Carry trade calculator

This easy-to-use carry trade calculator helps you figure out the profit or loss resulting from interest rate differences in a currency swap.

The Invezz carry trade calculator calculates the amount of interest that’s either earned or paid on currency pair trades. Keep reading to learn how our carry trade calculator works, and how you can use that knowledge to inform yourself when forex trading.

How to use our carry trade calculator

Using our carry trade calculator means following these steps:

  1. Enter in the currency you use for your account (for example, GBP).
  2. Enter in the currency pair you wish to trade (for example, GBP/EUR).
  3. Enter in the action you wish to perform (either buy/long or sell/short).
  4. Enter in the lend rate for the trade.
  5. Enter in the borrow rate for the trade.
  6. Type your trade size.
  7. Type the number of days you’ve held (or plan to hold) your position.

Your interest earned will appear at the bottom instantly after you’ve punched in all of this information.

How the carry trade calculator works

The Invezz carry trade calculator tabulates the profit or loss you’ve made on your forex currency pair trade, accounting for the lend and borrow rates linked to trading each of the two currencies. It takes into account all relevant information to generate the precise figure so you can work out the amount you’ll gain or lose on a forex trade.

Why should I use it?

You should use this carry trade calculator to ensure your trades will be profitable, even when taking interest rates into account. The goal of a carry trade calculator is to take a low interest rate into account and figure out the point at which you stand to make a profit. 

What is a carry trade? 

A carry trade is a trading strategy that involves borrowing at a low-interest rate and investing in an asset that provides a higher rate of return. Carry trading is most commonly undertaken when investing in forex markets.

The foreign exchange market (forex) is a global market where world currencies are traded for each other, in the form of currency pairs like EUR/USD or GBP/USD. The forex market is responsible for setting foreign exchange rates for every currency in the world. Traders use forex brokers to either buy or sell different currencies, with the goal of making a profit if the currency they’re trading moves in the direction they’ve predicted.

Written by: Jonah Keri
Jonah Keri is a trader and analyst who spent 11 years at Investor's Business Daily covering the markets. He now writes about stocks, cryptocurrencies, and other investments for Invezz and about emerging technologies for private clients.