Commander in Pips: Absolutely correct question. If fact, the broker converts carry value at close price every day. Here I’ve shown the conversion just to attract attention to this fact. I did it for simplicity at close of position. But in reality, the broker does it every day of holding position at the day close price. Also I didn’t mention, but the conversion done in those currency that your account is. So, if you have dollar account then you will get carry in dollars, EUR – in euros and so on… Pipruit: But sir, in this case it appears to be some sort of double conversion. So, we need to find carry on both currencies and only after that convert it in EUR – AUD to EUR and USD to EUR and then find the difference, right? Commander in Pips: Strictly speaking you’re right, and large participants follow this procedure. But be careful with retail brokers, since they can have “not quite the same” procedures and “slightly other rates”. When you will intend to open real account, talk to broker about carry calculation procedure, since there could appear really bad surprises. For instance, some brokers could withdraw a fixed amount of money every day of holding your position despite what position do you carry – long or short, S&P500 futures, AUD/USD or CHF/JPY. Be careful with that, especially if you intend actively use this feature. Ok, as an intermediate result, I want to discuss the possible results of such position. Let’s say, you’re long AUD/USD: 1. If AUD/USD rate has decreased – then your loss will be a bit smaller, since you’ve got positive carry. If this decreasing very shallow, you even can get profit still, but let’s look at this scenario as negative; 2. AUD/USD rate remains unchanged. You will get profit equals to carry. 3. If AUD/USD rate has increased, then you will get two different profits – one greater part from rate appreciation and second is carry. What will happen if you’re short – just replace green rectangles with red ones… Pipruit: Heh, I’ve got it… P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon. Note: FPA ranks are earned in the battles against scam, not in the classroom.