Apologies for my ignorance. I’ve heard a lot of talk about carry trades and I’ve always been wondering what this was about anyone mind elaborating a little ? 
Tons of info on youtube / the web about this so I’d recommend just popping that question in a search box.
Basically, the carry trade is a trading tactic in which a market participant seeks to take advantage of interest rate differentials between two competing currencies, by funding a higher-yielding currency with a lower-yielding one.
A classic example of a carry strategy would be trading with some of the JPY-crosses.
Take AUDJPY for example; The RBA’s rate is 2.5% while the BOJ’s rate is set @ .1%.
When you go long on a currency pair, effectively you are borrowing one currency to fund the purchase of another.
When you’re long AUDJPY, you’re “borrowing” JPY to “purchase” AUD.
So, when overnight roll charges are tacked on, your account will be credited the interest rate differential based on the two competing rates. Hold the position on a Wednesday, and you get triple roll.
As you know however, it’s not wise to simply go long AUDJPY in anticipation of accumulating the roll.
Why? Because the position can move against you, and any roll accumulated may just be wiped out and become insignificant.
The same works for the opposite side of that trade though- which is something you need to be careful and aware of.
If you’re short AUDJPY, you’re going to be paying interest for holding the position.
Every Wednesday, I try and find an opportunity a few hours before NY close to take advantage of that triple roll on an intraday trade. A few months ago, I had 3 or 4 weeks in a row where I was able to nail a nice long trade before the close, bag the triple roll around 5PM EST, then close the position out later that night with the 3x roll + a small gain.
Does that make sense?
Jake
To be more specific, in carry trading your goal is to profit over the interest rate differentials as stated. However, these traders are often great in size (millions) and are held for the long term. The entry is often provided via a monthly chart while the goal is to hold on to the trade for over 6 months, preferably one year or when the target is achieved.
Here’s a newbie-friendly guide from the School of Pipsology: What is Carry Trade? | Carry Trade | Freshman Year | Undergraduate
Hope this helps!