When the clock strikes five

Here’s a typical rollover fee process: Generally, at 5 p.m. ET funds are automatically subtracted or added to accounts with open positions because of automatic rollover. For accounts maintaining at least 2 percent or greater margin equity, funds are added for positions in which the client is long the currency bearing the higher interest rate and deducted in the opposite case.

It’s important to remember for positions that are open on Wednesday and held overnight, the amount added or subtracted to an account as a result of rolling over a position tends to be around three times the usual amount. This three-day rollover accounts for settlement of trades through the weekend period. (See “The short-term British pound/Japanese yen carry trade,” December 2004 Currency Trader to read about a strategy that incorporates this three day rollover process.)