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:
“I would rather not see such winds subside, which carry your slow ship away, although they leave me, cast down, on an empty shore, often, with clenched hand, calling you cruel.”
—Propertius Sextus (c. 50–16 B.C.)
“It passes, and we stay:
A quality of loss
Affecting our content,
As trade had suddenly encroached
Upon a sacrament.”
—Emily Dickinson (1830–1886)