The forex carry trade strategy is very popular among long term currency traders, hedge funds and banks.

It takes advantage of the interest rate differentials between two currencies while also hoping to benefit from the long term trend in the pair. Click here to download the Forex Carry Trade Strategy. The strategy is pretty simple to explain.

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A trader needs to buy a high yielding currency while simultaneously selling a low yielding currency to earn daily interest. The table above shows the current interest rates for the major currencies.

The interest rate differential is 3. A trader will earn 3. Always use the carry trade strategy in conjunction with a forex trading system or trending strategy. Trade only in the overall direction of the high yielding currency in this case the AUD. Please bear in mind that the carry trade strategy is a long term investment strategy, so trade off daily or weekly forex charts.

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We use a moving average cross-over strategy to manage our carry trades. Set stop losses below the most recent levels of support. Profit targets should be at least twice the risk taken on each carry trade.

Move stop loss to break-even once profit equals the risk, thus removing the risk from being stopped out at the original stop loss. When to close a trade? The first trade was opened at Stop loss moved to BE. Currently you have JavaScript disabled.

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