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. Currency Carry Trade

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

    A theory in which the interest rate differential between two ...
  6. Credit Card Arbitrage

    Borrowing money at a low interest rate from a credit card then ...
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. Forex Strategies

    How do I use Relative Vigor Index (RVI) to create a forex trading strategy?

    Learn a forex trading strategy designed to maximize trend trading profits by using the Relative Vigor Index in conjunction with other technical indicators.
  6. Forex Strategies

    How do I Implement a forex strategy when spotting a Rectangle Pattern?

    Understand what a rectangle chart pattern is, and learn a common strategy that traders use to obtain short-term profits when they recognize the pattern.
  7. Forex Strategies

    How do I use Polarized Fractal Efficiency (PFE) to create a forex trading strategy?

    Discover a forex trading strategy designed to profit from market reversal signals generated by the Polarized Fractal Efficiency, or PFE, indicator.
  8. Forex Strategies

    How do I use the Relative Strength Index (RSI) to create a forex trading strategy?

    Find out about a forex trading strategy that uses the RSI, and profit from retracements that occur when a market is overbought or oversold.
  9. Forex Strategies

    How do I implement a forex strategy when spotting a Pennant Pattern?

    Understand the basics of the forex pennant pattern and how to use this indicator to create an effective trading strategy, including optimal setup, entry and exit.
  10. Brokers

    Arbitrage Opportunities in Spread Betting

    While the opportunities are few and far between, investors may use arbitrage to take advantage of price differences in financial spread betting.

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center