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Carry trade vs carry trader 3 replies

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Attachments: AUDJPY + EURAUD + AUDUSD -- (carry + intraday)
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AUDJPY + EURAUD + AUDUSD -- (carry + intraday)

Quoting Pip Anon
{quote} I think it will reemerge once equities flop over. Right now there is no incentive to carry Aussie because their is better yielding assets right now. When that happens Aussie should pop hard, but untill then there is no point.
Correct, that would make sense to me.

Aussie down fall is not just because of yields lowering. It certainly was the catalyst for enough large bets to be placed, to cause the price to fall.

I think even more so than the rate cut, Aussie was dying for a technical correction on a 5 year scale.

Even if the RBA didn't cut, it couldn't have just consolidated between parity and 1.06 for all eternity. Even if policy didn't chance between the FED or the RBA for the next 50 years, Aussie would have broke down below parity eventually.


Besides, now that Aussie has dropped so much (although I wouldn't consider it "cheap" yet), and equities have not, equities look far riskier to me.

Other than the fact that the FED and other central banks secretly (well not so secretly anymore) buy U.S. equities, and that the SP500 grows almost directly inline with the FEDs balance sheet, I see no reason to buy all time highs on the premise of a "breakout".

I trade markets back into the range 90% of the time, breakouts of the range maybe 10%. I look for weak liquidity in a move (price spikes) and then fade them.
Be hopeful in a winning position, and fearful in a losing position.
Quoting JeremyWS
{quote} Fair enough if you exclude EM FX, and true that carry trade is dead and gone therefore "trading" is how to make money atm. But there is no major today that has any dependence on carry, AUD swaps have contracted ~150bps in a couple of years and now 22 above NZD R differentials do however matter but that is relatively exogenous from carry and more FI relative performance reflecting varying risks therefore affecting FX.

Are you mostly an investor or trader??


I guess i need to get me a better broker. I can trade MXN, and TRY, but not INR. Honestly that's where I need to put my money after the next blow off USD bubble (equities crash and flight to cash 2008 type scenario would be ideal for that, once the FED saves the day, a risk free short on high yielding exotics..)
Be hopeful in a winning position, and fearful in a losing position.
Thanks guys for the analysis. Btw how do u guys see for AudJpy for this 2 weeks?

Personally with the strong Yen and Aud due for correction(dont know when) I thought its a better trade on a bearish bias, looking forward for another 150 to 200 pips drop. But dont really like losing that interest everyday.

Look like scalping is a better choice for this pair. Hope to hear more opinions for this to enlighten me.

thanks.
The only winner is the one who survive the longest...
Good day traders. AUD/JPY long from 97,24. First trade of the day with 2/3 (0,6%) of usual risk. Reaction is good. After 97,50 - SL to b/e.

Green pips to all!
Twitter: MrC_Forex ; Facebook: /pages/MrC-Forex/197693770247397
Quoting Rag2RichesFX
{quote} Are you mostly an investor or trader?? I guess i need to get me a better broker. I can trade MXN, and TRY, but not INR. Honestly that's where I need to put my money after the next blow off USD bubble (equities crash and flight to cash 2008 type scenario would be ideal for that, once the FED saves the day, a risk free short on high yielding exotics..)
I'm mostly a bond trader but occasionally fx, definitely not an investor though.

Problem is though if we see a summer sell-off in stock analogous to 2011 then ok the AUD may be down at 0.85 and many exotics will be at great value but I certainly wouldn't be buying in a hurry, mainly because there would be a very systemic reason and that would make me question if AUD may got to 0.6 or lower.

Furthermore swaps would tighten and so less carry, maybe even below 200bps.....

