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Rabax Nov 13, 2006 12:07pm | Post# 1

NZD/JPY
 
Hello everyone.

I've looked arount the forum a little bit but have not found any thread dedicated to NZD/JPY currency pair.

I am looking into this pair for quite some time. I am a newbie in Forex, but have a basic understanding of the market.

So my question to you, the experts, is the following:

If I was to go long NZD/JPY (I know, not a very wise choice at the moment) - but somewhere in the following months, and decide for a carry trade i.e. keep the NZD for a longer period of time.

I have done some calculating and got the following figures:

Investment - 1500EUR
Long 2 minilots NZD/JPY
Daily interest rate (at the momet 7%/365) = ~1,9 EUR
In a year the interest would be ~714 EUR, which is 48% of the initial investment.

This position would be without a stoploss order, since the 1500 EUR would mean that NZD/JPY could drop for 1100 pips, which would mean that the value could drop to (if bought at 78,00) 67,00. The lowest value for this pair ever was 64,32 and lowest this year was 67,77.

In theory if the currency is ranging from lets say 67,00 to 87,00 (max value ever, and also max 2006), this position could remain open throughout the year.

A 48% yearly income is not such a bad thing?

Please post your comments on this idea and feel free to rip it apart, it will save me money .

Oh, and I forgot - the leverage is 400:1.

Any other comments on this pair are very welcome.

Thank you all for writing.

Regards.

tar Nov 13, 2006 12:27pm | Post# 2

in GFT u need only 25nzd for every mini !

iya Nov 13, 2006 2:53pm | Post# 3

Should be a good idea in general, but...
 
...exchange rate development is more important than interest:

What if the trade goes against you?
You say if it goes to 67,00 the initial capital is lost, so if that happens at the end of the year, your ROI will be -52%! If it looses even more, you would be broke. On the other hand if it goes in your direction you would win a lot more than 48% of course.

The good news is, that (in my limited experience ) the currency with the lower interest yield is more likely to deprecate. I think in the long term, low interest rates mean more liquidity, higher inflation and ultimately less valuable fiat money.
If that is the case, the only uncertainty would be that the BOJ is coming to its senses and continues to raise the rates.

So you should only do it, if you think that NZDJPY will rise or at least stay were it is. Don't simply bet that the interest gains will outweigh the potential losses.

StockKJay Nov 13, 2006 3:23pm | Post# 4

Rabax,

Leave enough room so that you feel really safe about the trade. If your absolute max drawdown would not cause a margin call, yes this is a great investement.

Also look at such currencies as ZAR/JPY, I believe that is an 8.5% difference or something crazy.

Rabax Nov 13, 2006 4:59pm | Post# 5

Rabax,

Leave enough room so that you feel really safe about the trade. If your absolute max drawdown would not cause a margin call, yes this is a great investement.

Also look at such currencies as ZAR/JPY, I believe that is an 8.5% difference or something crazy.
That is exactly it.

With 1,5k EUR, I could afford the currency (if bought at 78,00) to lose 1100 pips with 2 minilots bought. Of course with interest, my position would be getting stronger as interest flows in, which means I could afford a wider span.

In my opinion the ideal buy price would be 74-76, that's why I decided to wait a little longer. I'm hoping it will fall at least a little bit more.

ZAR/JPY from what I can see is about 50% more volatile than NZDJPY, which I would consider a far riskier investment. I don't want to get too greedy.

Greed usually hits you in the face... with a big steel rod.

Even if the position would fall, I am in no hurry to liquidate it. If it goes up, it's even better, but not my primary goal.

Of course, there will probably be an increase in interest rates of BoJ in the following year and maybe a decrease in interest rates of Bank of NZ. But so far it seems ok.

It would be great if anyone knows of any sites (maybe even this one?) that have a log of interest rates. Or I'll just go check it on google.

As for the NZD/JPY rate, I'm pretty sure NZD/JPY will drop to somewhere around 77, if not lower. I'm thinking about buying at around 76 or less (as stated above). We'll have to wait and see - only time will tell.

Rabax Dec 20, 2006 5:05am | Post# 6

You just have to love NZD. Didn't drop to 77 or lower, it was near enough luckily, but still it's doing great.

If anyone has any other comments regarding this pair, please share them. It is interesting to see the NZD getting stronger, even tough it's a shared opinion that rates will be rised on JPY to 0,5% and higher next year.

