Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Cost of carry definition

The cost of maintaining an investment position is often referred to as the cost of carry or carrying charge. It can come in many forms, including interest on margins or the loans used to make the trade, or the cost of storage and insurance associated with holding a commodity.

In forex, for example, there are several costs that can arise from keeping a position open. Changes in interest rates can necessitate a charge on your account, or overnight funding charges can be incurred. Often, the cost of carry will already be included in the price of opening a new position.

The cost of carry of a position varies depending on the type of trade and asset being traded. 

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