ATFXWhat are the characteristics of foreign exchange arbitrage trading and pay attention to loss fraud when investing

understandforeign exchangePeople in the market should be aware of foreign exchange carry trading, which refers to the act of selling low-interest currencies by buying high-interest currencies in the foreign exchange market. The high-interest currencies purchased are deposited in the country's banks to earn higher interest rates than low-interest currency countries. So what are the characteristics of foreign exchange carry trades?Let's take a look together.

What are the characteristics of foreign exchange carry trades

【1】Foreign exchange carry trades can generate profits in both directions.Foreign exchange transactionsGenerally, it involves currency. When buying one currency, one will inevitably sell another currency, so one can hold both long and short positions. Regardless of the market situation, there is an opportunity to profit.

【2】Long duration of foreign exchange arbitrage trading, all day long24Trading is available within hours. Therefore, the foreign exchange market is more suitable for active traders, and investors can also trade according to their own schedule.

【3】Foreign exchange carry trades have high liquidity. The average daily trading volume in the foreign exchange market is1.9Trillion US dollars, which is equivalent tofuturesMarketable4Times, the US stock market30So they naturally become the world's largest and most liquid markets. The huge market capacity can provide investors with sufficient profit margins.

Of course, foreign exchange carry trades also have risks, and changes in exchange rates are the main risks of carry trades. Investors' risk preferences are one of the important factors that affect exchange rates and can also affect the profits of carry trades. So before conducting foreign exchange carry trades, it is important to understand the risk environment and the risk preferences of the investor community.

At present, there are two main forms of foreign exchange carry trading. One way is for participants to directly exchange their low interest currency into high interest currency and deposit it in the country's banking institutions. Another approach is to borrow from low interest currency countries, convert the borrowed low interest currency into high interest currency, and deposit it in the country's banking institutions, or use it to invest in more attractive assets such as the stock market.