I read this with regard to managing crash risk for carry trade strategies (in regards to FX).
“when a currency falls below/above the band, the trader will overweight/underweight that currency in the traders carry trade portfolio.”
Is it saying that when the value of a currency falls, we are going to take a bigger position in that specific currency? Why is that the case, especially if the value of the currency has fallen below a certain threshold?
Thank you
I didn't find the right solution from the Internet.
