Who Else Knows Rollover Interest?

[afuturestrader]

Not having much experience with cash forex I am
questioning how important Rollover interest is to
traders. Do traders, for example, target rollover
interest as a tactic?

If comparing multiple systems and/or newsletters
against each would you suggest I take the time to
calculate Rollover interest to get a true picture?
Or is it insignificant, and just a part of forex
trading most traders don't pay much attention to?

Best Regards,

afuturestrader

[Trader/God]

It would depend on your trading style and the pairs you trade. If you are only a day trader it won't matter too much. Interest isn't spread over the length of time you hold the pair (with most brokers) its only applied once a day at a specific time so you can avoid it easily.

For longer term position traders, especially ones who trade GBP/JPY they care a tremendous amount about interest because the differential is large so they can subsidize a losing position and wait for the pair to come back with out taking as much pain. This pair was a great trade because of the differential and high oil you could count on it going up and get a daily boost from the rolls. If you are trading EUR/USD the rollover isn't large enough to really matter unless you are holding the trade for a long time. Its almost never worth trading around rollover periods to avoid the interest because the spread is going to be more than you will gain or lose in rollover.

During certain times a year savvy traders can get an almost guaranteed profit from the rolls. It happens when their are holiday periods and several days of interest are accessed in one day. So you might have a day with 6 periods of interest in a single day, enough to give you back the spread, some profit and some room to spare. Of course those are rare events.

Trader/God

[Trader01]

Originally Posted by afuturestrader

Not having much experience with cash forex I am
questioning how important Rollover interest is to
traders. Do traders, for example, target rollover
interest as a tactic?

If comparing multiple systems and/or newsletters
against each would you suggest I take the time to
calculate Rollover interest to get a true picture?
Or is it insignificant, and just a part of forex
trading most traders don't pay much attention to?

Best Regards,

afuturestrader

The entire subject of Interest Rate Differentials is the essence of Forex.

Swim against the river at your own peril!

At this forum you will find millions of short-term traders who think nothing of spending $50K per year in spread/commission fees rather than earn several thousand $s in accrual Interest by just letting the river carry them.