Carry Trade Mechanics: From Entry to Exit

Carry trades are one of the most discussed strategies in crypto markets, but how do they really work from start to finish?

Here's the breakdown—setup phase locks in yield differentials, positioning traders to capitalize on interest rate gaps between lending and borrowing. The accumulation follows as positions scale, stacking leverage while market conditions remain favorable. Then comes the critical unwind: positions close as conditions shift, spreads tighten, or risk appetite cools.

The game changes fast. Timing entries isn't just about finding good yields—it's about reading market sentiment, monitoring funding rates, and knowing when liquidity could dry up. Exit strategy matters more than most realize; staying too long turns profit into loss in seconds.

Want to understand carry trade risk-reward dynamics and market cycles? The mechanics aren't complicated once you see the pattern.