Carry Trade
A strategy where traders borrow in a low-interest-rate currency and invest in a higher-interest-rate currency to profit from the interest rate differential.
Related terms
Interest Rate
The percentage charged above a lender’s principal for the use of its capital. Central banks set base interest rates to manage their domestic economies, and these become the benchmark for borrowing and investment rates across the banking system.
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The process of extending the settlement date of an open position. In forex, it involves transferring the settlement of a trade to another value date.
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Aggressive
A description of traders and/or price action acting with conviction.
Read full definitionArbitrage
The simultaneous buying and selling of the same currency in different markets to profit from small price differences. The strategy exploits temporary inefficiencies in FX markets.
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An instruction given to a dealer to buy or sell at the best rate that can be obtained at a specific time.
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An instruction given to a dealer to buy or sell at a specific price or better.
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A third party coordinating the sale of financial securities between sellers and buyers. Exchanges only accept orders from their members, so traders and investors use brokers as intermediaries; brokers are compensated through commissions, fees or payment from the exchange.
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Traders who expect prices to rise and who may be holding long positions.
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