How To Calculate Overnight Interest Rates ?
Currency pairs, spot precious metals overnight interest calculation
For example ( long )
Assuming you are long one standard lot of EUR/USD (EUR/USD) and hold the position overnight, the overnight interest accrued on that day*.
- Lots1
- Calculation modeUSD
- Overnight interest on long orders-0.86
Overnight interest calculation formula = number of lots x number of trading days x long/short order overnight interest
Overnight interest = 1x -0.86 x 1= -0.86USD
For example ( short )
(EUR/USD) and hold the position overnight, the overnight interest accrued on that day*.
- Lots1
- Calculation modeUSD
- Overnight interest on short orders0.03
Overnight interest calculation formula = number of lots x long/short order overnight interest x number of trading days
Overnight interest = 1 x 0.03 x 1= 0.03USD
Calculation of overnight interest for index Derivatives
For example ( long )
Assuming that you are long one standard lot of NDX (Nasdaq Index), the market buying price (Ask Price) is 13133.9, and you hold the position overnight, the accrued overnight interest on that day*:
- Lots1
- Calculation modePercentage
- Overnight interest on long orders-6.56
Overnight interest calculation formula = price × contract size × lot size × number of days × overnight interest/100/360.
Overnight interest = 13133.9 x 10 x 1 x 1 x -6.56 ÷ 100 ÷ 360 = -23.93 USD.
For example ( short )
Assuming that you are short one standard lot of NDX (Nasdaq index), the market bid price (Bid Price) is 13133.9, and you hold the position overnight, the accrued overnight interest on that day*:
- Lots1
- Calculation modePercentage
- Overnight interest on short orders1.56
Overnight interest calculation formula = price × contract size × lot size × number of days × overnight interest/100/360.
Overnight interest = 13133.9 x 10 x 1 x 1 x 1.56 ÷ 100 ÷ 360 = 5.69 USD.
* If the value is positive, it means the interest you earn; if the value is negative, it means the interest that charge , Products settled in non-USD need to be multiplied or divided by the corresponding exchange rate.
