|Name||FX Carry Trade|
|Cycle||Daily interest rate calculation|
|Profit/Loss||Interest rate X balance X leverage rate|
|Margin||Leverage factor X balance within margin levels|
|Entry Rules||Leverage X Price (consider margin risk)|
|Reference:Commodities and Futures Trading Commission National Futures Association Carry Trade Carry Trade Calculator Forex Brokers FX Spot Rates|
The carry trade can be a useful income producing strategy. A trader shall benefit from daily intebank interest rate differences of an FX currency pair when the exchange rate between two countries remains favorable for positive gain. Consider other factors when investing in the carry trade like leverage, technical analysis, margin level, fund availability and hedging. Think about having a strategic approach in management of risk. The daily interest rate yield can be significantly high when leveraging 10x, 100x or 400x, so, any appreciation/depreciation in currency pair pricing can further factor in high profit or loss. When over leveraging a position, be particularly, careful of your account margin level as strategic consideration is necessary for safe trading.