The term Carry trading unless otherwise specified, denotes currency carry trading. Carry trading is one of the Currency trading strategies which is the most popular strategy currently being used by professional currency traders as well as less seasoned traders. The main reason why carry trading is gaining a pace is the interest rate differences existing in different countries.
Unlike other currency trading strategies which are focused towards trading different pairs of currencies with a motive to earn a profit resulting from the changes in exchange rates, in carry trading the main focus is to take advantage of different interest rates prevailing in different markets across the globe. The most attractive avenue for carry trading are the currency pairs having minimal changes in exchange rates & having substantial interest rate disparity prevailing in respective countries.
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