Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.
What is a CFD Rollover?
When traders hold CFD positions, whether long (buy) or short (sell), the brokerage has in place predetermined dates that the contracts are closed. Traders may, on these dates, close out their positions, buying or selling, as the case may be, and either pocket their earnings or incur their losses, depending on the price movement of their CFD. In the event that a trader does not specifically close his position, the brokerage will automatically rollover the position to the next trading period, charging or crediting the trader with the difference between the closing price on the old contract and the opening bid on the new one.
How does CFD Rollover affect forex traders?
Traders should look at the brokerage’s rollover dates before opening a position on a CFD. Rollover dates are generally every three months on Sunday mornings. Any positions not closed by the end of the trading day on the previous Friday are automatically rolled over on Sunday morning. Traders who see that their positions are profitable and believe that they will continue to be so, will usually not touch the position, and allow it to rollover in the hope that they will earn greater profits. On the other hand, if a trader sees that the position has not been profitable, and does not believe it will turn around the coming trade period may opt to close the position before the rollover. A trader may also close out the position if it has been profitable, but he does not have confidence that it will continue to be so.