Work out carry trade return instantly with clear inputs, formula shown and shareable results.
A carry trade borrows in a low-rate currency to invest in a high-rate one, earning the rate differential. Leverage multiplies the carry, but the break-even shows how small a currency move erases a year's income — which is why carry trades unwind violently.
Carry trade
Carry = high rate - funding rate; return on equity = carry × leverage
Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
Because the high-rate currency often weakens exactly when risk appetite falls, and leverage turns a modest move into a full loss.
In theory the carry should be offset by depreciation. In practice it often is not, until it abruptly is.