<h2>Rollover Risk</h2>
<p>Rollover risk, also known as swap risk, is a type of risk that arises from holding open positions in the overnight market. It occurs due to the interest rate differential between the two currencies involved in a trade.</p>

<h2>How It Works</h2>
<p>When you hold a position overnight, you are essentially borrowing one currency to buy another. The cost of this borrowing is reflected in the swap rate, which is applied to your position at the end of each trading day. If the interest rate of the currency you borrowed is higher than the interest rate of the currency you bought, you will incur a loss. Conversely, if the interest rate of the currency you bought is higher, you will receive a credit.</p>
<p>Here's a simple breakdown:</p>
<ul>
  <li>If you hold a long position (buy) in a high-interest currency and a short position (sell) in a low-interest currency, you will pay the swap rate.</li>
  <li>If you hold a short position in a high-interest currency and a long position in a low-interest currency, you will receive the swap rate.</li>
</ul>

<h2>Why It Matters for Traders</h2>
<p>Rollover risk can significantly impact your trading strategy, especially if you're holding positions overnight. Here's why it matters:</p>
<ul>
  <li><strong>Cost of Carry</strong>: Rollover risk can add to the cost of carrying a position overnight. This can eat into your profits or exacerbate your losses.</li>
  <li><strong>Market Volatility</strong>: Rollover risk can amplify market volatility. During periods of high volatility, swap rates can change dramatically, leading to unexpected gains or losses.</li>
  <li><strong>Leverage</strong>: When trading with leverage, rollover risk can have a more significant impact on your account. This is because the swap rate is applied to your full leverage amount, not just the margin required to hold the position.</li>
</ul>

<h2>Example</h2>
<p>Let's say you're trading EUR/USD with a leverage of 1:300. You open a long position of 100,000 units (equivalent to €100,000) at a swap rate of -2.5 pips. This means you will pay -2.5 pips per day for holding this position overnight.</p>
<p>At the end of the day, the swap cost would be:</p>
<p><strong>-2.5 pips * 100,000 units * 1:300 leverage = -750 pips</strong></p>
<p>If the exchange rate moved against you by 750 pips during the day, your net loss would be zero. However, if it moved by only 700 pips, you would still incur a loss of -50 pips due to the swap cost.</p>

<h2>Key Takeaways</h2>
<ul>
  <li>Rollover risk is a cost of carrying a position overnight.</li>
  <li>It can amplify market volatility and impact your trading strategy.</li>
  <li>When trading with leverage, rollover risk can have a more significant impact on your account.</li>
  <li>MetaTrader 5, offered by STB Provider, clearly displays the swap rates for each instrument, allowing you to manage your rollover risk effectively.</li>
</ul>