NameFX Carry Trade
TypeFX Currency
RiskMedium-High
RewardHigh
CycleDaily interest rate calculation
Profit/LossInterest rate X balance X leverage rate
MarginLeverage factor X balance within margin levels
Entry RulesLeverage X Price (consider margin risk)
Reference:
Commodities and Futures Trading Commission
National Futures Association
Carry Trade
Carry Trade Calculator
Forex Brokers
FX Spot Rates



About Strategy

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.