Hi, everyone. Let me qualify this by saying I'm just starting with this forex stuff, and there's a lot I don't quite understand. In beginners' books, there's always a few paragraphs or maybe a chapter devoted to carry trade, and here in Japan, it's gotten a lot of press for driving the yen so high recently. (the unwinding of the carry trade, that is)
Now that I have an account, it sounds appealing and at least a little less risky than going for the intraday technical analysis plays most traders do. So I'd like to try it, but with interest rates dropping across the world, it's a bad idea, right? There are still currencies with fairly high interest yields. Like NZD or ZAR. So what if I say, went long on NZD/USD? (seeing how the Fed Funds Rate is nearly zero) Would the volatility or weakness of the NZD wipe me out? I was thinking however bad the New Zealand economy is, it can't be worse than the US one(could it?).
Now that I have an account, it sounds appealing and at least a little less risky than going for the intraday technical analysis plays most traders do. So I'd like to try it, but with interest rates dropping across the world, it's a bad idea, right? There are still currencies with fairly high interest yields. Like NZD or ZAR. So what if I say, went long on NZD/USD? (seeing how the Fed Funds Rate is nearly zero) Would the volatility or weakness of the NZD wipe me out? I was thinking however bad the New Zealand economy is, it can't be worse than the US one(could it?).