Any Ideas For A relaively safe Carry Trade

Beginner Questions
1

hi guys
im a fx newbie. does anyone have any ideas on how to start a relatively safe strategy for carry trading using oanda as a broker and 5k as an account.:slight_smile:

2

Hi Newbie,
The best advice anyone can give you is, don’t use your money first. I hope you plan on using a $5k demo account first and not just jump in and hope you swim.

Now that we have that figured out. I have been trying a new system for a few months now and I am up alomost %50. Here is the rundown

  1. Put no more that %5 of my balance at risk. $5,0000 * .05= $250
  2. 100 pip stop loss
  3. risk / 100pip s/l = # of lots to buy. $250/100= 2.5 lots
    This is a mini account of course
  4. At every 100 gain I add to the trade. 100pip gain buy 2.5 lots, 200pip gain buy another 2.5 lots. This keeps going until I get stopped out.
  5. ONLY BUY LOTS PAIRS THAT GIVE ME A POSITIVE ROLL OVER.
  6. Trade with the trend.

Thats about it I like the nzd/usd pair the best because it doesn’t move too much in a day. If you try gbp/jpy where it can move 200 or 300 pips a day you miht want to open up your s/l so you don’t get knocked out too soon.

3

thanx bazooko for the advice, will try on demo first.

4

There’s no safe carrytrade that you can leave unmanaged and unmonitored.

The only safe carrytrade is to buy at the low and set the stop loss at break even once it goes above - and hope it doesn’t reverse anytime soon. This is not easy to do. for example, a good buy would have been on March 4th or 5th on GBP/JPY and you would have been find up until mid August. However, your account would have built up rather nicely collecting swap for 5 months!

I would recommend practicing on Oanda’s demo at first.

yes, you’ll see lots of recommendations for hedging your carrytrade that results in an interest positive account, however, most of these have problems during the unwinding of the carrytrade.

5

paco99 I think that the carry trade is the easiest trade to place. The trick is to place you s/l large enough so that you don’t get stopped out too fast. I have had several trades that sat at a 60 to 70 pip loss for a week only to turn around and make a 100 pip profit on the next week. It does take more patience then the quicker trades but you get a better reward and you only need to spend about 15 minutes a day on it. Take a look at nzd/usd from 6/25/07 until now it has made a nice move and it is not jumpng 300 pips a day. That is the key, using eur/gbp would get you kicked out in about an hour only to see it reverse for a 300 pip gain on the next day (just example. I don’t mean it will always happen).

As for the hedging you are right, I have not been able to figure out a way to get that to work.