{"id":6637,"date":"2019-03-14T06:49:30","date_gmt":"2019-03-14T06:49:30","guid":{"rendered":"https:\/\/www.wasteyourtime.co\/?p=6637"},"modified":"2019-09-06T22:34:33","modified_gmt":"2019-09-06T21:34:33","slug":"currency-carry-trade","status":"publish","type":"post","link":"https:\/\/traders-paradise.com\/magazine\/2019\/03\/currency-carry-trade\/","title":{"rendered":"Currency Carry Trade – What is It and How to Profit from It?"},"content":{"rendered":"

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3 min read<\/span><\/i><\/p>\n

\"Currency<\/p>\n

A currency carry trade is a popular technique among currency traders. <\/span><\/p>\n

It is when a trader borrows a currency at a low-interest rate to fund the purchase of another currency earning a higher interest rate.<\/span><\/p>\n

In the forex market, currencies are traded in pairs, as you already know. For example, when you buy USD\/GBP you are actually buying the U.S. dollar and selling Great Britain pound at the same time.<\/span><\/p>\n

You pay interest on the currency you sell and collect interest on the currency you buy.<\/span><\/p>\n

In the forex market, interest payments occur every trading day based on your position.<\/span><\/p>\n

Actually, all positions are closed at the end of the day in the forex market. But you don\u2019t see it happen if you hold a position to the next day.<\/span><\/p>\n

Brokers just close and reopen your position. Then they credit or debit you the overnight interest rate differential between the currencies.<\/span><\/p>\n

This is the cost of \u201ccarrying\u201d a position to the next day.<\/span><\/p>\n

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