Investing in Currencies

Using leverage with the carry trade Forex markets can offer relatively higher leverage than trading in other assets; this can have an amplifying effect on potential profits from the carry trade. Carry trading major pairs like EUR/USD with margin requirements of 2-5% could turn modest interest rate differentials into substantial potential returns by multiplying the carry profit 20-50 times; however, leverage can also magnify profits and losses from price action of the forex pair that could result in losses exceeding the account's initial deposit. Using the above example, buying 1...