The carry over on Aud/Jpy is pretty nice. Has anyone here tried this? You buy into the Aud/Jpy to take
advantage of the carry over. The amount you buy into it is not a large amount because you are riding on
the fact that Aud/Jpy will probably reach a lower point sooner or later.
So lets say you have an account with 1000 dollars. Using Oanda you could buy 100 at market.
and then put a buy limit order every 25-100 pips below that order for another 100
As the limit orders are met you will surely be in the negative but the amounts were small (100) and so by the
time you have built up a decent amount of orders your average price is low and the market cycle will probably be less likely to hurt your averaged down order than if you had put it all in at the top.
This whole purpose is not to gain money from the pips but instead to have a larger sum of money put into the market at a decent value so you can hold and reap the benefits of carry over each day.
Where I see this going completely wrong is if interests rates of AUD become lower than JPY.
Sorry for messy post.
side note, I know averaging down is a terrible idea for regular trading. Don’t build on losers. But the premise of a loser here is different.
yeah, that’s the old style carry trade! you earn little over 1 pip/day regardless direction of the pair. In otherword, you’re speculate type of “risk on”. However, when “risk off” enviroment comes in Place, watch out?
Just my 2 cents
Most of the time that we called “risk on” mean everybody feels time to buy stocks and high yield currencies. USD is losing value against its counter-part EUR,CHF, GBP,AUD. When risk off, (one of worst financial crisis) USD tends to gain its value. The best example is mid 2008 through almost end of 2009, AUD/USD was lost over 4000 pips.
Hope this help!