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In the Forex market, there is a common method of trading known as the carry trade which is made in relation to fundamental analysis. It should be a common term once a trader has studied their fundamentals and learned how to apply the knowledge they have gained. Still, many traders do not understand what a carry trade is or how to use it because they may have only focused on technical analysis rather than fundamental analysis.Before a Forex trader decides whether they can make a carry trade, they must first evaluate different currencies and the economic conditions in their associated countries. This is the basics of fundamentals and interest rates are probably the most important of these basics.In a carry trade, Forex traders try to get a better idea of the true value of a currency through various news reports, political events and economic statistics. Then the carry trade can be used as a good strategy based on the interest rates in a particular set of currencies. The basic idea is that, when a trader decides to sell a currency with lower interest rates, they can also purchase a currency that’s offering higher interest rates. They sell the low rate and they buy the high...more
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