Carry Trade

Trading Basics

Carry Trade

A forex trading strategy of borrowing funds in a low-interest rate currency and buying assets in higher yielding currency.

For years this was selling Yen to buy Dollars.

Other Trading Basics

Bid-Ask Spread

The difference between the price the trader and buy at and the price they can sell at.

Also bid-offer spread. The wider the spread, the more the trader pays, reactively.

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Alpha

This is a measure of price performance vs a benchmark.

If a trader makes 10% per annum and the index makes 7% the trader has an alpha of 3%.

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Learn the skills needed to trade the markets on our Trading for Beginners course.