I find this term interesting.
In the Carry Trade, speculators buy high interest currencies and sell currencies with low interest rates. These positions ensure that each trading day rollover-interest will be posted to the trader's account. Thus the Carry Trade has the potential to significantly enhance a trader's return.
Generally, traders seek to buy countries with high interest rates, and seek to short currencies who offer low interest rates.The carry trade works best under certain market conditions, and the selection of the currency pair can make the difference between a losing and a profitable trade. When selecting the currency pair, traders want to observe two things. On the one hand, the trader wants to make sure he is buying the currency that has the higher interest rate and is selling the currency that has a lower interest rate in comparison. On the other hand, the trader also wants to view the health of the economy for the currency pair to ensure the market will move to his/her favor. Essentially, the trader will be buying a currency with a stronger economy and selling the currency with a weaker economy
