In this video, we cover the carry trade explained in detail and show how traders use this powerful forex strategy to profit from interest rate differentials. You’ll learn what is the carry trade, how the yen carry trade works, and why it’s so popular in forex trading. We break down the mechanics behind borrowing low-yield currencies like the Japanese yen and investing in high-yield currencies, using clear examples including a carry trade Japan scenario and a carry trade example you can follow. We also discuss when the carry trade profits, what happens during a carry trade unwind, and why this strategy is relevant for carry trade forex, carry trade IBKR, and even those studying carry trade CFA concepts. Watch until the end to test yourself with a carry trade practice question and understand the risks and rewards of this classic currency trading approach.
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Chapters:
0:00 – The Carry Trade Explained & Uncovered Interest Rate Parity
1:19 – How the Carry Trade Works
2:35 – When the Carry Trade Makes Money
5:52 – Carry Trade Practice Question with Solution
*Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.
