Interest rates and carrying costs

Intraday traders usually don’t pay additional fees, but overnight carrying costs, based on the difference between the base and counter currencies’ interest rates, can affect performance if you hold a position(long or short) past the 5 p.m. (ET) rollover time.

Interest-rate fees should either be added to or subtracted from your account, depending on whether the long currency’s interest rate is higher or lower than the corresponding short currency’s rate.

For example, if you go long EUR/USD and hold the trade past 5 p.m., you may receive a small credit as the firm rolls your position forward one day and applies interest. You earn the difference between the long currency’s (euro) higher interest rate and the short currency’s (U.S. dollar) lower rate. However, if you sell EUR/USD short, you’ll owe that same amount.

Daily rollover fees typically range from $2 to $15 per lot, but it’s important to read the fine print and see how certain FX dealers apply them. Some firms always charge a rollover fee, but you may only earn it with a certain margin level or account size.

Another consideration is whether funds are segregated from company assets in a regular FDIC insured bank account that generates interest on unused cash.