Martinghoul
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I assume you're referring to rolls of your spreadbetting FX position? If I have a plain cash position, I don't need to roll anything over.
For s/b positions, their volume is so tiny relative to the size of the FX mkt, they're irrelevant. Moreover, I don't think s/b shops actually physically roll over your position. I have a sneaky suspicion that it's just a way for them to earn a little more bid/offer. I could be wrong, though.
They will (or will not) happen the first time your trade settles.
Hope this helps.
For s/b positions, their volume is so tiny relative to the size of the FX mkt, they're irrelevant. Moreover, I don't think s/b shops actually physically roll over your position. I have a sneaky suspicion that it's just a way for them to earn a little more bid/offer. I could be wrong, though.
They will (or will not) happen the first time your trade settles.
Hope this helps.
Martinghoul
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But, as I said, I don't understand the notion of 'rollover' as applied to an FX spot position. If I am long 1MM EUR today, I don't have to do anything to be long 1MM EUR tomorrow.
As I understand it Spot trades settle in two busines days, so keeping a position open for longer means the broker has to close the trade after two days and open a new one (for two more days) or something like that. And you get debited/credited the difference in interest rates associated with the two currencies. It might be a small amount for small trades. I think this is the basis of carry trades. This might all be behind the scenes stuff.
Martinghoul
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Noooooo!!!! This is not at all what happens in the spot FX mkt. If I have done a spot FX trade, I have a cash balance. This cash is mine and nobody can touch it. The carry trade mechanism is completely different.
I have been so convinced that Spot trades and carry trades were one and the same. A normal spot trade being directional, a carry trade means you hold for longer and you want the pair to not move, or stay trending for ages with little or no volatility. Or you want the change in the pairs exchange rate not to ever become greater than the interest rate differential. But that underlying both strategies is the same mechanism going on - in normal spot trading you just don't see it but its there..?
Rhody Trader
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Actually, he's right. Spot is technically a 2-day forward contract. That's why there's roll-over, which is nothing more than offsetting an open position in the current session and opening a new one in the next session so no delivery requirement is triggered. Otherwise you'd have to do the exchange two days on. This is something much more relevant to the inter-bank market than to retail, however. Most brokers seem to have gone away from rolling and now just do net carry interest.
