Remember when the central banks did not meddle with the markets to the same extend they have been doing since post 2008? Carry trading used to be a nice way to add some earnings to your account, but over the past six years it has really been a lot less profitable than when we actually had interest rates. There are still some nice carry trades out there, but in general I think it has severely decreased. Don’t get me wrong I am not suggesting a pure carry trade strategy, but it used to add some nice cash-flow to your portfolio. No, carry trading is not risk free!
possibly the only carry trade worth at the moment and for the next couple of months (re-evaluate @the end of September) is short selling EURNZD because of the huge divergence in the relative Central Banks’ monetary policy at first and the testing of the 127% fib level secondly.
I’ve been short EURAUD for a few weeks now.
NZDJPY has also been a nice carry, but it looks like longs may be unwinding due to potential pullbacks in risk trends.
Don’t forget about NZD/CHF! It’s pretty much the same thing as EUR/NZD since Franc traders take their cues off of the ECB most of the time. It’s also in a nice technical uptrend similar to EUR/NZD’s downtrend. RBNZ’s monetary policy meeting is up this week, so be cautious if they don’t raise again!
good point here, judging from a couple NZD pairs, the market does not expect another rate hike this time, so in case RBNZ proceeds with raising NZD will skyrocket, if not there will be massive profit taking and trend reversals.
keep wondering why they make that announcement exactly upon NY close when the spreads are huge…wtf, don’t they trade themselves?
But what about high price volatility and swaps?? It can easily bring your account to ruin in case of insufficient margin. Carry trading is performed at best in stocks, where near, intermediate and major trends take shape in more or less smooth overall direction…
lol, every time