What ever happened to the carry trade? Back in the middle of 2007 I was just a year into my trading "apprenticeship". I just had just blown my first account and was trying to find the perfect system that will make me a millionaire overnight. I knew a friend who was just starting out in trading, lets call him Bob. "Bob" got into forex trading by hearing about the "Carry Trade".What is the "Carry Trade" ?A "Carry Trade" is executed when you borrow a currency that has a low interest rate, like the Japanese Yen and at the same time you buy a currency that has a high interest rate. You make a profit of the interest rate differential between the two currencies, also called Carry or Rollover.The prime example for a so called "funding currency" for the past decade has been the Japanese Yen. The Bank of Japan has kept interest rates in the near zero range for close to 15 years now. See the chart below for this.As can be seen on the chart, Japan's interest rates stayed in the 0%-0.5% range all throughout the past decade. Even to this day Japan has one of the lowest interest rates of the world ranging at 0%-0.10%.Back in 2007 there were a lot of currencies with "high" interest rates. The more…
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