Carry Trade Calculator
Calculate potential profits from currency carry trades including interest rate differentials and exchange rate movements
About this calculator
The Carry Trade Calculator helps forex traders analyze potential profits from currency carry trades by calculating returns from interest rate differentials between two currencies. This powerful tool factors in both the interest earned from holding higher-yielding currencies and potential gains or losses from exchange rate movements. It's essential for traders looking to optimize their carry trade strategies and assess risk-reward ratios before entering positions.
How to use
Enter the currency pair you want to trade, input the interest rates for both the base and quote currencies, specify your position size and holding period. The calculator will compute your potential profit from interest rate differentials and show how exchange rate changes impact your overall returns.
Frequently asked questions
What is a currency carry trade?
A carry trade involves borrowing in a low-interest currency and investing in a higher-yielding currency to profit from the interest rate differential.
What are the main risks in carry trading?
Exchange rate volatility can offset interest gains, and sudden market shifts can cause significant losses despite positive interest differentials.
How often are carry trade profits calculated?
Interest payments are typically calculated daily and credited to your account, though the exact timing depends on your broker's policies.