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Author Topic: What is a currency carry trade?  (Read 4998 times)

Offline Manish Kumar

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What is a currency carry trade?
« on: April 12, 2012, 03:28:30 PM »
Hello fellow traders,

write your review about What is a currency carry trade? it will help a lot to newbies.
Don't save what is left after spending; spend what is left after saving.

Offline Dominator4fx

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Re: What is a currency carry trade?
« Reply #1 on: April 21, 2012, 02:59:31 PM »
Hello fellow traders,

write your review about What is a currency carry trade? it will help a lot to newbies.

It just means that you have not taken the Physical delivery of the currency so it gets carried over and then a SWAP is applied to it.

This way you can hold currency for a long time till you want the rates.

Offline Kevin @ FXPIG

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Re: What is a currency carry trade?
« Reply #2 on: April 25, 2012, 12:05:13 AM »

The term 'carry trade' when talked about amongst 'carry traders' refers to a currency pair that pays a good SWAP rate (normally on the buy side) so that the pair can be bought and held for longer periods with the benefit of daily SWAP interest.

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Offline binaryoption1

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Re: What is a currency carry trade?
« Reply #3 on: July 26, 2012, 12:28:24 PM »
A technique in which an investor provides a certain forex with a relatively preferential and uses the funds to purchase a different forex producing a higher attention amount. A trader using this technique efforts to capture the difference between the rates, which can often be substantial, depending on the amount of make use of used.




Offline jennyjohn

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Re: What is a currency carry trade?
« Reply #4 on: August 27, 2012, 12:26:55 PM »
The phrase 'carry trade' when mentioned amongst 'carry traders' is the phrase for a forex couple that will pay a good SWAP amount (normally on the buy side) so that the couple can be purchased and organised for for a more time time with the advantage of everyday SWAP attention.


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Offline JoshTaylor

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Re: What is a currency carry trade?
« Reply #5 on: October 17, 2012, 01:50:04 AM »

The term 'carry trade' when talked about amongst 'carry traders' refers to a currency pair that pays a good SWAP rate (normally on the buy side) so that the pair can be bought and held for longer periods with the benefit of daily SWAP interest.

Exactly...the most common currency pairs used to "carry" are the USD/JPY and ESPECIALLY, #1 pair for the carry trade is the AUD/JPY. You will see this especially when the AUD overnight interest rate increases and Japan bottoms out interest on the Yen. What happens is that there is an "interest rate differential" between the base and cross currency. In the case of the AUD (which usually has the highest interest rate) and the JPY (which usually has the lowest interest rate). The market is primed you will see traders selling JPY and buying AUD (risk on environment). And you will be paid on the difference in the interested rates (base-cross).

In other words if the AUD is paying 4.50 % and the JPY is paying .50% then the interest rate differential is 4.00% (no, it does not mean they are going to pay you 4% on your account balance each night  ;) ). When the environment is right and the interest rate levels are right you will see traders BUYING the AUD/JPY for long-term position trades. Because not only do they get the gains from pip movement but they are making interested daily.

But it goes both ways...buy AUD/JPY and you are gaining daily interest adn selling AUD/JPY you are paying daily interest. Most brokers reputable brokers do pay the interest rate differential.

See the screenshot. You can see that I had 5 short positions on some trades that I held positions after the 5:00 pm NY window. By holding these trades over night, and the fact that I was selling these pairs (and base was paying higher than the cross) I paid interest by holding the positions overnight.

Now look at the second screenshot. I bought AUD and NZD (higher interest pairs) against USD and JPY (lower interest pairs)

When you see the risk environment right you can use what the large institutional traders will use for long-term gains and position trades that will run these pairs up 1000+ pips over a period of many months. Watch for this because you can use the carry trade as a long-term strategy and ride the trend.  ;D

Happy Trading
Josh Taylor

Offline jefftimothy

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Re: What is a currency carry trade?
« Reply #6 on: October 22, 2012, 12:50:04 AM »
Hello fellow traders,

write your review about What is a currency carry trade? it will help a lot to newbies.

Carry trade means trading with a currency pair where there is a considerable difference of interest rate between the two currency of the pair. Such as trading with AUD/JPY where AUD has high interest rate and JPY has low interest rate. Also NZD/JPY is a good example. To make profit from carry trade read this article : How to benefit from carry trade.
 

Offline tonnymak

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Re: What is a currency carry trade?
« Reply #7 on: April 22, 2013, 01:44:55 PM »
The idea of 'carry trade' while spoke of between 'carry traders' identifies a currency set of two of which pays an excellent EXCHANGE price (normally about the buy side) so the set of two are available along with held intended for for a longer time times using the benefit of everyday EXCHANGE interest.

Offline Manish Kumar

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Re: What is a currency carry trade?
« Reply #8 on: October 14, 2013, 02:46:14 PM »
Thanks for your kind response guys...

I created this thread for just information. It really helps newbies....
Don't save what is left after spending; spend what is left after saving.

Offline hybrid

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Re: What is a currency carry trade?
« Reply #9 on: February 01, 2016, 12:27:23 PM »
In forex trading most of us trade in currencies. There are many trading pairs including metals and oil. I like currency trading because they involve less risk than of gold and oil. we have to choose any currency pair and open position according to the market  for buy or sell.

Offline jakesgarland

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Re: What is a currency carry trade?
« Reply #10 on: February 16, 2016, 08:49:56 AM »
Currencies carry trading is one of the most profitable areas in forex trading. Carry trading takes advantage of the interest rate differential between the two currencies in a currency pair. You earn interest. If the high interest currency appreciates, you earn a capital gain as well.

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Offline Paul.Trafford

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Re: What is a currency carry trade?
« Reply #11 on: February 26, 2016, 01:44:07 PM »
I am stil new in online forex trading, I think I understand the currencies carry trading. How much money should I use to start using this strategy , is 2000 okay ?

Offline hybrid

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Re: What is a currency carry trade?
« Reply #12 on: March 05, 2016, 05:05:27 AM »
I am also new thinking to try currency carry trading. I am getting knowledge about it May be after some months I become a good trader for it. I heard this type of trading is beneficial.

 

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