Best Cash Back Forex Rebates : Learn How to Trade Forex: Foreign Exchange (FX) Currency Trading – Taking Advantage of Interest Rate Differential
By selling currencies whose country has a lower interest rate against currencies whose country has a higher interest rate, you can profit from the interest rate differential (known as a carry trade) as well as price appreciation.
That’s like being able to get a frosted cupcake with sprinkles on top! That talks to you! Imagine how delicious that would taste!
For example, take a look at the nice uptrend on AUD/JPY. If you had a long position on this pair, you would’ve made a hefty profit.
On top of that, the interest rate differential between AUD and JPY was huge. From 2002 to 2007, the Reserve Bank of Australia had raised rates to 6.25% while the BOJ kept their rates at 0%.
That means you made profits off your long position AND the interest rate differential on that trade!
Now that’d be an awesome cash cow right there!