Carry Trade Strategy (1 min summary) | Quantified Strategies

A carry trade strategy involves borrowing at a low-interest rate currency and converting the borrowed amount into another currency with a higher interest rate to invest in an asset that provides a higher rate of return.

Carry trade forex example
The first step in making a profitable carry trade is to find a currency that offers a high-interest rate and one that provides a low rate. What you need to do is to find and match the currencies with the highest and lowest yields. New Zealand and Australia often have the highest yields while Japan has the lowest. Since currencies are traded in pairs, all you need to do to make a currency carry trade is to buy AUD/JPY or NZD/JPY through a forex broker.

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