Negative Carry

Negative carry is holding a position whose overnight financing is a net cost: you are long the lower-yielding currency and short the higher-yielding one, so the interest-rate differential runs against you, and the broker's markup on the swap widens the debit further. The charge is small beside a day's price movement and easy to ignore on a short trade, but it accrues every night a position stays open and it does not depend on being right about direction. Two things make it bigger than the rate differential alone would suggest: the broker's own spread on the swap, and the weekend rollover, when several days of financing are applied at once. A position can be ahead on price and still be worn down by carry — which is why the swap side of an instrument is worth reading before planning to hold it for weeks.