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Forex Arbitrage Trading

Forex Arbitrage Trading


Forex carry trading is a strategy that takes advantage of the difference in interest rates between two currencies to make a profit. This strategy is often used when interest rates in both currencies are low and investors are willing to short one currency and buy the other at a higher interest rate. This is a good strategy to use during a recession, as lower interest rates encourage investors to borrow money. The interest rate differential will then increase over time.


The advantage of using this strategy is that it allows traders to take on higher risk than traditional investing. Traders borrow the relevant currency from lenders that offer lower interest rates. The currency is then exchanged for the new currency, thereby generating a profit. The carry trade works well when the central bank raises interest rates and the value of the currency is low. Traders are willing to take this risk because they believe their currency will rise in value.


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