What Is Carry Trading? Estimated reading: 1 minute 81 views Carry trading is a forex strategy where traders buy a high-interest currency while selling a low-interest currency, earning the interest rate differential between the two.How It Works:You go long on a currency with a higher interest rate and short one with a lower interest rate.The broker credits you the difference daily, as long as the rate differential is positive.Example:If NZD has a 4% interest rate and USD has 2%, buying NZD/USD allows you to earn the 2% difference daily, which can accumulate over time.Carry trading is most effective in stable market conditions, where interest rate differentials remain consistent.
