Posted by forex at 7:31 AM
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1. Understand rolling spots. A spot trade is a purchase of currency “on the spot," that is, the purchase is made that day and delivery is supposed to happen within two days. With a rolling spot, instead of taking delivery of that currency, that spot trade is rolled over into the next day. For active forex trades, brokers typically roll spots automatically unless you specifically tell them to close it.
2. Calculate the spread on the spot trade. Find the relevant bid price and ask price for your purchase. Bid/ask prices are always expressed as five digits. The difference between the bid price and ask price is the spread. For instance, if you are trading dollars and euros with a bid price of $100.00 and an ask price of $100.02, the spread is 0.02. You can find current bid/ask prices by consulting your broker or checking stock exchange/forex exchange market websites.
3. Repeat the calculation after it rolls over. The calculation process is the same for a rolling spread, but you will need to recalculate it whenever you roll your spot and the bid/ask prices change. Keep an eye on the spreads to ensure that it remains in your favor. When the price of the currency you are holding falls below the currency you are purchasing, you will lose money.