A position held beyond a provider’s daily cutoff may receive a financing charge or credit. The rules depend on the product and provider.
The idea
Overnight financing is common with leveraged products, including some forex and CFD positions. The calculation may depend on the instrument, direction, position size, rates and number of days. A provider may apply a larger adjustment on a particular day to account for non-trading days. Check the cutoff time and the current schedule rather than assuming every position is charged in the same way.
Apply the idea
Imagine a provider lists an illustrative financing charge of $1 per night for your position. Holding it across three applicable nights would produce a $3 charge if the rate and rules stayed the same. Actual rates can change, and the adjustment can also be a credit. Review the trade history for the amount applied.
Key takeaway
Before holding a position overnight, check the provider’s cutoff, current rates and calculation. Include any charge or credit in the final result.
