Carry trade
A carry trade seeks to earn the financing-rate difference by funding exposure in a lower-interest-rate currency and holding a higher-interest-rate currency or asset. Exchange-rate losses and funding changes can outweigh the income; forex CFD swap charges also depend on product terms.
In a hypothetical carry trade, an investor borrows a low-rate currency to hold a higher-rate currency, but depreciation of the latter outweighs the interest earned.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Glossary definitions are general education only and are not investment advice. Risk disclosure