HI All,
Anybody playing the carry trade try/jpy?
If not, what carry trades are serving you well recently?
Regards,
Patrick
I’m looking at USDTRY. But not trading it regularly. How to you execute your Carry Trades at the moment?
Hi!
I use https://www.oanda.com/forex-trading/analysis/financing-calculator to calculate/estimate financing on 24 hours for my position size. Ex. for a 100k position size, I get paid 12.31 every 24 hour.
If I have 25:1 margin requirment, It essentially locks 4k of my NAV to control 100k.
Estimating potential gains: 12.31 per day x 365 gives 4493.15. So IF price of pair remains same after 365 days, I made 112%.
Regards,
Patrick
Sounds good. On the Wednesday there is a triple rollover which gives you x 3 the normal daily interest to account for the weekend. I prefer to trade Wednesday for that reason.
The interest payment builds some edge into the trade but there is still a trade risk associated with losing on your position after having accrued the overnight interest. For that reason I prefer to trade on a 1:10 Reward risk, with a view to close the trade as soon as possible after having received the interest payment.
The one thing I would point out is that you are inevitably going to lose some trades if you have a TP and SL, so I wouldn’t calculate based on 365 days of profit. I think you need to get in an out quickly overnight and only trade when the short term trend is the direction of the favourable Swap be it buy or sell;
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Hi!
Yes, all good points. Maybe my strategy isn’t a pure carry trade play, but more a selective forex play with TP and SL. If I have two valid setups, I’ll choose the one giving me positive daily financing.
Other techniques for a pure long term carry trade? Maybe some inversely correlated asset to hedge risk in the underlyning mouvement?
Regards,
Patrick
That sounds like a brilliant idea. If you can hedge the trade risk at little expense that would be great. Do you have any ideas on what asset you might use. Options price in the Swap, as do futures…there must be something, perhaps commodities.
It would definitely worth the effort to go looking for something that could achieve trade risk neutral carry trades