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Trends & Analysis
News

Gold continues to shine amid geopolitical worries

News

Crude oil dips for 3rd session after supply data

News

Is there an AI upside for AMD?

News

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News

Buy the JPMorgan dip?

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Goldman Sachs shares surge after earnings beat

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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Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

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ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.