How can i hedge a carry trade?

<p id="isPasted">Natural carry trades are unhedged so investors can hedge their position by purchasing options. You can use options to limit potential losses should a currency significantly fluctuate against you.</p><p>A carry trade is a popular forex strategy where traders attempt to take advantage of differences in interest rates between currencies. These differences may be small but carry trades are often executed with significant leverage to enhance profitability. Carry trades can work for prolonged periods but they may unwind abruptly if the underlying economic conditions change.</p><p>Investors interested in carry trading should study the mechanics of the trade, follow the economic trends of the underlying nations, and enter a position only when they’re confident they understand all the risks. You might consider touching base with a top Forex broker first if you're considering wading in.</p>