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Carry Trade [live progress]

  • #21
  • Edited 9:51pm May 22, 2007 2:54pm | Edited 9:51pm
Hi roller,

Looking over your positions, it appears you have more of a hedge going than an actual carry trade basket.

To carry trade, a trader would look for pairs that are OS or OB and that appear ready to move in the direction that would be
"interest earned positive" and give you appreciation on your investment in terms of
"pip appreciation", with a following stop.

You are short the USD/CHF& cad/jpy which debits your account, as well as long eur/usd which debits.

Traders get burned when trying to carry and the pair they position in is ready to correct ( which some call unwind ) Having gone LONG the gpd/jpy when it corrected to about 221.50 and than hold with a following stop would have been the time to enter the carry, or cad/jyp at around 100.00. Than you'd begin to have a true carry basket put together. As for me, the gpd/usd is not worth carrying, interest paid to low and a volitale pair....even interest debited is nominal....so one can choose to positon trade without high carry costs.

To me it appears you have a few positions that would offset each other (hedge)....though you are still net pos on your trades interest. With oil as it is, cad/jpy was/is a great trade to be long (maybe ready to correct ).....cad appreciation vs yen, plus interest. Be careful on the gpd/jpy carry tonight with gpd bank minutes due out. Market is VERY long pound and short the yen......

Hope that makes a bit of sense. Others may explain it better than I.
Best of Luck
Proper Prior Planning Prevents Piss Poor Performance
  • #22
  • May 22, 2007 5:50pm May 22, 2007 5:50pm
Quoting theroller
And here is the detailed status of each currency pair used in the carry trade account:
That is wonderful portfolio!
Also Japanese traders often short CHFJPY simply because interest payment is inexpensive(only 50 yen per 10,000 CHF per one day). As Japanese mentality and behavior, it is not possibly accepted that they continue paying high-interest rate swaps for a long moment, I think!(I'm a proud Japanese)

I cited a case for reference, last autumn I had ever read the thread which went around recommending buying CADJPY on the 2ch(2channel is the largest Internet forum in Japan). The thread starter(Japanese, of course) identified himself as financial strategist and he encouraged readers of the foreign exchange forum. He used to expound his theory on the forex forum,
" 1 US dollar will become 1 Canadian dollar within 2007, so Japanese must buy CADJPY because Japanese should continue receiving high-interest income and become a wealthy man!"
Although we can't just know Canadian dimension, it seemed many readers followed his advice.
Me? what a pity! I didn't buy CADJPY because I decided not to do what I didn't understand...
Peace and Happiness through Prosperity (by Konosuke Matsushita)
  • #23
  • May 22, 2007 6:50pm May 22, 2007 6:50pm
i wonder, do you put all the position at once and reporting the position condition daily?

i think it is better if you put it piece by piece.
  • #24
  • May 22, 2007 8:13pm May 22, 2007 8:13pm
Your opinion on cary trade xxx/JPY
  • #25
  • May 22, 2007 9:59pm May 22, 2007 9:59pm
Quoting Gwan
i wonder, do you put all the position at once and reporting the position condition daily?

i think it is better if you put it piece by piece.
Hi Gwan,

Carry trades are placed ( positioned ) as they become a viable long term investment ( as each trader defines L/T ).......so pair by pair would be corrrect, and as timing is never perfect.....scaling into positions is best way ( my opinion ), just DO NOT overleverage !
Proper Prior Planning Prevents Piss Poor Performance
  • #26
  • Edited 10:16pm May 22, 2007 10:15pm | Edited 10:16pm
Quoting kariunas13
Your opinion on cary trade xxx/JPY

Many exotics are good carry trades vs the yen.....though I'd be VERY carefule at the moment....appears many are top heavy, and skuttlebutt is that some correction is coming......gpd/jpy is one to be leary of at the moment.

A carry trade I am looking for is the gpd/chf....though not at these levels, maybe look at the aud/jpy, nzd/jpy and eur/chf (timing is critical)......just don't jump on board and sit through a correction/drawdown/unwinding.....wait for OS markets, I usually go from the daily charts with a weekly as backup.

These aren't for many brokers. Are not for high leverage either. Nor brokers with hugh spreads and low swaps.

Hope this helps
Proper Prior Planning Prevents Piss Poor Performance
  • #27
  • May 23, 2007 6:19am May 23, 2007 6:19am
checked the recent jpy rally that happened late february. the account set here would have provided around -1100$ swing (gbpjpy would cause -1767$). there seems to be two ways to overcome that: a) place a stop on JPY negative pairs b) include a volatile gbp pair and short it ex:gbpchf, buy that would decrease the interest rate profit substancially.

any other options () you might think of?
  • #28
  • May 25, 2007 4:30pm May 25, 2007 4:30pm
How about this for a carry trade strategy:

Long GBP/JPY with a broker that pays interest e.g. IBFX
Short GBP/JPY with a commision broker that does not charge interest e.g. MB Trading

Move money between accounts to maintain the margin as required
  • #29
  • May 25, 2007 5:36pm May 25, 2007 5:36pm
How much does it cost to remove the money for re-balancing
can you do a wire transfer


