Overnight positions may incur rollover interest, depending on long or short trades。If you trade with XM, how do you manage them?？

An overnight position is a trade that has not been closed or closed at the end of the trading day, which is common among swing traders who aim to trade for several days.。

Founded in 2009, XM is one of the most popular brokers for beginners and experienced traders, and the platform continues to grow and reach more than 5 million international users worldwide.。Traders at XM can trade at one of the lowest costs in the industry, access excellent research and education sections, and use a trading app for beginners。

If your scenario makes you hold a position for more than a day, here are instructions on how to trade overnight positions in XM。

The Nature of Overnight Positions

As the name implies, an overnight position is a trade that begins during the day and has not been closed at the end of the trading day, and many day traders and scalpers try not to hold these overnight positions.。For stocks, an overnight position means that you buy or short a company and continue to hold it after the close。Trading positions held overnight by traders may touch development rates。

What is the rollover rate?？

Rollover is the process of extending the delivery date of an open position (i.e. the date on which the trade must be completed)。The currency market allows all spot transactions to take place on two trading days, i.e. the physical delivery of the currency.。However, there is no physical delivery when profits are traded, so all open positions must be closed at the close of the day (22: 00 GMT on the XM platform) and reopened on the next trading day, and the cost of making such trades is called the rollover rate。

The rollover rate is determined by a swap contract, charging a fee to the trader or making a profit from it。XM will not close or reopen positions and will only debit or credit trading accounts with overnight positions based on current interest rates。

Although there is no rollover, if the market is closed on Saturday and Sunday, banks will still charge interest on open positions over the weekend, only less。To accommodate this time difference, XM introduced a 3-day rollover fee on Wednesday。

How to Calculate the Rollover Rate for XM

There are some differences in the rollover rate calculation charged by XM, depending on the open trading instrument。

Foreign exchange and spot metals (gold and silver) exchange rates

Rollover rates charged on foreign exchange instruments and spot metals positions are dependent on next-day rates (i.e., tomorrow and the day after), including mark-ups on XM overnight positions。XM does not provide conditions for tomorrow's and next-day interest rates, but they are derived from the interest rate differential between the two currencies。

For example, if you trade USD / JPY, the rollover rate for tomorrow and next day rates on long positions is + 0.5%, the rollover rate for short positions is -1.5%。In this example, it is known that interest rates in the United States are higher than in Japan。When opening a long position in a currency pair overnight, you will receive + 0.5% -XM markup, while the short position is -1 based on XM's profit margin..5%。

Overnight interest on foreign exchange and spot metals is calculated as follows:

X trade size (long / short tomorrow exchange rate - XM mark-up)

Keep in mind that positive and negative positions depend on the difference in the exchange rates of the two currencies in a given currency pair。

Stock and Index Prices

The rollover rate on equity positions and stock indices is determined by the underlying interbank offered rate of the stock or index (in the case of Australian listed securities, this will be the interest rate on short-term loans between Australian banks), plus / minus the XM mark-up based on the position.。

Example: Suppose you are trading Unilever shares listed in the UK。The UK interbank short-term interest rate is 1 per annum..5%, the long position is calculated as -1.5% / 365 - XM - XM daily mark-up; on the other hand, for short positions, calculated as 1.5% / 365-XM daily markup。

XM stock and stock index rollover rates are calculated as follows.

Trade size x closing rate x (interbank short-term interest rate long / short position - XM addition)

In summary, the start and end of the trading day in XM is 22: 00 GMT, and all trading positions that remain open after that time, even if they are only 1 minute, will be considered overnight positions and will be charged overnight interest.。

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