Carry Grid

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.

BREAKING DOWN '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. Currency Carry Trade

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

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

    An order to buy a security which is entered at a price above ...
  6. Credit Card Arbitrage

    Borrowing money at a low interest rate from a credit card then ...
Related Articles
  1. 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.
  2. 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.
  3. 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.
  4. Forex Education

    Currency Carry Trades 101

    This strategy can provide returns even if the currency pair doesn't move a cent.
  5. Forex Strategies

    How To Build A Forex Trading Model

    The forex market is volatile, but a forex trading model with clear, step-by-step rules based on a sound strategy can help decrease losing trades.
  6. Investing Basics

    NYIF Instructor Series: Risk Arbitrage

    In this short instructional video Jack Farmer explains what risk arbitrage is outlines three different examples of it.
  7. Mutual Funds & ETFs

    UUP: Powershares DB US Dollar Bullish Fund ETF

    Explore information and detailed analysis of two popular currency exchange-traded funds, the PowerShares DB U.S. Dollar Bullish and Bearish Index Funds.
  8. Investing

    A New Reason Behind This Strategy’s Outperformance

    One of the great anomalies of investing: The historical long-term outperformance of smart beta or factor-based strategies relative to the equity market.
  9. Forex Fundamentals

    Is the Iraqi Dinar Investment a Wise Investment?

    The Iraqi dinar is a hot investment--but is it a wise one?
  10. Forex Education

    9 Tricks Of The Successful Forex Trader

    These steps will make you a more disciplined, smarter and, ultimately, wealthier trader.
RELATED FAQS
  1. What is arbitrage?

    Arbitrage is basically buying in one market and simultaneously selling in another, profiting from a temporary difference. ... Read Full Answer >>
  2. Is there a difference between financial spread betting and arbitrage? (AAPL, NFLX)

    Financial spread betting is a type of speculation that involves a highly leveraged derivative product, whereas arbitrage ... Read Full Answer >>
  3. What are the goals of covered interest arbitrage?

    The goals of covered interest arbitrage include enabling investors to trade volatile currency pairs without risk as well ... Read Full Answer >>
  4. How does arbitrage affect the price of exchange traded funds (ETFs)?

    Arbitrage may be used to bring the market value of an exchange-traded fund (ETF) back into line with the net asset value ... Read Full Answer >>
  5. How do I Implement a Forex Strategy when spotting a Sanku (Three Gaps) Pattern?

    A forex trading strategy can easily be implemented to profit from a market reversal signal that comes from the sanku, or ... Read Full Answer >>
  6. What's a good forex strategy to use when spotting a Wedge-shaped Pattern?

    Use wedge-shaped patterns to identify bullish or bearish price action when trading currencies in the foreign exchange (forex) ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center