Carry Trade
Currency carry trade refers to the act of borrowing one currency that has a low interest rate in order to purchase another with a higher interest rate. A large difference in rates can be highly profitable for the trader, especially if high leverage is used. However, with all levered investments this is a double edged sword, and large exchange rate fluctuations can suddenly swing trades into huge losses.
Read more about this topic: Foreign Exchange Market
Famous quotes containing the words carry and/or trade:
“Steam was till the other day the devil which we dreaded. Every pot made by any human potter or brazier had a hole in its cover, to let off the enemy, lest he should lift pot and roof and carry the house away.”
—Ralph Waldo Emerson (1803–1882)
“The last job I had, I had to take it out in trade and this is no butcher shop—not yet, anyhow!”
—Robert Pirosh, U.S. screenwriter, George Seaton, George Oppenheimer, and Sam Wood. Dr. Hugo Z. Hackenbush (Groucho Marx)