Quoting NewstraderFX
How about this for a carry trade strategy:

Long GBP/JPY with a broker that pays interest e.g. IBFX
Short GBP/JPY with a commision broker that does not charge interest e.g. MB Trading

Move money between accounts to maintain the margin as required
  • #30
  • May 25, 2007 5:55pm May 25, 2007 5:55pm
Quoting NewstraderFX
How about this for a carry trade strategy:

Long GBP/JPY with a broker that pays interest e.g. IBFX
Short GBP/JPY with a commision broker that does not charge interest e.g. MB Trading

Move money between accounts to maintain the margin as required
This is actually the way you do it -- forget all the basket stuff. You'll earn somewhere around 80% a year, if not more. I know a guy who is doing it right now with a nice sized account.

Free money. All you have to do is watch it to, like you said, move money around when big swings happen.

This is how the big boys carry. They don't mess with baskets...

The only thing you have to do is make sure you trade a little bit on the no swap side so the broker doesn't have issues...
Mr. Trend
  • #31
  • May 25, 2007 7:26pm May 25, 2007 7:26pm
Quoting NewstraderFX
How about this for a carry trade strategy:

Long GBP/JPY with a broker that pays interest e.g. IBFX
Short GBP/JPY with a commision broker that does not charge interest e.g. MB Trading

Move money between accounts to maintain the margin as required
Wow, NewstraderFX. I have read really good ideas from you lately. Thank you man.
  • #32
  • May 25, 2007 8:16pm May 25, 2007 8:16pm
What about this:

In order to use only one account. Buy GBPJPY and sell CHFJPY. These two pairs have a good correlation. You will be earning a good interest amount with GBPJPY long a losing a small amount with CHFJPY short.
You may need to adjust lot size considering pairs movements, they have a good correlation which should keep a good balance but really dont know if they move the same.

Would it be possible?
  • #33
  • May 25, 2007 10:06pm May 25, 2007 10:06pm
Nevermind-MB is charging the rollover
  • #34
  • May 25, 2007 11:05pm May 25, 2007 11:05pm
The pair last year in the same period ( end of May 2006 ) has recorded an all time low @ 1.0927 , and within two monthes the US Dollar recovered and reached 1.14 , and it kept on recovering till the 1.1850 levels .

So why are you so pessimistic against the USD , may be it will dive more , but its a matter of time since it will fly again .

Im long sinse 1.0970 and Im ready to wait .

good luck for all
  • #35
  • May 26, 2007 3:48am May 26, 2007 3:48am
What type of formula would you use for calculating the lot size
based on the daily pip of the two pairs ?
can someone give an example of a calculation using the daily range
for lot sizing


Quoting pabloski
What about this:

In order to use only one account. Buy GBPJPY and sell CHFJPY. These two pairs have a good correlation. You will be earning a good interest amount with GBPJPY long a losing a small amount with CHFJPY short.
You may need to adjust lot size considering pairs movements, they have a good correlation which should keep a good balance but really dont know if they move the same.

Would it be possible?
  • #36
  • May 26, 2007 10:57am May 26, 2007 10:57am
Quoting NewstraderFX
Nevermind-MB is charging the rollover
I think it's CMS who you call... ask them for a no swap account. They don't advertise it, but it's available.
Mr. Trend
  • #37
  • Jul 9, 2008 11:56am Jul 9, 2008 11:56am
Are the trades still alive?
If everyone believes it, it will work.
  • #38
  • Sep 1, 2008 3:14am Sep 1, 2008 3:14am
Quoting TradurGurl
I hedged, and shorted all the yen crosses -- and they dropped like rocks the whole time, so I made 100 to 200% profit on each. My long trades went down, too, but I tend to think that A TRADE THAT GOES BACKWORDS REALLY FAST RETURNS TENDS TO CORRECT REALLY FAST, TOO -- so I allowed for a BIG drawdown, which was off-set by my hedge.
hi tradurgurl,

a question if you dont mind.......

you were long the yen crosses - you hedged those and shorted them.

so if I understand your story, you were long say 5 contracts, hedged those 5 contracts and went short another 5 contracts?

how did you hedge those contracts?
with options or did you have another account so you could short on the second account?

if options: how exactly did you do this?

thanks for your time.
  • #39
  • Mar 2, 2010 6:46am Mar 2, 2010 6:46am
Wow, its been 3 years

At the time I started this thread, it was the game of JPY crosses. Since than, crisis, and huge drop in interest rates caused JPY carry trading not to be so much profitable. (by the way, i didn't keep track of the initial one; but just looking at it, it seems to have done good during the crisis, too)

Looking around the current carry interests, I have put another portfolio, and my intention is to keep track of this daily, or with updates at least a week. Will definitely monitor rate decisions and add/subtract to the portfolio depending on raise/drop of rates.

Here it goes:
Attached Image (click to enlarge)
Click to Enlarge Name: 3:2:10.png Size: 36 KB
  • #40
  • Mar 2, 2010 6:46am Mar 2, 2010 6:46am
This portfolio is created at US Open on March 2, 2010
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