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. Currency Carry Trade

    A strategy in which an investor sells a certain currency with ...
  3. Interest Rate Parity

    A theory in which the interest rate differential between two ...
  4. Buy Stop Order

    An order to buy a security which is entered at a price above ...
  5. Interest Rate Differential - IRD

    A differential measuring the gap in interest rates between two ...
  6. Forex Spread Betting

    A category of spread betting that involves taking a bet on the ...
Related Articles
  1. The Credit Crisis And The Carry Trade
    Forex Education

    The Credit Crisis And The Carry Trade

  2. The
    Forex Education

    The "Turn To The Carry" Trade

  3. Top 7 Questions About Currency Trading ...
    Forex Education

    Top 7 Questions About Currency Trading ...

  4. Currency Carry Trades 101
    Forex Education

    Currency Carry Trades 101

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center