A carry trade buys a higher-interest currency funded by a lower-interest one, aiming to pocket the daily interest difference through swap while also hoping the pair moves favourably. It can pay steadily but turns risky fast if the pair drops or volatility spikes.
Forex Term
Carry Trade
Earning the interest-rate gap between two currencies.
Example
Buying a high-rate currency against a low-rate one can earn a positive swap each night.
Related Terms
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Trading Forex and CFDs involves a significant risk of loss.
Risk
Forex and CFD trading involves significant risk of loss and is not suitable for all investors. Leverage can work against you. This content is educational and not financial advice — always do your own research.