Regional Preferences

Agent Merina

Agent Merina

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Market Structure

Carry Trade

A strategy of borrowing in a low-yielding currency to invest in a higher-yielding one. Concepts like this reveal some of the underlying plumbing of the forex market that isn't visible directly on a retail trading screen.

Meaning

What Carry Trade means

A strategy of borrowing in a low-yielding currency to invest in a higher-yielding one. Concepts like this reveal some of the underlying plumbing of the forex market that isn't visible directly on a retail trading screen.

Trading context

Why it matters

It's a major driver of long-term currency flows, especially involving JPY. Traders progressing past the basics tend to lean on this more heavily as they start combining multiple concepts into a coherent trading approach.

Example

How traders may see it

Unwinds rapidly during risk-off events, causing sharp reversals. In practice, traders typically encounter this directly within their trading platform, charting software, or an economic calendar, depending on the specific context in which it arises.