Overnight Funding Adjustment

The overnight funding adjustment refers to the interest or fees that traders and investors must pay or receive when holding leveraged positions (such as contracts for difference, or CFDs) overnight. These adjustments are based on the difference between the interest rates of the two currencies or assets involved in the trade. The adjustment ensures that the cost of borrowing is reflected when positions are carried over to the next day.

Example

A trader holding a leveraged position in the currency market may receive or pay an overnight funding adjustment based on the interest rate differential between the two currencies involved.