What is Carry trade?
Currencies (forex)Borrowing in a low-interest currency to invest in a higher-interest one, earning the gap. It can unwind violently when markets panic.
Think of it like: Borrowing your sister's bike for free and renting it out to a friend for a fee.
Real example: When the yen jumped in early August 2024, traders rushed to repay yen loans and Japan's Nikkei 225 fell 12% on 5 August.
Lesson: Money flowing in and out Practise it now: Headline Reflex