long-term - do high-yield currencies out-perform? | Forex Factory

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long-term - do high-yield currencies out-perform?

  • #1
  • First Post: Feb 21, 2014 8:35pm Feb 21, 2014 8:35pm
i am looking to go long term trading with my trades and im not that experienced yet but here is the question does the currency with the highest interest rate compared to a currency that has a lower interest rate win the war if your looking to go long term with the trade ?
  • #2
  • Feb 22, 2014 12:26am Feb 22, 2014 12:26am
Quoting tank398
i am looking to go long term trading with my trades and im not that experienced yet but here is the question does the currency with the highest interest rate compared to a currency that has a lower interest rate win the war if your looking to go long term with the trade ?
That will be one reason why one currency might trend well against another. Any cheap interest rate currency has the potential for carry trade opportunities and to trend. Looking at SA where we have higher interest rates than the currency majors rates (and recently hiked), the rand is weak at the moment, it should be strengthening. So other things are at play.

There will be times when interest diff's will bring trends but also when other factors such as commodity prices, US macro economic issues (quantitative easing and its withdrawal), economies improving quicker than other countries etc etc etc will start a trend.

So to answer your question at times yes, at times no.
  • #3
  • Feb 22, 2014 1:12am Feb 22, 2014 1:12am
Quoting tank398
i am looking to go long term trading with my trades and im not that experienced yet but here is the question does the currency with the highest interest rate compared to a currency that has a lower interest rate win the war if your looking to go long term with the trade ?
For Traders at present it is very difficult to find any long time trend. Because everyday a lot of new comers are entering into the Forex market without having sufficient knowledge. They enter the market loose some pips or sometimes blow up their account & leave the market. So the market is full of noise. Under the present condition, when finding an opportunity the traders should grab 20-30 pips & leave the market. Otherwise he/she will face a retracement/reversal & face lose. But before going into live, everyone needs to have a lot of practice with demo account. After having 20 consecutive win, they should go into live. But first of all you should have sufficient knowledge of forex trading which are available free (online).
  • #4
  • Feb 22, 2014 1:18am Feb 22, 2014 1:18am
Quoting tank398
i am looking to go long term trading with my trades and im not that experienced yet but here is the question does the currency with the highest interest rate compared to a currency that has a lower interest rate win the war if your looking to go long term with the trade ?
No. The market decides and one has to seek out the liquidity levels....on the appropriate timeframe of course.
The road to pipland is arduous and fraught with challenge.
  • #5
  • Feb 22, 2014 2:08pm Feb 22, 2014 2:08pm
Quoting salimc
{quote} For Traders at present it is very difficult to find any long time trend. Because everyday a lot of new comers are entering into the Forex market without having sufficient knowledge. They enter the market loose some pips or sometimes blow up their account & leave the market. So the market is full of noise. Under the present condition, when finding an opportunity the traders should grab 20-30 pips & leave the market. Otherwise he/she will face a retracement/reversal & face lose. But before going into live, everyone needs to have a lot of practice...
well im still using my demo account and wont go live until i feel comfortable .... i mostly trade the monthly charts and use weekly charts as my entry is the fundamentals analysis i use for them the same when i trade from the daily charts and the tighter time frames or some things i can ignore ?
  • #6
  • Feb 22, 2014 2:34pm Feb 22, 2014 2:34pm
Quoting Vantage
{quote} That will be one reason why one currency might trend well against another. Any cheap interest rate currency has the potential for carry trade opportunities and to trend. Looking at SA where we have higher interest rates than the currency majors rates (and recently hiked), the rand is weak at the moment, it should be strengthening. So other things are at play. There will be times when interest diff's will bring trends but also when other factors such as commodity prices, US macro economic issues (quantitative easing and its withdrawal), economies...
Well said. Its important to also know that longterm trader tend to be less profitable these days due to frequent central banks intervention. You will have to be aware of a lot of fundies in order to do well
  • #7
  • Feb 23, 2014 8:31am Feb 23, 2014 8:31am
Quoting tank398
i am looking to go long term trading with my trades and im not that experienced yet but here is the question does the currency with the highest interest rate compared to a currency that has a lower interest rate win the war if your looking to go long term with the trade ?
Obviously it's not as easy as that... Interest rates are just the response to economic expansion / contraction (very simplified) and are thus lagging indicators.
  • #8
  • Feb 23, 2014 9:41am Feb 23, 2014 9:41am
Quoting Custos
{quote} Obviously it's not as easy as that... Interest rates are just the response to economic expansion / contraction (very simplified) and are thus lagging indicators.
not secondary market rates.
  • #9
  • Feb 24, 2014 4:50am Feb 24, 2014 4:50am
Quoting JeremyWS
{quote} not secondary market rates.
he was talking about interest rates (which are set by the central banks), not secondary market rates.
  • #10
  • Feb 24, 2014 7:06am Feb 24, 2014 7:06am
HI
MY NAME IS NITSAN I TRADE 7 YEARS

