The Strategy Of Carry – Trade

Катерина

New member
21.01.2010
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the Strategy of carry trade (carry trade) is one of the most popular Forex trading strategies. She used not only the ordinary traders and large hedge funds. The basic principle of the strategy of carry trade is to buy currency with a high interest rate and selling a currency with a low interest rate. This situation will allow you to profit not only from fluctuations in the price of a currency pair but also from the difference in interest rates (swaps). This strategy can only be applied under normal global economic conditions. Do not use it during a crisis.



Features



* Long-term profits.

* Two sources of profit.

* Works only with the growing global economy.



How to trade?



1. Choose the currency pair with a high positive swap (interest rate difference). AUD/JPY, NZD/JPY and GBP/JPY — good historical examples of such pairs.

2. Buy or sell the pair, depending on the direction in which the swap is positive.

3. Select a modest position size, so you can withstand a pretty serious uncommitted loss.

4. Do not set a stop-loss (one of the few Forex trading strategies, where it is not recommended to use stop-loss).

5. Wait.

6. When you feel that you earned enough or you expect some global financial turmoil, close the position.
 

kingtreid

New member
29.01.2010
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This strategy is used at the moment the GBP/JPY pair. Didn't know that it already exists (I think therefore I trade only
) Started with the minimum lot, the kickbacks were filled, now minus. Topping up is done according to the buy signals, some with TP closed, some stuck. Swap of 1.77 dripping. This strategy is likely to be very popular with the exit from the crisis, I agree. And now it is not clear what will happen.
 

Катерина

New member
21.01.2010
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The carry trade strategy is long-term, so do not jdat short-term profits. Traders who use this strategy keep open their positions for many months or even years. The longer you wait, the more profit you get.
 

Dom1no

New member
04.01.2010
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keep open their positions for many months or even years.



I am only one year in the subject, and then deals the years keep


I would not stand and shut down...
 

Ищущий

New member
08.01.2010
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what should I do if the broker you are trading will change the swaps ( this often), but the deal in the red? Where here hedging. Not go.
 

kingtreid

New member
29.01.2010
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With the exit from the crisis, the swaps, as I understand it will only grow, and soon the strategy will be more relevant than in this time. Good that at least analysis, you just need to wait. The risk is certainly present, and with DC and with the swaps, but in Forex the risk is present in all strategies.
 

kingtreid

New member
29.01.2010
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Bought another pound/yen, the red was decent, but the swap is dripping, and soothing. It is unlikely now that the strategy is relevant, but the turn difficult to predict (at least for me), so slowly zakupayus. Someone else uses this strategy?
 

concept

New member
19.02.2010
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Well, as I understand it is for ordinary traders with small capital - this strategy does not roll, and in the current environment when interest rates were lowered to impossible to use it at all no reason.....
 

kingtreid

New member
29.01.2010
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And who experienced can tell how much swap was at the pound/yen a few years ago? I now found the rules on swaps, where dripping 1.77 points daily. Is this normal, or before it was even shokoladna? With a small Deposit on a cent account, you can use the strategy.
 

Maryskevich

New member
12.01.2010
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of Course, this is not the way to earn if you have a small Deposit in the Bank on interest more than on this strategy. And in the description is clearly written that only works in a growing world economy.
 

Semi

New member
05.02.2010
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Right now in the World economy crisis! I think the strategy is not relevant!
 
15.12.2009
36
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If you are constantly working with stocks, currencies, bonds, other securities, or commodities, then you are probably faced with the term “carry trade”. For the first time in this strategy drew attention in the ' 80s, when she began to make a profit. We will examine the structure of the transactions, the type of carry trade, give examples of when they work and when their use is not recommended, also consider this strategy.



Let's start in order. Carry trade is a popular strategy in the currency market. What is the deal? Sold the currency, which brings some income, and one that does not bring the expected income or do not give profit and it is called the low-income seek to sell. The most common purchase via the carry trade consists of the new Zealand dollar/Japanese yen Australian dollar/Japanese yen and British pound/Swiss franc – those currencies have advantages because of the large difference in interest rates of currencies. The main step in this strategy is to analyze the currencies and the selection of the most profitable, and Vice versa.





