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Psychological challenges of pure speculation

How to identify potential carry opportunities

They provide liquidity to the market

Used by hedge funds and institutions

Hedging costs vs. unhedged risk trade-off

Options for defined-risk strategies

Swaps for institutional portfolio management

Used for hedging and speculative strategies

Swaps hedge long-term project cashflows

Carry trades for interest-seeking investors

Call option gives right to buy currency

No counterparty risk from clearinghouse

Non-standardized compared to futures

Carry trade works in stable conditions

Common speculative strategies explained

Currency Quotes