Anyone making money on Carry Trade?

Hello All,

I’ve been through the school and done some reading and fiddling and such. I have a question.

Is anyone doing well with the carry trade? Specificially, buying pairs with good interest differentials and holding them for the daily interest.

Is there any reason I can’t buy the pair an hour before the interest is calclulated, and then sell an hour after?

Anyone have any thoughts on this at all. It seems to me that the profit vs risk for this idea is pretty good (for FOREX at least) and I’m curious if other people hav expereince here.

Thanks
~Nimble

I wouldn’t worry about that right now if I were U.

Learn to make money first trading and then you can afford to incorporate interest rates into your money making strategy.

FYI, however, the golden days of taking advantage of the carry trade are over, after the recent liquidity crisis.

Money is still buying high interest yielding currencies like AUD and NZD against YEN, as noted the past week, but these trades can be “unwound” very quickly and viciously nowadays because we can expect markets to be more volatile than they have ever been the past few years.

Just worry about not losing money, and you should be OK and take it from there.

good luck

Nimble, you can make money on carry trades… but not in the way you suggested. You need to be holding on to trades for longer periods of time than an hour - the interest you’d get paid wouldn’t cover your spread.

Google carry trade CNY and you’ll see details of the long Turkish Lira / Chinese Yuan trade, which currently earns a whopping 18% annual interest return before leverage at Oanda.

But don’t forget your biggest risk is the currency moves which could turn a trade against you v. quickly, so you’ll need to have a view on where a currency pair is heading, as well as some defined stop losses to make it work.

PS - I don’t use carry trade strategies myself…

Thanks for the tip on TRY and CNY carry strategies…

I will definitely be looking into it.

It all depends on the broker you are using. Some don’t pay intresta at all. The ones that pay intrest will pay if you hold a trade at the end of the day. ie. if you buy nzd/usd 5 seconds befor the end of the day and hold it until the day ends you will get intrest, however you will lose on the spread.

Think of intrest as a little extra in your pay check. Unless you have to pay intest then think of it as another bill you have to pay.

Oanda is the only broker I have seen that pays intrest on the second.

In short don’t try to make a whole stragity around the intrest trade.

You can use this to help you. It really does depend on when your broker calculate their interest rates.
World Interest Rates Table

Right now I recommend cation with tight stop losses. The carry trade is/was being hammered thanks to the subprime problem.s

i still use carry trades, but there just one part of my overall hedge fund.

This is the plan I was looking at:
Find a broker that computes interest at a certain time each day.
Buy a good ‘carry trade’ pair an hour or so before the computation time.
Collect the interest.
Sell the pair before it can swing too far.

My thought was that I could collect some leveraged interest every day, with a very high probability of success.

~Nimble

Edit. I see the problem here. Each point of spread is equal to a interest differential of 3%. (3% per year / 365 days =~ 1 pip). So this plan will only work if the yearly interest differential is more than 3 times the spread. That’s not likely. Bummer…

My entire Trade strategy is based on building up a leveraged position in positive carry trade.
Have brought my self back from -300 dollars to -130 with a five hundred dollar account in about 10 months. Should be around positive in maybe 6 months.

I have always lost money untill i started “averaging down” or scaling in whatever people wanna call it.

In case you are wondering i have 4 open positions one is -213 pips one is -70 pips one is - 43 pips one is +23 pips all in the same currency its paying me minimum of 4% a year but usually price turns around and i cash out with 50-100 pips positive and a reasonably sized position.

I have a 100 dollar account using different currency that is up 10 percent over the course of 5 months.

Slow yes
But I also only spend about 5 min a day just to see where price is at then I am off.

I could leverage my positions harder but I can take about a 1-1.5k pip loss before im 50% in red.

AUD/JPY, NZD/JPY and some other pairs are available for carry trading.
But the problem to trade with this pair for me is high spread related to this pair in my broker. So I don’t trade using these pairs, as carry trading is not suitable of my trading style.

I´m not used to carry trades, despite I think it´s a good trading strategy.
but, what about trying some hedge, for example buying GbpChf and seling GbpNzd?

Yeah, I use carry trades. I tend to hold trades for days and weeks tbh, not so interested in the day to day stuff (too difficult tbh and tricky). ooops noticed this was super old thread.

I look at carry interest as a bonus for swing / position trades. I dont specifically target them, but if i have a set up i usually use but can execute on a pair that has interest then I will take it in that pair instead. There is a lot of price risk vs the intrest used for carry so you have to either hold an entire portfolio for a delta neutral position if you want to make money purely on carry interest. Which is way to much work for me. But no reason not to take that extra gravy to the bank. :smiley: