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Trends & Analysis
News

Week Ahead Preview: 10th of February

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Amazon’s shares slide despite Q4 beat

News

PepsiCo’s shares climb despite Q4 sales miss

News

GBP/JPY price may drop to a Multi-month low

News

Alphabet’s shares plunge despite Q4 earnings beat

News

Gold Price Outlook – Will Gold hit a new all-time high?

Trends & Analysis
News

Week Ahead Preview: 10th of February

News

Amazon’s shares slide despite Q4 beat

News

PepsiCo’s shares climb despite Q4 sales miss

News

GBP/JPY price may drop to a Multi-month low

News

Alphabet’s shares plunge despite Q4 earnings beat

News

Gold Price Outlook – Will Gold hit a new all-time high?

Carry-over charge definition

The carry-over charge is the interest rate that is charged or earned when a trading position is held open overnight. It is also known as the rollover fee or swap rate. Carry-over charges apply to financial markets that allow traders to hold positions overnight, such as the forex and CFD markets.

 

How is the carry-over charge calculated?

The carry-over charge is charged by the broker to compensate for the cost of borrowing the funds necessary to keep a trader’s position overnight. The amount of the charge depends on the size of the position and the interest rate differential between the currencies involved in the trade.

 

An example of carry-over charges

Let’s say a trader has a long position on GBP/USD (also known as ‘cable’) with a standard lot size of 100,000 units at the current exchange rate of 1.2500. They hold this position overnight, which means they must pay a carry-over charge depending on the interest rate differential between the two currencies.

Assuming that the pound sterling interest rate is 0.5% and the US dollar interest rate is 0.25%, the interest rate differential is 0.25%. To calculate the carry-over charge, the trader multiplies the lot size by the interest rate differential and the number of days they hold the position. For example, if they hold the position for one day:

Carry-over charge = (100,000 x 0.0025) / 365 = $6.85

The trader would pay or receive $6.85 depending on whether they are long or short on GBP/USD. If they hold the position for multiple days, the charge would be calculated for each day and added up. However, it is worth mentioning that some brokers may charge additional fees to account for their own profit margin.

 

Start trading with ADSS

ADSS offers a range of global markets for traders, with opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.

 

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