For much of the last decade, foreign exchange (FX) trading was a pretty straightforward game.
Currency managers were able to earn healthy returns by exploiting a couple of simple factors: carry and momentum.
The carry trade involves selling a low interest rate currency and investing the proceeds in a higher-yielding currency, while momentum strategies exploit the tendency of FX moves to trend over time.
Data from Deutsche Bank shows carry and momentum strategies earned annualised returns of 7.27%
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