I would, if I were an investor be jumping on HY if we see a stock market crash were 10% could be realistic.
Quoting Mr.C
Good day traders. AUD/JPY long from 97,24. First trade of the day with 2/3 (0,6%) of usual risk. Reaction is good. After 97,50 - SL to b/e. Green pips to all!
97,50 reached. At my desk - not moving SL to b/e yet.
Twitter: MrC_Forex ; Facebook: /pages/MrC-Forex/197693770247397
Quoting Mr.C
{quote} 97,50 reached. At my desk - not moving SL to b/e yet.
AUD/JPY: looks like we have a runner here. Triangle formation evolving. 55 pips floating. TP1 is @ ADR, in the area ~ 98,37. TP2 - upper TL of the formation.
Attached Image (click to enlarge)
Click to Enlarge Name: audjpy_130530_h1.png Size: 54 KB
Twitter: MrC_Forex ; Facebook: /pages/MrC-Forex/197693770247397
Quoting Mr.C
{quote} AUD/JPY: looks like we have a runner here. Triangle formation evolving. 55 pips floating. TP1 is @ ADR, in the area ~ 98,37. TP2 - upper TL of the formation. {image}
By the end of the day result is 20 pips floating profit. After a good start AUD/JPY bulls lost their power. Moving my SL to +1 as the PA at the moment isn't very promising there. Price is sitting on a trend line that unfortunately is screaming for a break south. Don't want to be a hero - 0 risk mode ON. Good luck today if anyone is still hunting pips. See you during London tomorrow.
Twitter: MrC_Forex ; Facebook: /pages/MrC-Forex/197693770247397
  • Post #209
  • Quote
  • Edited at 1:22pm May 30, 2013 1:11pm | Edited at 1:22pm
Quoting JeremyWS
{quote} I'm mostly a bond trader but occasionally fx, definitely not an investor though. Problem is though if we see a summer sell-off in stock analogous to 2011 then ok the AUD may be down at 0.85 and many exotics will be at great value but I certainly wouldn't be buying in a hurry, mainly because there would be a very systemic reason and that would make me question if AUD may got to 0.6 or lower. Furthermore swaps would tighten and so less carry, maybe even below 200bps..... I would, if I were an investor be jumping on HY if we see a stock market...
agree with that.. i wont just buy a price level. i always wait for confirmation of a reversal

who couldn't have called the reversal in 2009 after the crisis, just based off monthly candles alone (multiple reversal candles + weak liquidity from the down move = easy short capitulation)

also the very principle of BUY FEAR and SELL GREED.

and then of course the confidence people had in risk assets after the FED intervened


what about the bond markets do you prefer? do you find it easier to be on the "right" side of the market?

or are you just in it for the yields


you know its funny, i use emotion to my benefit now. before it used to hurt me as a trader. whenever im fearful of entering a trade now, i know that means its the right TIME to enter.
Be hopeful in a winning position, and fearful in a losing position.
Forming a triangle on the AJ. A lot of JPY numbers due out tonight, so maybe that will be the catalyst for a breakout above 98.

Attached Image (click to enlarge)
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Hidden divergence on H4, and a nice 50% retracement, which may play out a nice continuing bearish trend.
Attached Image (click to enlarge)
Click to Enlarge Name: audjpy_h4.gif Size: 38 KB
The only winner is the one who survive the longest...
  • Post #212
  • Quote
  • Edited at 2:15pm May 30, 2013 1:54pm | Edited at 2:15pm
Quoting Rag2RichesFX
{quote} closed half for +70 pips 97.84 will reload it with TIGHT sl (bonus) if i see an opportunity. this move is very inefficient, should fall back first before continuation. 80 pip countertrend move in 15 mins? weak liquidity, will see a wave down likely.

still weak.. reason is weekly candle. if you look at it you can see that this week = consolidation

next week = real move most likely will happen.. next week = June

not sure if i will be looking long or short... probably short though. but the more and more i think about it, USDJPY is in 90% of scenarios, the preferred way to play the YEN, not via the Aussie.

