What “rollover for deposit currency” means
In forex, “rollover” is the interest-related charge or credit that is applied when a position is held past a certain daily cutoff (often called the rollover time). It is not the same thing as the spot price change; it is mainly a reflection of interest-rate differences between the two currencies in the trade, expressed in your account’s deposit currency.
When you ask, “How is rollover calculated for deposit currency?”, you are asking how the provider turns a currency-pair interest difference into an amount credited or charged in the account currency (for example, when the deposit currency does not match either currency in the traded pair). Because providers may use slightly different conventions for timing, pricing, and conversion, you need to treat the result as convention-dependent.
The core mechanics: from interest rates to a deposit-currency amount
A simple, general way to think about rollover is:
- Identify the trade’s two currencies (the pair) and determine the relevant interest rates for each side.
- Convert the interest differential into a per-day financing value.
- Apply your provider’s convention for how that daily value is scaled to your position size.
- Convert the financing value into your deposit currency, if needed.
Interest-rate inputs are often expressed as annual rates (or day-count equivalents). The key mechanics are usually:
- Differential: Rollover reflects the interest-rate gap between the pair’s two currencies (the direction depends on whether you are long or short the pair).
- Daily scaling: Since rollover is applied per day, the annualized rate is converted to a daily rate using a day-count convention (for example, a 360-day or 365-day style assumption). This is a common source of small differences.
- Position scaling: The financing amount is proportional to the contract size and the provider’s lot-value definition.
- Conversion step: If the deposit currency is not one of the pair currencies, the financing amount must be converted into the deposit currency using some exchange-rate inputs the provider specifies.
Broker-style adjustments and the “triple-swap” idea
Many rollover explanations mention “triple-swap” conventions. In general terms, this refers to rollover calculations that involve three currencies rather than just two.
This happens when your account deposit currency is different from both currencies in the traded pair. The provider may compute the financing in one intermediate currency and then convert twice—effectively involving the pair currencies plus the deposit currency. Conceptually, it can be treated as:
- compute the interest differential for the traded pair in a reference way;
- convert the result into the deposit currency using additional conversion rates;
- apply any extra rule the provider uses for the timing of those rates.
The exact sequence (and which rates—bid/ask, mid, or a specific reference—are used) is a provider convention. That is why two providers can show slightly different rollover amounts even when the underlying interest rates are similar.
A simple example with explicit assumptions (no live rates)
Assume:
- You hold a position overnight.
- The provider applies a per-day financing based on an annual interest differential converted to daily using a chosen day-count.
- Your deposit currency is not one of the traded pair currencies, so conversion is required.
Then the rollover amount in deposit currency can be written abstractly as:
Rollover (deposit currency) ≈ (Position factor) × (Daily interest differential) × (Conversion rate(s) from financing currency to deposit currency)
If the provider uses “triple-swap,” the conversion component may require two conversion legs rather than one.
Limitations, failure modes, and what can change
Key limitations and risks in rollover calculations are mostly about assumptions and conventions:
- Convention differences: Day-count conventions, which quote (bid/ask) is used, and the exact timing of rate references can all change the outcome. - Rate-source differences: Interest rates may be sourced from different benchmarks or updated at different times, so the “inputs” implied by the formula may not match what you infer externally. - Conversion dependence: If deposit currency conversion uses market quotes, rollover can change even if your perceived interest differential is stable. - Weekend/holiday effects: Many systems treat non-trading days differently (for example, by adjusting the number of days charged/credited). Even if you don’t know the exact rule, you should expect rollover on days near market closures to differ from a normal day.