Can you provide an example of rollover on a forex pair?
When you buy the EUR/USD pair, you are buying the euro, and selling the U.S. dollar to pay for it. If the euro interest rate is 4.00%, and the U.S. rate is 2.25%, you are buying the currency with the higher interest rate, and you will earn rollover -- about 1.75% on an annual basis. If you sell the EUR/USD pair, you are selling the currency with the higher interest rate, and you will pay rollover -- about 1.75% on an annual basis, since you are paying the euro interest rate and earning the U.S. interest rate. One of the most popular forex strategies in the twenty first century has been the "Carry Trade". The "Carry Trade" takes advantage of both the differences in interest rates between countries and the high available leverage of the forex market. Leverage: Leverage is a double-edged sword and can dramatically amplify your profits. It can also just as dramatically amplify your losses. Trading foreign exchange with any level of leverage may not be suitable for all investors.
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