90% of moves I see are larger in the USDJPY than the AUDJPY

and the reasons why this is should be obvious to a good trader..

yen weakness (3nd most liquid currency behind euro) typically represent USD (most liquid) strength... which is AUD bearish

still its a good pair to trade. i may even decide to stick with just two pairs (for day trades, not carry). these two have been wonderful to me this month.

audusd and usdjpy.. why trade audjpy?


the only reason i can see to trade audjpy (on the short side) is if aussie continues its heavy push down, AT THE SAME we finally see some yen strength..

yen strength and aussie weakness simultaneously happens from time to time, but its definitely not the norm....




edit: fixed a few stupid typos
Be hopeful in a winning position, and fearful in a losing position.
Quoting thegunslinger
Forming a triangle on the AJ. A lot of JPY numbers due out tonight, so maybe that will be the catalyst for a breakout above 98. {image}

Possible but looking at weekly candle i think we just range rest of the week... although that range does include higher than 98.. so yes its possible
Be hopeful in a winning position, and fearful in a losing position.
Quoting Rag2RichesFX
{quote} i may even decide to stick with just two pairs (for day trades, not carry). these two have been wonderful to me this month. audusd and usdjpy.. why trade audjpy? the only reason i can see to trade audjpy (on the short side) is if aussie continues its heavy push down, AT THE SAME we finally see some yen strength.. yen strength and aussie weakness simultaneously happens from time to time, but its definitely not the norm.... edit: fixed a few stupid typos
on same page here I also use only these for shortterm trading, currently in paper mode as dont want to trade shortterm over the phone - still working. Results pretty good . In general I see 10 pips is enough stop, but this is paper. For real will increase to 15 to minimise temptation of broker to kick me out, maybe more. Also i use strictly limit order for entry and all my trades look like knife catching.

Just out of interest, what is your typical initial stop distance ?
  • Post #215
  • Quote
  • Edited at 6:02pm May 30, 2013 5:52pm | Edited at 6:02pm
Quoting seaman2
{quote} on same page here I also use only these for shortterm trading, currently in paper mode as dont want to trade shortterm over the phone - still working. Results pretty good . In general I see 10 pips is enough stop, but this is paper. For real will increase to 15 to minimise temptation of broker to kick me out, maybe more. Also i use strictly limit order for entry and all my trades look like knife catching. Just out of interest, what is your typical initial stop distance ?

hey seaman, glad its going well. you should only trade when you feel like trading. yeah short term over a phone is tough


tight stop loss entries i will use occasionally. but these tight stop losses are mostly for momentum trades, or when you are trying to snipe the very high or low of a major level (with a great risk reward potential). such as sniping a 4 hour or daily top/bottom (double top/bottom) with a 10-20 pip stoploss.


i dont mind sharing my risk model and strategies


#1 - 10 to 25 pips stop loss, take profit 100% dependent upon price action. usually will take 50% of the position off at a minor level if PA agreees

maximum risk per day = 50 pips (2-3 losses). often i will let 10-20% of these scalps run for 50-200 pips, as a bonus

(if an m15 scalp turns into an strong h4 or daily move, why not take advantage of that?)
#2 - 20 pip stop loss, take profit is 20 pips.1 loss per day maximum.
ill take 15 pips minimum, and no less, if price action wants to be stubborn around my TP.
#3 - 30 pip stop loss, 10 pip take profit. 1 trade per day.
wont settle for less than TP hit, but i will definitely close at BE
#4 - 50 pip stop loss, 25 pip take profit. 1 trade per day maximum, no trades on friday.

breakeven after +15
#5 - 100 pip stop loss, 50 pip take profit, one trade per week. no trades on friday.
breakeven after +30


in order from highest leverage to lowest leverage per model
#4, #2, #3,#5,#1




you want to take a guess as to which model is performing best?

