Most deals in Forex trading are done as Spot deals. Spot deals are nearly always due for settlement two business days later.This is referred to as the "Value date" or delivery date. On that date the counterparties take delivery of the currency they have sold or bought. In Spot Forex trading the end of the business day is usually 21:59 (London time). Any position still open at this time is automatically rolled over to the next business day, which again finishes at 21:59. This is necessary to avoid the actual delivery of the currency. As Spot deals are predominantly speculative, the traders won't wish to take delivery of the actual currency. They will instruct the brokerage to roll over their position. Many of the brokers do this automatically unless you instruct them that you actually want delivery of the currency - which you don't, of course!
Another point to note is that most leveraged accounts are unable to actually deliver the currency as there is insufficient capital there to cover the transaction. (Remember that if you are trading with Easy-Forex, you can have a "leverage" of 200:1, which means if you have $100 in your account you can trade with $20,000. This is known as the "margin") Trading on margin
means you have in effect got a loan from your broker for the amount you are trading. If you had a 1.0 lot position (a "lot" is £1,000) with 100:1 leverage, your broker has advanced you the $100,000 even though you did not actually have $100,000. The broker will normally charge you the interest differential between the two currencies if you roll over your position. This normally only happens if you rolled over the position and not if you open and close the position within the same business day. If the first named currency has an overnight interest rate lower than the second currency, then you will pay that interest differential if you bought that currency. If the first named currency has a higher interest rate than the second currency then you will gain the interest differential. To put it more simply: if you are long (bought) a particular currency and that currency has higher overnight interest rate you will gain. If you are short (sold) the currency with a higher overnight interest rate then you will lose the difference.
Another point to note is that most leveraged accounts are unable to actually deliver the currency as there is insufficient capital there to cover the transaction. (Remember that if you are trading with Easy-Forex, you can have a "leverage" of 200:1, which means if you have $100 in your account you can trade with $20,000. This is known as the "margin") Trading on margin
means you have in effect got a loan from your broker for the amount you are trading. If you had a 1.0 lot position (a "lot" is £1,000) with 100:1 leverage, your broker has advanced you the $100,000 even though you did not actually have $100,000. The broker will normally charge you the interest differential between the two currencies if you roll over your position. This normally only happens if you rolled over the position and not if you open and close the position within the same business day. If the first named currency has an overnight interest rate lower than the second currency, then you will pay that interest differential if you bought that currency. If the first named currency has a higher interest rate than the second currency then you will gain the interest differential. To put it more simply: if you are long (bought) a particular currency and that currency has higher overnight interest rate you will gain. If you are short (sold) the currency with a higher overnight interest rate then you will lose the difference.
More information on all aspects of Forex trading on http://www.bizwrite.co.uk/Forex/forexindex.html
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