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trading to make interest

  • #1
  • First Post: Apr 6, 2010 5:52am Apr 6, 2010 5:52am
does anyone trade to make interest
carrier trader i think it is called

out of £10 risk ive earned £2 in interest over 2 weeks more than some banks pay in a year

if you do would like to talk more on this subject
  • #2
  • Apr 6, 2010 5:56am Apr 6, 2010 5:56am
wonder the maths behind it all and the possible profit making?

just started trading like a long term professional
as have small capital and dont want to be speculative trader.

interested by carry trading
  • #3
  • Apr 6, 2010 5:58am Apr 6, 2010 5:58am
am i right in saying 100 pound £20 interest
1000 pound £200 interest

or is there more to it than this?
  • #4
  • Apr 6, 2010 6:00am Apr 6, 2010 6:00am
looking for long term traders experience and intel

thanks for your time
  • #5
  • Apr 6, 2010 6:08am Apr 6, 2010 6:08am
im a price trader
follow price trends and dont predict futures

dont all kinds of indicators and now dont use them

made more profit just looking at the chart on all time scales and getting in
riding a trend as long as i can

and locking in profits with stop loss capturing.

and learnt time zone trading, swing, reversals, candle patterns, indicators, flags, retracements, support and resistance,heat maps, ma, ichomo, renko
par star,
you name it ive learnt it

so looking to make monthly wage rather
than short term profits

hence interest now interests me lol
  • #6
  • Apr 6, 2010 12:12pm Apr 6, 2010 12:12pm
Hey Swano,

You might want to look into carry basket trading.
The premise is that you create a hedged "basket" of currencies which are near to market neutral but appreciate due to interest rate disparities.
It was all the rage when I started reading these boards.
(Because interest rate differentials were climbing).

Interestingly as we move out of this recession carry trading might
be on the cards again. Keep on the look out for rate hikes by central banks.
  • #7
  • Apr 6, 2010 1:02pm Apr 6, 2010 1:02pm
Quoting swano
does anyone trade to make interest
carrier trader i think it is called

out of £10 risk ive earned £2 in interest over 2 weeks more than some banks pay in a year

if you do would like to talk more on this subject
Hi Swano,

Are you calculating correctly? 20% in 2 weeks equates to 500% PA, or greater. Why am I wasting my time trading? Would you please expand on this process; I'd surely like to get in on this.
They call me "Hondo"
  • #8
  • Apr 8, 2010 2:15am Apr 8, 2010 2:15am
Quoting Ted1983
Hey Swano,

You might want to look into carry basket trading.
The premise is that you create a hedged "basket" of currencies which are near to market neutral but appreciate due to interest rate disparities.
It was all the rage when I started reading these boards.
(Because interest rate differentials were climbing).

Interestingly as we move out of this recession carry trading might
be on the cards again. Keep on the look out for rate hikes by central banks.
Thanks for the advice man
do you somtimes trade like that as well then?
im seriously considering the possibilities in trading like this.
this is what pros do and well like to be the same one day
almost there lol
  • #9
  • Apr 8, 2010 2:24am Apr 8, 2010 2:24am
Quoting eventtrading
Hi Swano,

Are you calculating correctly? 20% in 2 weeks equates to 500% PA, or greater. Why am I wasting my time trading? Would you please expand on this process; I'd surely like to get in on this.
well yeah i was trading Eud/ aud
i sure it was trending down
so i joined in, im not going to argue with tall the other traders selling it
and use stupid indicators that lie to me and say its reversing now.
like no way man.

this is a war, and you need an army to fight with you not against you.

yeah made £2 out of £10 risk

my trade now is at £30
300 percent
and interest at £3.50
35 percent

so im in the army, compounding my money and making interest

aud always seems to have high interest rate as well
so im guessing if you trade a currency with high interest its going to pay off more interest in your trade

I m now seriously consideing it, this is what the pros do, best to follow the generals.
  • #10
  • Apr 8, 2010 2:40am Apr 8, 2010 2:40am
im think now that carrier trading is the way forward

not really about timing to much
as
lets say england 1 percent interest rate
compare it to aud 8 percent near enough

would look for trends

and get in

i ll post more soon explain better
  • #11
  • Apr 8, 2010 3:35am Apr 8, 2010 3:35am
To make 20% interest in a week seems like an incredible risk to take. What is your leverage? What would happen to your account if the price rallied 1%? What about 5%? 10%? 50%?

It might seem unlikely, but then I saw a lot of people get burnt buying Aussie and Kiwi dollars with Yen back in 2008, back when the Aussie dollar was buying more than 100 yen, then promptly retraced down to 55.

That said, I do carry trade, but I wait until prices have moved down significantly before I enter.

The advice I can offer you is this:

1. Find two nations that are in a long-term structural relationship with each other - ones that are very dependent on each other for trade.

2. Find out if there is a systematic difference in interest rates between the two countries.

3. Figure out where these currencies usually top and bottom relative to each other (these can be very predictable due to market manipulation by both countries).

4. Buy agressively when prices are at their usual lows (but leave a little room for price to move against you). Sell when at usual highs.

I bought AUD/JPY back in late 2008. Currently, my account has made something in the order of 22.8% in interest and a capital gain of about 180%.
Nothing ventured, nothing gained.
  • #12
  • Apr 8, 2010 6:16am Apr 8, 2010 6:16am
I hope I am correct in saying this but carry trading is much the same as a dividend yield in that you are looking for the best price to purchase into in order to maximise that yield. So in terms of stocks, if its price drops but it continues to pay out the same dividend then the yield is higher. Currencies would I guess be slightly different but you still get a payoff in the case that the currency/stock increases in price. The drawdown will come when the price goes down but you continue to hold just for the interest/dividend payoff.