THIS YEARS MATKET GO FALL BIG TIME

S&P500 is end flag/gratley patterm...there is a BIG ab=cd...price will fall this years or from here or from fibo 161.8

and we gonna see big big red candle

GL HF

NITSAN
Attached Image (click to enlarge)
Click to Enlarge Name: MARKETWILLFALLNITSAN1.jpg Size: 158 KB
  • #11
  • Feb 24, 2014 1:28pm Feb 24, 2014 1:28pm
Quoting Custos
{quote} he was talking about interest rates (which are set by the central banks), not secondary market rates.
doesn't matter.

Secondary market rates matter more than base rate.
  • #12
  • Feb 24, 2014 1:34pm Feb 24, 2014 1:34pm
Quoting JeremyWS
{quote} doesn't matter. Secondary market rates matter more than base rate.
care to give an example what you mean?
  • #13
  • Feb 24, 2014 2:27pm Feb 24, 2014 2:27pm
this might be a stretch but does does the s&p and nasdaq go along with any currency kinda the way 10 year us bonds go with the usd/yen ?
  • #14
  • Feb 24, 2014 3:50pm Feb 24, 2014 3:50pm
Quoting tank398
this might be a stretch but does does the s&p and nasdaq go along with any currency kinda the way 10 year us bonds go with the usd/yen ?
I can vouch for USDJPY and the S&P. I trade the ES everyday and they both flow together for the most part. But you didn't need anyone to tell you that. Compare your charts. Do your own due diligence.. Talk is cheap around here new trader.... sometimes...
SPC * Swollen PocketZ Crew!
  • #15
  • Feb 24, 2014 4:34pm Feb 24, 2014 4:34pm
Quoting Custos
{quote} care to give an example what you mean?
consider the FX swap markets. any of them, I don't mind (maybe israeli shekel won't work, but that is about it )
  • #16
  • Feb 24, 2014 6:53pm Feb 24, 2014 6:53pm
Quoting tank398
i am looking to go long term trading with my trades and im not that experienced yet but here is the question does the currency with the highest interest rate compared to a currency that has a lower interest rate win the war if your looking to go long term with the trade ?
You are chasing a carry trade looking for interest rate differentials.

1. Ensure the currency pairs you are looking at both have liquidity.
2. The currency with high interest rates is not a basket case ie Zimbabwe
3. Just because one ccy pair has higher int rates than the other doesn't mean the exchange rate will follow as this maybe already factored in to the movement already.
Happy Hunting
  • #17
  • Feb 24, 2014 8:21pm Feb 24, 2014 8:21pm
Quoting Nitsan_Levi
HI MY NAME IS NITSAN I TRADE 7 YEARS THIS YEARS MATKET GO FALL BIG TIME S&P500 is end flag/gratley patterm...there is a BIG ab=cd...price will fall this years or from here or from fibo 161.8 and we gonna see big big red candle GL HF NITSAN {image}
Interesting view. Many forget to realize the fact that we are still in a VERY supportive liquidity environment-look at the UST yield curve. This is in no way indicative of a larger pullback, as the front end is still anchored down firmly. Sure the back end has risen a bit over the past few weeks, but nothing mentionable in terms of a flattening structure. Are markets overvalued? Perhaps, but the trend is clear and it is up. Any type of correction is a buying opportunity in this current environment. You also may want to use a logarithmic chart for your technical analysis, as the standard view distorts the shape.
  • #18
  • Feb 24, 2014 8:30pm Feb 24, 2014 8:30pm
Quoting salimc
{quote} For Traders at present it is very difficult to find any long time trend. Because everyday a lot of new comers are entering into the Forex market without having sufficient knowledge. They enter the market loose some pips or sometimes blow up their account & leave the market. So the market is full of noise. Under the present condition, when finding an opportunity the traders should grab 20-30 pips & leave the market. Otherwise he/she will face a retracement/reversal & face lose. But before going into live, everyone needs to have a lot of practice...

A trader needs real money on the line to learn. Demo trading creates a false assumption and action bias in a traders mind, that is why most traders fail when they move to live capital. The first thing a student trader should do is open a small live account to get a feel for their risk tolerances and trading personality. A trader will learn nothing online compared to what they will in the live market.

If a trader is trying to "grab 20-30 pips" they are simply trading noise you speak of! Start trading off a longer term chart like 8h or daily, this will reduce most of the noise. You should reduce your position size accordingly to allow for larger stops. It is ALL about risk control.
  • #19
  • Last Post: Apr 23, 2014 4:05am Apr 23, 2014 4:05am
No. They do not.
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