Gotta love the interest rates combined with leverage!

Went in long on the AUD/JPY as well, but I'm more concerned, because it is on a record high, we'll see how long it lasts.

Regards to all,
Jan

barakah Dec 20, 2006 7:42pm | Post# 7

great swap
 
Hi Jan,

Merry Christmas, great thread. I'm in aud/jpy and looking for similar zar/jpy or kiwi/yen.

I understand the concept and think for a newb its a good way to grow our caps before touching other higher risk currencies.

Did you long since nov? if yes, how's it doing? will be great to hear from you.

Your swap should be around your capital by now i guess, kaching!

tdion Dec 21, 2006 11:06am | Post# 8

First, I found this site offering excellent fundamentals on NZD: http://www.beehive.govt.nz/
Second, I built a system around the NZD/JPY. It needs some work. If you trade this pair, please check my system out, hyperlinked on my signature.

Tom

Rabax Dec 22, 2006 4:31am | Post# 9

Hi Jan,

Merry Christmas, great thread. I'm in aud/jpy and looking for similar zar/jpy or kiwi/yen.

I understand the concept and think for a newb its a good way to grow our caps before touching other higher risk currencies.

Did you long since nov? if yes, how's it doing? will be great to hear from you.

Your swap should be around your capital by now i guess, kaching!
Well.

First of all I must emphasize that I am still demoing, and it's not real money right now (which is bad at the moment, since I would have made a healthy gain), but there will be opportunities in the next year as well.

I must say, that in the past I made some stupid choices, and tried to get as much out as possible, with no regards, to risk. First I went long 3 lots, when I made over 2500 EUR on the 3 lots (starting capital was 5000 EUR). It was great having the value of NZD increase and getting high interest at the same time. So of course, if we are profiting, why not profit more? So I went and bought 5 more lots of NZD. I figured since I was already 2500 EUR in profit, the profit could cover a potential loss, but was at the same time confident that NZD will still continue to go up.

Well the trade turned against me, but I could afford to wait it out. After about a week, I had a negative balance of cca. 2000 EUR (since 5 lots weighted against the profitable 3 lots heavily). I decided to cut my lossess and closed the trades.

If I would stick it out, I would have a huge profit by now, but if the NZD wouldn't rise again, I would have lost all.

This combined with some other stupid things I did, reduced my account to 1500 EUR.

This is when I decided to start playing by the rules (money management, stops, assess the currency pair, as to what will happen with it in the future, etc.). This is how I decided for the signature that I use right now and in my opinion this is the greatest problem of all - Greed and impatience.

Since 17th of November I have been playing by the rules, and so far I have an account (in open trades) of cca. 2300 EUR, which is already the 48%+ that I have been aiming for. I am also scaling up into trade, therefore also covering for potential loss with the already made profits.

I wonder what will happen with the real money, but I think I learned my lession. Getting rich overnight if not an option, losing it all overnight is. Play your cards right, minimise risk and keep profit is the key. Greed is the killer of us all.

I can't wait to start. And I must say that I love NZD/JPY pair, have done 2 trades on AUD/JPY also, but as I said i'm more concerned about those 2 trades turning against me, but it's covered so far.

Regards, Jan

Rabax Dec 22, 2006 4:47am | Post# 10

First, I found this site offering excellent fundamentals on NZD: http://www.beehive.govt.nz/
Second, I built a system around the NZD/JPY. It needs some work. If you trade this pair, please check my system out, hyperlinked on my signature.

Tom
I posted my opinion on your system in your thread.

Regards,
Jan

timbeaven Dec 22, 2006 4:49am | Post# 11

Jan,

Have you looked into running the same carry trade on Gbp/Jpy?

IMHO, I think the rollover credits/ interest payments per mini/lot are almost double that of Nzd/Jpy (OK, the trading range is far greater also!!).

Cheers,
Tim.

Rabax Dec 22, 2006 6:40am | Post# 12

Jan,

Have you looked into running the same carry trade on Gbp/Jpy?

IMHO, I think the rollover credits/ interest payments per mini/lot are almost double that of Nzd/Jpy (OK, the trading range is far greater also!!).

