What is rollover in forex?

Rollover in forex is the daily cut-off at 17:00 New York time, when one trading day ends and the next begins. Most brokers book the swap then, on every position held through it, and liquidity thins for a while, so spreads are often wider then than at any other time of day.

When rollover happens

The time is fixed on the New York clock, so in UTC it moves when the US changes its clocks (NIST):

Market Watch shows quote times in your broker’s server time, which may be neither UTC nor your own zone. The forex market hours clock shows the next rollover in your time zone.

Why there is a rollover

Most spot currency trades settle two business days after the trade date: “T+2 remains the convention in the spot market” (CLS). At 17:00 New York the trade date moves forward by one day, and an open position is rolled to the next value date instead of being settled. The interest difference between the two currencies for that extra day is the basis of the swap the broker books.

What happens to spreads

The rollover falls at the end of the New York trading day, roughly when the Australasian day begins. In a study of 5-minute quotes for the euro, pound and yen against the dollar from 1999 to 2018, Krohn, Mueller and Whelan found that bid-ask spreads “peak around 5:00 p.m. ET, i.e., when U.S. markets close” (working paper). In their data, spreads start widening after 14:00 New York and rise steadily towards that close. How wide the spread gets, and for how long, depends on the broker and the pair.

The wider spread also reaches open trades. MT5 checks a short’s stop loss against the ask, and the chart shows the bid, so a spread spike can close a short while the chart stays below the stop. See bid and ask prices, why forex spreads widen at rollover and why a stop loss is hit when the chart never reached it.

Where you see it in MT5

• The Spread column in Market Watch, in points, widening around 17:00 New York.
• The Swap column in the Trade tab (View → Toolbox → Trade), which changes on positions held through the cut-off.

The common mistake

Writing a time filter in UTC or in local time and forgetting daylight saving. The rollover moves by an hour in UTC twice a year, so a UTC filter that blocked it in July misses it by an hour in December.

Rollover and PipWarden

By default, on intraday timeframes, PipWarden opens new trades only when a candle closes inside the London (07:00 to 16:00 UTC) or New York (12:00 to 21:00 UTC) session. The window ends at 21:00 UTC, which is the rollover itself in US summer time and an hour before it in winter, so the day’s last new intraday entries come before the cut-off. If you set a spread limit for a pair, it is checked before every order, and a trade blocked by it is logged as “Spread too wide”.

Open positions stay open through the rollover. They are charged or paid swap like any other position, and their stops can still be reached by a wider spread.