FOREX TRADERS

[Capitalist]

Isn't the whole strat of the carry simply to bag the interest while not having to worry about what direction either side of the trade trends?


The answer is no. Whoever told you that a carry trade is riskless with respect to market direction is on crack.

The risk in a carry trade is PRECISELY that the market will move against you. It's like selling naked calls; you can make periodic small profits time after time, but if the market moves against you by a big amount you lose everything.

You may be thinking of some kind of arbitrage strategy. Arbitrage involves entering a riskless transaction (two legs hedged against each other). But a carry trade is NOT arbitrage.