According to statistics for the month of March 2008, the interest rates of the most liquid currencies in the world are:



In new Zealand (new Zealand dollar, NZD) 8.25%

* United Kingdom (pound, GBP) 5.25%

* Canada (canadian dollar, CAD) of 3.5%

* Switzerland (Swiss franc, CHF) 2.25%

* United States (USD, USD) 2.25%

* Japan (Japanese yen, JPY) 0.50%

* Australia (Australian dollar, AUD) 7.25%

* Eurozone (Euro, EUR) 4.00%



After analyzing these results, it is easy to notice that the currency of New Zealand and Australia has the highest rate and Japan the lowest. Therefore, these currency pairs carry trade transactions are the most common.



Source: forextales.ru
 
15.12.2009
36
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the Mechanism of yield %

One of the highlights of the carry trade strategy is the ability to profit from interest. In other words, the calculation of income each day is as follows: the interest rate of the currency purchased and the interest rate of the sold currency multiplied by the amount of positions and divided by the number of days in a year.

For example, the NZD/JPY pair yield would be as follows:

(0.825 – 0.005) x 100000 / 365 = about $22 per day

You must realize that the profit you can get only those traders who work with a long position on NZD/JPY. As you can see, this strategy does not represent anything difficult, which is why it has become very popular, but certain knowledge is required, otherwise you can easily lose all that had been created over the years.



how can I use the carry trade?

Imagine that the Central Bank increases interest rates: Carry trade starts to work, even when Central Banks only intend to do it. In the modern world, moving money from one country to another does not pose any difficulty and can be performed by pressing a single key on the computer, therefore, large investors, do not hesitate to move their funds from one country to another in search of greater profits. The advantage of the carry trade not only in obtaining stable profits, but in a measure of capital. When the Central Bank raises interest rates, the financial community peace monitors these changes carefully, and some immediately invest their capital in carry trade transactions, thereby increasing the quotes of the currency pair. The main factor here is the purpose of entering the loop changes the rates in the first period of time after changing courses.



It no longer makes sense to resort to the strategy of carry trade

Imagine that the rates are reduced by the Central Bank, then the feasibility of using the carry trade is questionable. In order for the strategy carry trades for a profit, a couple of currencies that are involved in the process should either not change or increase. When interest rates drop, the intensity of the deposits in these couples from foreign investors is greatly reduced, which can lead to the depreciation of the pair and easy to cancel any profit from interest rates.



the best method of trading carry trade – using a basket of currencies

Weighing all the "pros" and "cons" of the system carry trade, the best way to trade carry is the use of a basket of currencies. Having a basket in which are three most profitable and three less-yielding currencies, any currency pair is only part of the total portfolio; that is why, when bearing a loss on one pair you can get profit other, thereby compensating for your losses. Exactly what are trading, hedge funds and major banks. This system is a bit complicated for the average man, because the management of the basket will require a significant financial investment and more attention. The main criterion for the recycle bin is a constant changing of the portfolio components based on the interest rates of Central Banks.



the advantages of the carry trade

Carry trade is a long – term strategy that is ideal for medium to large investors, as checking quotes will take much less time, and test them it will be necessary only once a week, not every day or even hour. These carry traders, as well as leading banks on wall Street can hold its position for a long time – for months or even years. The fundamental task of the carry trade is making a profit by waiting. However, traders prefer short-term trades, for example, up to 5 days, the carry trade will also be an important strategy.



Source: forextales.ru
 
10.04.2010
10
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Here is a working strategy. Of course, You will earn 100% or 50%, even 10% is not always feasible in normal stock and it is very important. To carry often the kickbacks. I personally always have 1-2 open positions at the carry-trade. The strategy does not work in times of crisis, or any difficulties in the global economy. Just wait it out, and then open the new. I recommend this strategy.
 

Maryskevich

New member
12.01.2010
7
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0
Also think that the strategy is not so profitable, but at least you can earn more than Bank interest and risks in this strategy are not as large.
 
10.04.2010
10
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As an additional strategy to work are very good, I get about 5% a month in extra by using this strategy. Although if a bit of work with this strategy can be hold out and to 10% per month with acceptable risks.