In the world of trading, a rollover takes place on the expiry date of a futures CFD, where all open positions are automatically moved to the next available contract.
This video provides a quick walkthrough of Plus500’s free-of-charge rollover service. We cover what a rollover is, its main features and how it (does not) impact your trading.
What is a rollover?
A rollover is an action that is performed by a broker or CFD provider to keep a position open beyond its expiry date. Unlike some CFD providers, Plus500’s rollover service is available free of charge, allowing you to keep your open positions and orders on futures-based CFD contracts - such as Natural Gas or Oil - without the need for you to manually close and reopen them at a new rate.
Most of the futures-based instruments we offer have an automatic rollover date. If a futures contract is not subject to automatic rollover, your position will close on the expiry date set for the instrument.
Rollovers do not impact your equity
When a position is automatically rolled over, an adjustment is either added to or subtracted from your account to offset the difference between the previous and new contract rates. The value of your position continues to reflect the impact of market movements based on your position’s original opening level, size and spread. In other words, your equity before the rollover remains identical to your equity after the rollover.
A Buy position will receive a NEGATIVE ADJUSTMENT when the new contract is trading at a higher price, and a POSITIVE ADJUSTMENT when the new contract is trading at a lower price.
Conversely, a Sell position will receive a POSITIVE ADJUSTMENT when the new contract is trading at a higher price, and a NEGATIVE ADJUSTMENT when the new contract is trading at a lower price.
Please note that rates for stop orders, such as 'Close at Profit' and 'Close at Loss', are also adjusted accordingly.
Rollover examples
Rollover for a Buy Position on Germany 40
Let’s say you open a Buy position of 100 contracts of Germany 40. The contract is scheduled to automatically roll over on the 31st of December at 22:45 UTC. Its current Sell rate is 12450. The Sell rate for the new futures contract is 12460 (i.e., 10 euros higher).
At the time of the rollover, an ADJUSTMENT WILL BE SUBTRACTED from your position to ensure your equity remains the same.
The adjustment for the Buy position = [(Old contract rate - New contract rate) * (Number of contracts) * (Point Value)] = (-€10 * 100 * 1) = -€1000
In other words, €1,000 will be SUBTRACTED FROM your account.
Rollover for a Sell Position on UK 100
Now, let’s say you open a Sell position of 100 contracts of UK100. The contract is scheduled to automatically roll over on the 19th of January at 23:50 UTC. Its current Buy rate is 7180. The Buy rate for the new futures contract is 7190 (i.e. 10 pounds higher).
At the time of the rollover, an adjustment will be added to your position to ensure your equity remains the same.
The adjustment for the Sell position = [(New contract rate - Old contract rate) * (Number of contracts) * (Point Value)] = (£10 * 100 * 10) = £10000
In other words, £10,000 will be ADDED TO your account.
Where can the rollover details be found?
You can find information regarding an instrument’s rollover by:
- Signing up / Logging in to your account.
- Searching for a futures contract CFD, for example, a commodity or stock index.
- Going to the instrument’s "Details" screen.
- Scrolling down to the Info section to see the upcoming rollover date.
In addition to the above, you can also follow key events on the Economic Calendar to determine when an instrument’s rate is likely to fluctuate (which, as a result, causes the rollover adjustment to rise when the rate is higher, or fall when the rate is lower).