Cheers,
Tim.
It's a very interesting pair also and has been in a very nice long-term uptrend this year and also this month. Would consider it a buy definately, however the interest rate difference is far lower (5%-0.25%=4,75%) then NZD/JPY (7.25%-0.25%=7%). But if we would consider the rise in the value, it would be a huge gain. A definite buy.

Regards,
Jan

timbeaven Dec 22, 2006 7:03am | Post# 13

You are probably correct there Jan about the current interest rate differentials between the afore mentioned currencies (I haven't checked them!!).

But, I was refering to the interest payments you will receive from your broker.

OK, one should reflect the other, but apparently that is not the case (and I have no idea why!!).
Taking fxcm as an example, their interest payments for 1 mini lot long of NzdJpy is $1.23 per day, for GbpJpy it is $2.40 per day.

Sorry for not keeping this thread dedicated solely to Nzd/Jpy!!

Cheers,
Tim.

Rabax Dec 22, 2006 9:40am | Post# 14

You are probably correct there Jan about the current interest rate differentials between the afore mentioned currencies (I haven't checked them!!).

But, I was refering to the interest payments you will receive from your broker.

OK, one should reflect the other, but apparently that is not the case (and I have no idea why!!).
Taking fxcm as an example, their interest payments for 1 mini lot long of NzdJpy is $1.23 per day, for GbpJpy it is $2.40 per day.

Sorry for not keeping this thread dedicated solely to Nzd/Jpy!!

Cheers,
Tim.
I think this is logical, as 1 lot long of NZD/JPY means that you own 100.000 NZD=83*100.000JPY and long for 1 lot GBP is 100.000GBP=232,5*100.000 JPY. Then you calculate the rates (7% for long NZD and 4,75% for long GBP per day (/365). That's where the difference is. 1 lot of NZD is of less value than 1 lot of GBP.

GirlFlyer Dec 22, 2006 11:04am | Post# 15

Jan,

Have you looked into running the same carry trade on Gbp/Jpy?

IMHO, I think the rollover credits/ interest payments per mini/lot are almost double that of Nzd/Jpy (OK, the trading range is far greater also!!).

Cheers,
Tim.
Interest works out to be as much with GBP/JPY because your lot is worth almost 3 times as much as 1 NZD lot. If you bought 3 NZD lots, it would come out in USD to be just a little more than what the USD value of 1 lot of GBP

So, NZD = less equity per lot.

Hope that helps to understand the diff

GF

LumoX Dec 22, 2006 11:11am | Post# 16

Surely, GBP/JPY and NZD/JPY bith have pip values of $0.85 per pip (for a US$ account) so how can one be worth less than the other?

Bonus points for an 'Airplane' quote in the response!!

StockKJay Jan 6, 2007 11:46pm | Post# 17

Still around Rabax?
 
This dip on all the JPY pairs seems like the perfect opportunity to begin watching for a long setup. Though caution obviously should be high considering the talk of as high as .50 bp rate increase in the next couple months by the Japanese. Since I myself have no position in any carry trades, I welcome this dip... I hope for my sake (isnt it always : ) that this dip continues and I will get cheaper prices for my hopefully long hold north.

CHF is being shortened a whole lot as well right now, with rising rates coming (possibly) in Japan, CHF may become near as equal a carry trade with its low 2% currency interest.

Any other thoughts?

Rabax Jan 8, 2007 7:27am | Post# 18

I think the most important thing will be the decision on interest rates in Japan. We'll have to wait and see, what will happen. Also the fact is, that NZD and AUD are still very strong against JPY.

Between us, I'm hoping for the YEN to gain against NZD and AUD, so that we get a better long for both.

Haven't looked into the fundamentals a lot lately, so this is just a wish without any firm arguments. But as far as I hear, BoJ should raise rates this month and maybe lay ground for further rate increases. Who knows, we'll have to wait and see, but I'd short at the moment, as the retracement is far from over in my opinion.

StockKJay Jan 9, 2007 8:36am | Post# 19


Between us, I'm hoping for the YEN to gain against NZD and AUD, so that we get a better long for both.

.
Though I have taken advantage of the reversal and plan to hold as long as possible, I couldnt agree more with your statement. Even with a .50 rate raise by Japan, the market will still have no better currency to carry against. With JPY strength better than what we saw last week, it would do good things for those that want to get into pairs long term such as NZD and AUD JPY.

Rabax Apr 26, 2008 3:20am | Post# 20

Darn, I missed the entry at 77...


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