Carry trade

[CashOutChick]

I saw someone advertising his system which I think uses "carry trade of electronic currency". His system earned him US$300 to US$600 a day in interest for 1 month (Aug 2007). What is electronic currency? How does it work?

 

[ampro]

So in a word, stop looking for the holy grail from these bloody systems. I'm going to make this really simple for you all...............

DON'T BUY SYSTEMS, DO YOUR OWN HOMEWORK!!!! DON'T BUY SYSTEMS, DO YOUR OWN HOMEWORK!!!! DON'T BUY SYSTEMS, DO YOUR OWN HOMEWORK!!!!.......

excellent advice Unc,

but you're wasting your breath even trying

 

[westernforce]

Thanks Uncle GJ

I only hope the purveyors of systems are watching

 

[ampro]

Slap enough make-up on a god awful ugly broad, spruce her up in fancy attire & plant her on the corner of 17th & Vine & they’ll be plenty of slickers only too willing to peel off a couple $50 bills for a little entertainment without looking too deep.

I seriously doubt the types of punters attracted by the greed of the grail bait in this game are any different GJ.

And no (before anyone asks), I have no direct experience of either scenario

 

[DannyBly]

I think we are in something of an 'anti-carry' climate right now with money flowing out of higher yielding/higher risk currencies. I just wrote an article on the carry trade and the super high yielding exotic carry trade currencies:

Exotic Carry Trade

the daily interest payouts and massive leverage available make it quite a tempting strategy regardless of the economic climate-

 

[gooseman]

i'd be interested in how the system works given that the carry trade principle is buying bonds in the high-yielding countries....the FX is merely a means to an end.....

obviosuly when vol picks up the carry trade reverses....is it based on that?>

 

[Rhody Trader]

i'd be interested in how the system works given that the carry trade principle is buying bonds in the high-yielding countries....the FX is merely a means to an end.....

obviosuly when vol picks up the carry trade reverses....is it based on that?>

The currency part for the big players is only a pass through mechanism. It's a way to get cheap capital and put it to work in places where higher returns can be achieved. That could be borrowing Yen to buy Indian stocks. It seems that only retail forex traders think of it as purely a currency market thing.

And yes, that is exactly why when risk aversion comes crashing into the markets the carry trade pairs get hammered.

 

[gooseman]

Cheers Rhody.

I understand the mechanisms of the carry trade but what I was wondering was how you trade the fx through the 'system'. Do you short the yen and wait for everyone else to step in and do the same? When it boils down to it you're essentially trading global vol....

 

[Rhody Trader]

Cheers Rhody.

I understand the mechanisms of the carry trade but what I was wondering was how you trade the fx through the 'system'. Do you short the yen and wait for everyone else to step in and do the same? When it boils down to it you're essentially trading global vol....

A carry trade player wouldn't be worrying too much about the movement of the Yen, so long as it doesn't move too much against them. They just want the yield differential.

 

[grantx]

Goose,

"you're essentially trading global vol". This is an unintentional side effect. While the yield differential is attractive, the risk is the volatility. Borrow Yen and invest in Zimbabwe - inflation at 100,000%, must be some pretty high yielding paper (I would suggest inflation-linked bonds).

Grant

 

[TWI]

Just continue to sell $ against anything and everything and forget about anything that complicates that outlook. I agree that inflation linked bonds are probably a very sound option right now.

 

[gooseman]

A carry trade player wouldn't be worrying too much about the movement of the Yen, so long as it doesn't move too much against them. They just want the yield differential.

sorry rhody i don't think you're getting what i mean. i know all about the carry trade....what i want to know is how a system trades the carry trade, i.e the fx. i'm assuming that the retail investors the system is aimed at is not ooking for yield.

 

[TWI]

I think it would probably just short all the low yielders against all the high yielders. NZD/Y, AUD/Y, BZR/Y would be examples.

 

[Rhody Trader]

sorry rhody i don't think you're getting what i mean. i know all about the carry trade....what i want to know is how a system trades the carry trade, i.e the fx. i'm assuming that the retail investors the system is aimed at is not ooking for yield.

No, I wasn't.

Basically all you're talking about is direction trading of the primary carry trade pairs. The implication of them is that one should be leaned toward being long the higher yielding pair, thereby only making the trades in those directions. That sort of decision-making, though, wouldn't vary much from other approaches to the market.

 

[rod30]

very good article

I think we are in something of an 'anti-carry' climate right now with money flowing out of higher yielding/higher risk currencies. I just wrote an article on the carry trade and the super high yielding exotic carry trade currencies:

Exotic Carry Trade

the daily interest payouts and massive leverage available make it quite a tempting strategy regardless of the economic climate-

which are the economic indicator inflation reduction, central bank high interest example about NZD in your article
i cant understand overnight interest debited or accredited ( swap ) ?
so if i open a position on Monday long on Eur/usd i buy Eur and sell USd this is an example
interest rate on Eur 11 % Interest on USD 1 % = 10% up trend and i close it on Tue
i earn with a leverage of 4 40 % annually ok but if trend on Tue is down and i close the position ? i lose
so if NZD/ JPY NZD interest 1 % JPY interest 11 % i short on wed i close the position in profit Friday
10% * leverage = % annualy / 365 ?
or i must to wait the rollover payment day to close all ?
and how can i choose the currecies basket ?

 

[jkui89]

I saw someone advertising his system which I think uses "carry trade of electronic currency". His system earned him US$300 to US$600 a day in interest for 1 month (Aug 2007). What is electronic currency? How does it work?

Nobody seems to have answered your question so I'll have a go. I think I know the system you're talking about, and if we're talking about the same thing then it has nothing to do with Forex, but rather involves electronic currencies like e-gold (an internet payment system). I'm not familiar with the exact details of the system but I believe it involves "investing" in a massive ponzi scheme to make your $300 to $600 per day...

 

[rod30]

ok

Nobody seems to have answered your question so I'll have a go. I think I know the system you're talking about, and if we're talking about the same thing then it has nothing to do with Forex, but rather involves electronic currencies like e-gold (an internet payment system). I'm not familiar with the exact details of the system but I believe it involves "investing" in a massive ponzi scheme to make your $300 to $600 per day...

with this video you will understand how is possible to do that
Collect Positive Rolls | Forex on Margin | Currency Interest
and about $600 dolars in a day all depends how many lot you trade
and if you hedge your position all here and how big is your leverage
sure at the start your leverage must to be small 1:2

 

[jkui89]

with this video you will understand how is possible to do that
Collect Positive Rolls | Forex on Margin | Currency Interest
and about $600 dolars in a day all depends how many lot you trade
and if you hedge your position all here and how big is your leverage
sure at the start your leverage must to be small 1:2

I know what carry trade is, I still believe the original poster was referring to something completely different, i.e. electronic currencies like e-gold, NOT national currencies.