Overnight positions can be subject to rollover interest which depends on long or short trades. How do you manage them if you trade with XM?

Overnight positions refer to trades that have not been liquidated or closed at the end of the trading day. This position is very common among swing traders who aim to trade continuously for several days.

XM is one of the popular brokers among both beginners and experienced traders founded in 2009. The platform is growing with more than 5 million international users worldwide. Traders at XM can trade at one of the lowest costs in the industry, access excellent research and education section, and use a beginner-friendly trading app.

If your strategy requires you to hold positions for more than a day, here is an explanation of how to trade overnight positions in XM.

Positions Open Overnight at XM


The Essence of Keeping Overnight Positions

As the name suggests, overnight positions refer to trades that start during the day and that you have not closed by the time the trading day ends. Many day traders and scalpers try their best not to have these overnight positions because they have no control over what happens if they are not around. For stocks, an overnight position means that you buy or short a company and continue to hold it after the market closes. Trading positions that traders leave open overnight can trigger rollover interest rates.

See also: Brokers' Swap Comparison


What is a Rollover Rate?

Rollover is the process of extending the delivery date (i.e. the date on which the trade must be completed) of an open position. The currency market allows two trading days for all spot transactions, which means the physical delivery of the currency. However, there is no physical delivery when trading with profit margins, so all open positions must be closed at the end of the day (22:00 GMT on XM platforms) each day and reopened the next trading day. The cost to do such a transaction is called a rollover rate.

The rollover rate is determined through swap contracts, which can either be charged or profited for traders. XM does not close or reopen positions, but only debits or credits trading accounts for positions held overnight, depending on the current interest rate.

Although there is no rollover, if the market is closed on Saturdays and Sundays, the bank still charges interest on open positions over the weekend, only lowered. To accommodate this time difference, XM introduced a 3-day rollover fee on Wednesdays.


How to Calculate Rollover Rates at XM

There are some differences in the calculation of rollover rates charged by XM. This difference in tariffs depends on the position of what trading instrument is left open.


Forex and Spot Metals (Gold and Silver) Rates

Rollover rates charged for forex instruments and spot metal positions are subject to the next-day rate (i.e. tomorrow and the next day), including XM's markup for holding positions overnight. XM broker does not provide conditions for tomorrow's and next-day interest rates, but they are derived from the difference between the interest rates of the two currencies.

For example, if you trade USD/JPY, the rollover rate at tomorrow's and next-day rates will be +0.5% for long positions, and -1.5% for short positions. In this example, it can be known that the US interest rate is higher than that of Japan. You receive +0.5% - XM's markup when a long position of the currency pair is opened overnight. Meanwhile, short positions are calculated to get a minus 1.5% - XM's profit margin.

The calculation of rollover rates for forex and spot metals is as follows:

X transaction size (long/short tom-next rate – XM's Markup)

Keep in mind that plus or minus positions depend on the difference in the exchange rate of two currencies in a given pair.


Stock and Indices' Rates

The rollover rates charged for stock positions and stock indices are determined by the underlying interbank rate of the stock or index (For Australian-listed securities, this will be the interest rate on short-term loans between Australian banks), plus/minus the markup XM has depending on the positions.

For example: Assume you are trading Unilever shares listed in the UK. The interbank short-term interest rate in the UK is 1.5% p.a. The calculation for long positions is -1.5%/365 – XM – XM's daily markup. On the other hand, for short positions, the calculation is 1.5%/365 - XM's daily markup.

The calculation of XM's rollover rate for stocks and stock indices is:

Trade Size x Closing Rate x (long/short position of interbank short-term interest rate – XM's markup

All in all, the start and end of a trading day are considered to be 22:00 GMT in XM. All trading positions that are still open after the time, even if only for 1 minute, will be counted as an overnight position and would be charged a rollover rate.


XM broker is an established international firm and has become a true leader in the trading industry. Founded in 2009, the company works with the main principle of being "fair, trustworthy, and dependable". XM claims to support no re-quotes and real-time execution, where traders can choose from 10+ trading platforms suitable to any device.