Carry Grid

AAA

DEFINITION of 'Carry Grid'

A foreign exchange trading strategy that attempts to profit from a grid of "carry trade" currency positions. A carry grid entails the purchase of currencies that pay relatively high interest rates, and the concurrent sale of currencies that have low interest rates, at certain pre-set intervals.



INVESTOPEDIA EXPLAINS 'Carry Grid'

This strategy seeks to capture the interest differential or "carry" between various currencies. The major risk of a carry grid is that a major turnaround in the carry trade can lead to significant losses that may be exacerbated by the multiple trading positions in the trading grid.

RELATED TERMS
  1. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  2. Interest Rate Differential - IRD

    A differential measuring the gap in interest rates between two ...
  3. Buy Stop Order

    An order to buy a security which is entered at a price above ...
  4. Interest Rate Parity

    A theory in which the interest rate differential between two ...
  5. Currency Carry Trade

    A strategy in which an investor sells a certain currency with ...
  6. Credit Card Arbitrage

    Borrowing money at a low interest rate from a credit card then ...
RELATED FAQS
  1. How does a merger affect the shareholders?

    A merger affects the shareholders of both companies in different ways and is influenced by several factors, including the ... Read Full Answer >>
  2. How do I find positive correlation in the stock market?

    Positive correlation refers to a statistical relationship in which two variables generally move in the same direction together. ... Read Full Answer >>
  3. How do I implement a forex strategy when spotting a Upside Gap Two Crows Pattern?

    The upside gap two crows is, in theory, a bearish reversal pattern found in both the stock and forex markets. While there ... Read Full Answer >>
  4. What are the most common market indicators forex traders follow?

    There are literally hundreds of technical indicators for forex traders to choose from, however, there are a few which may ... Read Full Answer >>
  5. How do I use STIX Oscillator to create a forex trading strategy?

    The STIX oscillator can be applied to forex trading by signalling when to buy when a currency is in an oversold condition ... Read Full Answer >>
  6. How do I use Stochastic Oscillator to create a forex trading strategy?

    The stochastic oscillator is a momentum indicator that is widely used in forex trading to pinpoint potential trend reversals. ... Read Full Answer >>
Related Articles
  1. Forex Education

    The Credit Crisis And The Carry Trade

    When boom times turned to bust, these trades proved devastating for traders and the broader markets.
  2. Forex Education

    The "Turn To The Carry" Trade

    This variation on the turn to trend setup can help longer term traders make more potent trades.
  3. Forex Education

    Top 7 Questions About Currency Trading Answered

    Whether you're puzzled by pips or curious about carry trades, your queries are answered here.
  4. Forex Education

    Currency Carry Trades 101

    This strategy can provide returns even if the currency pair doesn't move a cent.
  5. Trading Systems & Software

    Brokerage Reviews: TradeStation Vs. Interactive Brokers

    These are among the most sophisticated brokers in the industry in terms of investment offerings, market access and technology.
  6. Trading Strategies

    Trade Forex Through Inside Day Breakout Strategy

    Inside day breakout is a popular strategy for forex trading. Here's how to recognize the patterns, entry/exit points and trading scenarios.
  7. Forex Strategies

    The 10 Riskiest Investments

    Investors seeking high returns must also be prepared for high risk. Here are ten of the riskiest investments available.
  8. Investing

    Why Is Arbitrage Trading Legal?

    Not only is arbitrage legal in the US and most developed countries, it can be beneficial to the overall health of a market.
  9. Mutual Funds & ETFs

    How ETF Arbitrage Works

    ETF arbitrage brings the market price of ETFs back in line with net asset values when divergence happens. But how does ETF arbitrage work?
  10. Forex

    Understanding Currency Carry Trade

    A currency carry trade is a long-term investment strategy used primarily by large institutional investors. The purpose is to make a profit over time from differences in interest rates between ...

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center