📖 Financial Lexicon Term
What is Rollover?
The process of extending the settlement date of an open position to the next trading day, incurring a swap charge or credit.
Detailed Explanation
In spot forex, trades legally settle in two business days. To avoid taking physical delivery of currency, brokers automatically 'roll over' open positions at 5:00 PM EST daily. This triggers the payment or receipt of overnight financing fees.
💡 Practical Trading Example
You leave a trade open past 5:00 PM EST, triggering the daily rollover process.