Buy the high-yield currency, sell the low-yield one, and collect the interest differential (swap) day after day. It accrues even when the exchange rate does not move. A practical walk-through of the mechanism, concrete rules, expectancy, and the tail risk that can swallow it all in an instant.
What this method harvests is not a rise in price. It is time itself.
Buy the high-yield currency, sell the low-yield one. Then, simply by holding the position, that interest differential (the swap point) accrues to your account day after day. Even if the exchange rate does not move at all, interest equal to the rate differential lands while you sleep. This is the carry trade.
Take AUD/JPY as an example. If Australia's policy rate is higher than Japan's, the side that buys AUD and sells JPY collects that difference every day. The rate can trade flat and the differential alone keeps quietly stacking up.
This idea is not confined to FX. In futures, roll yield is captured by rolling between near and far contracts. In bonds, roll-down rides the yield curve as time passes. In commodities, it is the return earned by repeatedly buying the front contract in a backwardated market. All of these belong to the same family: carry, the return that flows in over time simply from holding.
Let me draw a line here. Where time-series momentum and cross-sectional momentum aim to capture the direction of price, carry is a strategy that bets on price not moving. If it doesn't move, the entire differential is left over. It doesn't need to go your way. It just needs to stay calm. That is the prayer of this method.
How to Read
OANDA:AUDJPY
The Esoteric Volumes · By Application
Capital, discipline, psychology. The chapters that sit behind technique describe the bone-work that keeps an operator in the market for years. Access requires a written application, reviewed by hand.