i guarantee that i will never fully complete my risk models and strategies. i will always be tweaking them, cutting away inferior strategies, adding superior ones..
Be hopeful in a winning position, and fearful in a losing position.
Quoting Rag2RichesFX
{quote} hey seaman, glad its going well. tight stop loss entries i will use occasionally. but these tight stop losses are mostly for momentum trades, or when you are trying to snipe the very high or low of a major level (with a great risk reward potential). such as sniping a 4 hour or daily top/bottom (double top/bottom) with a 10 pip stop loss. i dont mind sharing my risk model and strategies #1 - 10 to 25 pips stop loss, take profit 100% dependent upon price action. usually will take 50% of the position off at a minor level if PA agreees maximum...
Thanks, really appreciate contribution from a good trader. Ok, just lucky trader, so you dont get to fight ego stuff again

I have working swing model and now want to apply same principles to shortterm trading. Results seem good but it is mainly paper at this stage. Funny that I also singled out audusd and usdjpy as the ones to watch for shortterm. For swing trades around 6 ccyies, gold and 3 stock indexes.

idea of large stops for shortterm trades is new to me. But makes sense.

Best performing no 4 ?
Quoting seaman2
{quote} Thanks, really appreciate contribution from a good trader. Ok, just lucky trader, so you dont get to fight ego stuff again I have working swing model and now want to apply same principles to shortterm trading. Results seem good but it is mainly paper at this stage. Funny that I also singled out audusd and usdjpy as the ones to watch for shortterm. For swing trades around 6 ccyies, gold and 3 stock indexes. idea of large stops for shortterm trades is new to me. But makes sense. Best performing no 4 ?
yes number 4 is right. i rarely have a loss on it

good thing you have a proper model to trade on. its probably the most important tool a trader can have.




my models might seem very strange but everyone will have their own unique models according to how their mind works with the market

for me these seem to work best but like i said i am constantly changing them, tweaking them slightly.. etc...

my large stops for daily trades only works because the targets are so easily reached. and in reality most trades never get close to hitting the stop anyways. its as if i could have used a 20 pip stop and it would have worked the same but, the confidence in using a 50 is completely different.

in reality its not really the right way to trade but.. gives me extreme confidence that i will make profit. i have very little fear of being stopped out and very confident target will be reached.

i like take profits by price action but for some strategies, fixed is best, especially when i am not able to watch market too often.. or trading from phone
Be hopeful in a winning position, and fearful in a losing position.
Quoting Rag2RichesFX
{quote} agree with that.. i wont just buy a price level. i always wait for confirmation of a reversal who couldn't have called the reversal in 2009 after the crisis, just based off monthly candles alone (multiple reversal candles + weak liquidity from the down move = easy short capitulation) also the very principle of BUY FEAR and SELL GREED. and then of course the confidence people had in risk assets after the FED intervened what about the bond markets do you prefer? do you find it easier to be on the "right" side of the market? or are you just...
I don't trade for the yields (or lack thereof) but I spread trade and macro swing, Bond trading is possibly the easiest asset class to do fundamental analysis, technical analysis and while it can be complex to begin with its so simple especially when you get to advanced level and don't have to consider relative credit / swaps / Vol skews that are involved with FX
Thoughts re. Short EURNZD here, Stochs and RSI are good, also at overextension level, move to 23% fib for TP

Second shows NZD vs 1Y forward defined swaps. Short term undervaluation for some decent arb via forwards and spot. All in all, looks like NZD could be a tad bullish over coming few sessions
Attached Images (click to enlarge)
Click to Enlarge Name: EURNZD.png Size: 102 KB Click to Enlarge Name: NZD 1Y.png Size: 100 KB
Quoting JeremyWS
{quote} I don't trade for the yields (or lack thereof) but I spread trade and macro swing, Bond trading is possibly the easiest asset class to do fundamental analysis, technical analysis and while it can be complex to begin with its so simple especially when you get to advanced level and don't have to consider relative credit / swaps / Vol skews that are involved with FX
i figured as much

whatever works right?

what bond markets are you into
Be hopeful in a winning position, and fearful in a losing position.
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