Transfer – Forex Trading Stay
“Transfer” is a technical term used to refer to what intermediaries do for your overnight position. If you are holding a certain position (whether the position is long-term or short-term) who stays. Then most brokers will “transfer” your position the next working day. This diversion usually occurs at the close of the New York market, which is 5 pm New York time.
Transfer refers to the automatic closing of your position and the reopening of the position immediately after the market opens.
The reason is for the intermediary to bring or charge interest to you for your overnight position.
For example, if I make a “buy” trade from GBP / USD at 1.9920, and hold it overnight, then the broker will close and reopen my position at around 5 pm NY time. If the price at that time becomes 1.9901, then the report I receive will more or less be like this;
Sell GBP/USD 1,99010
Buy GBP/USD 1,99005
At 5 pm N Y time, my long-term position is closed (“Selling”) by the intermediary at the previous price of 1.9901 and reopened shortly thereafter (“Buy”) at a price slightly below 1.99005 (lower than 0.5 pip). This closure means that I am getting a somewhat better (lower) price, because 0.5 pip is the interest that is given to me to hold a long-term stay position for GBP / USD.
If I hold a short-term stay position in GBP / USD, I will be obliged to pay interest.
The interest charged or paid by the broker is based on the difference between the interest rates of the two currencies in the pair. If the base currency has an interest rate that is greater than the comparison currency. Then a long-term stay position will pay interest. And in a short term position will be reduced by interest. Core reversals are true if the base currency has an interest rate lower than the benchmark currency.