Choose Stable Currencies or Look for Upward Trends

Opening a carry trade on a currency pair where either currency or both are volatile is a very risky move. Any profit gained in interest could be immediately wiped out by a sudden move in the market and you could well find yourself trading at a substantial loss.

Although risk often equals reward in forex trading, successful traders make strategic moves based on market knowledge to mitigate that risk.

So, when looking to open a carry trade, look for a historically stable currency pair or one in an upward trend that you expect to continue. This will protect you from adverse market moves and allow you to stay in your position for a beneficial amount of time.

Of course, there’s no guarantee here so you should also consider other risk management strategies, such as placing a stop loss on your trade.

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CFD Trading on financial markets carries risks. Before deciding to trade, you need to ensure that you understand the risks involved.