It is one way to trade which as I said can have good payoffs in the case of a rise trend and increase interest rates but getting out can be just as difficult as normal without incurring large loss should you hold on for too long, besides like dividends, you really need a good amount invested in order to recieve a satisfactory amount of interest/dividend payoff.

Razor
  • #13
  • Apr 8, 2010 11:43am Apr 8, 2010 11:43am
Quoting JamesCraig
To make 20% interest in a week seems like an incredible risk to take. What is your leverage? What would happen to your account if the price rallied 1%? What about 5%? 10%? 50%?

It might seem unlikely, but then I saw a lot of people get burnt buying Aussie and Kiwi dollars with Yen back in 2008, back when the Aussie dollar was buying more than 100 yen, then promptly retraced down to 55.

That said, I do carry trade, but I wait until prices have moved down significantly before I enter.

The advice I can offer you is this:

1. Find two nations...
thanks for the info man that was well put and sound advise
im a trend trader mostly understand the support and resistance levels but do it on a 6 month scale than short term

i know that november to april are usually good months
and may to may to october are bad

because of event s like christmas jan sales house prices in march time nearly always a given stuff like that

another thing why i look for for the big thing first then on short term know the direction, shortest i go now is a week

in the height of the recession i was making £200 a night a sleep day trading thou for £50 risk

i was trading at 1 british time and closing at 5 british time
asian markets worked a treat using just 21 moving average

now i dont use any indicator, might look at heat maps, to give me a picture of the here and now. but generally look for long term trends first
  • #14
  • Apr 8, 2010 11:51am Apr 8, 2010 11:51am
Quoting Razor_trader
I hope I am correct in saying this but carry trading is much the same as a dividend yield in that you are looking for the best price to purchase into in order to maximise that yield. So in terms of stocks, if its price drops but it continues to pay out the same dividend then the yield is higher. Currencies would I guess be slightly different but you still get a payoff in the case that the currency/stock increases in price. The drawdown will come when the price goes down but you continue to hold just for the interest/dividend payoff.

It is one...
thats true

thou if the trade is against you then the interest is to
you lose it.

did stock market a long time ago
made money on game group a uk company
always doubles in price or more in jan time
dec to jan

stock market is good because you can tell when some companies are going to do well in certain months

like retail get in december sell in jan
property feb sell in march
banks when recessions at an end buy
dont do penny shares £1 up only because of market cap is usally more sound.

but you need money to invest in that feild get better return for less on forex
spread betting sucks too, roll on bets dont go to great and options are so high risked no thanks.

happy here more fun more money lot nicer people too

what was i on about now ?
  • #15
  • Apr 8, 2010 11:57am Apr 8, 2010 11:57am
Quoting swano
Thanks for the advice man
do you somtimes trade like that as well then?
im seriously considering the possibilities in trading like this.
this is what pros do and well like to be the same one day
almost there lol

No, I've never tried anything long term like that.

If you look at the AUD/JPY now it look like its found suppport above the old daily resitance. Could be an opportunity to get into a long intrest paying position, off this retracement.
  • #16
  • Apr 8, 2010 12:21pm Apr 8, 2010 12:21pm
Heres a chart to illustrate.
Attached Image (click to enlarge)
Click to Enlarge Name: aud yen.jpg Size: 52 KB
  • #17
  • Apr 9, 2010 11:39am Apr 9, 2010 11:39am
on the end of the scale it has double bottoms and has past its pervious short term high

looks like its completed its fib retracement
but is still an up trend.... i wouldnt want to fight the army with a short trade. dont like reversal trading, fighting an army isnt fun.

dont like to predict a short trade until it actually happens. im happy to get in at its pivot point to support 1 and 2 as a target

but for now would avoid the whip lash effect that you sometimes get around support and resistance.

patients is always a winner.
join the army
not fight it.
  • #18
  • Apr 9, 2010 11:43am Apr 9, 2010 11:43am
Quoting Ted1983
Heres a chart to illustrate.
i like trends that move to the one o clock position and the 5 clock

on this chart it goes sideways a bit so its a weird one

i like a strong bullish one clock
and strong bear 5 o clock trends
  • #19
  • Apr 9, 2010 11:46am Apr 9, 2010 11:46am
Quoting Ted1983
Heres a chart to illustrate.
as you see on the chart theres a good 5 clock sell trend and a good 1 o clock trend up then goes off to 2 to 3

consolidating
support and resistances are good area to look at but wait till theres more fire power and numbers.
  • #20
  • Apr 9, 2010 3:22pm Apr 9, 2010 3:22pm
Quoting swano
am i right in saying 100 pound £20 interest
1000 pound £200 interest

or is there more to it than this?
Swano, I now understand the transaction that occurred. Yes, you made an excellent trade by taking a short position in EA. However, you did not make 20% interest, you made 19.99% "profit" on the trade, and about .01% interest.
Here's how it works. If you trade and hold a pair overnight, you either make or lose the interest differential between the two currencies. Since you were short the pair, you were "long" AUD, which has a higher interest rate. Thus you earn money everyday just by holding the short trade. That's the definition of a carry trade.
The most current rate I found is approximately $8.00/day for every standard lot (100K). Whether the pair goes up or down, you'll receive $8.00 every day per standard lot. If you had been long EA, you would lose this everyday.
OK, so this is great as long as the pair is falling. If the pair were to rise any (appreciable) amount, your interest means "Squat." You'd lose your butt in a hurry.
Carry trades can be (very) profitable as long as they move in your direction. If they turn however, you can get wiped pretty quickly by sticking with them.

Make sense?
They call me "Hondo"
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