When trading forex, one is essentially borrowing one currency, converting it in to another, and depositing it. This is all done. This trader is either paying out or receiving interest on their position, depending on whether the interest rate differential is for or against them.

This is commonly handled is what is referred to as a rollover. This is generally done transparently, but it does mean that at the end of each day you will either pay or receive the interest differential on your position.

The type of trader you are and the way your broker handles rollover will be the deciding factors in determining whether the interest rate differentials are an important concern for you. Some brokers will not apply the day's interest differential value on positions closed out during the trading day.

Forex market

Time
Most stock traders, the first difference they will notice between the forex market and equities is timeframe. There is ready forex trading activity in all time zones during the week, and sometimes even on the weekends as well. Other markets may in fact transact twenty-four hours, but the volume outside their primary trading day is thin and inconsistent.

Forex History

However, money or currency has been in our society in one form or another since the time of the ancient Pharaohs. With the introduction of paper bills a transferable payment of funds became viable, making transactions on this primitive foreign exchange market much easier for merchants and traders.


This has caused a recent influx of speculation by banks, hedge funds, independent broker dealer, future trading broker, brokerage houses and individuals.

The only time when currencies are not trading is after Japan closes for business on Friday, a one-day window exists before Europe opens for business on Monday morning. The Forex market is one that is still growing and developing as more traders discover its potential for earning and raising capital. The daily turnover it currently experiences makes it 30 times larger than any other US market.