest through the already purchased currency. For example, the interests of Japan and US are respectively 0.25%pa and 2.5%pa, assuming holding 118.50USDJPY of one hand of buyer’s position, you can obtain the USD and the income of 2.5% per year calculated in USD. For the already borrowed JPY, pay the interest of 0.25% per year.
To sum up, the open position can receive USD6.16 per day [100,000*(2.5% – 0.25%)/365]. Similarly, if holding short position of USDJPY, there will be loss of USD6.16 per day. In this way, the rollover interest can provide you with additional interest of loss coverage.
Appointment of Rollover
22:00 GMT is considered as the beginning and end of FX trading day. All positions that haven’t been opened at 22:00GMT shall become object of rollover, and shall be held for one night. The positions that have been opened at 22:01 will not become object of rollover before the next day. But when opening position at 21:59, the rollover shall be executed at GMT 22:00. For various positions that have been opened at 22:00, the debitor or creditor will appear in your account within 1 hour, which will be directly applicable to your account that is already logged in.