This is a currency trading strategy that benefits from the differentials between a currency offering a low borrowing interest rate and a currency offering a high lending interest rate. In essence, the trader will borrow/buy ‘low’ and lend/sell ‘high’.
Carry trades strategies are some of the most manageable strategies and also the oldest available for currency trading. They are also very popular amongst foreign exchange traders because traders can trade on margin and only a small deposit is required to exercise control over a large trade amount.
- Carry trades are a form of trading strategy.
- Carry trades are one of the simplest forms of trading and also one of the oldest.
- Traders use margin trading for carry trades because only a small amount of deposit is required to control a larger amount.