Carry trade


    What is a carry trade in forex trading?

    carry trade is a type of forex trade based on the different interest rates between two countries. The carry trade process involves selling currency of country with a low interest rate and using it to buy currency from a country with a higher interest rate.

    When the position is rolled over at the end of the trading day, you have to pay a relatively low interest rate on the money you have sold, while collecting a higher interest rate on the currency you have purchased. Thus, the reason behind a carry trade is less the price movement of the currency pair, but the difference between interest rates.

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