Carry Trade Strategie for Forex broker

Carry Trade Strategie – an overview:

If it is about the foreign exchange, Carry Trade Strategie belongs to the most popular strategies. Beside retail dealers this is in particular also applied by Hedgefonds. The system lies to buy a currency with a high interest rate and to sell at the same time a currency with low interest rate. Traders can thereby profit beside the course variations also from the interest which is achieved by the holds overnight. This functions of course only if the elective broker also pays interest for the holds of a position. Carry Trade Strategie should be applied only under normal conditions and not during a crisis or a longer-term correction.

Advantages of Carry Trade Strategie:

• Profits by course variations and interest
• Long-term profit potential

Disadvantages of Carry Trade Strategie:

•  Only with a growing economy successful-promissory

Use of Carry Trade Strategie:

1. First a currency pair with a relatively high interest rate is selected. Suitably for this are, for example, AUD/JPY, NZD/JPY and GBP/JPY.
2. Afterwards in the currency pair Long or Short go. The direction depends on whether a positive interest rate is granted for the holds.
3. To avoid a bigger loss at least on the paper a very moderate position size should be chosen.
4. Carry Trade Strategie belongs to few strategies with which no Stop-Loss should be put.
5. Now it is waited, until the position one enough profit is achieved or a crisis or correction is expected.

Example like Carry Trade Strategie can affect

Between end of 2000 and in the middle of 2006 the English pound had an interest rate of 5 percent. In the same period the interest rate of the Chinese yen went against 0. This caused with a hold of the positions overnight an interest rate of nearly 5 percent. With a lever from 1:100 an interest of about 2,500 percent arises for the whole period. In addition comes for the currency pair GBP/JPY in the same time an increase of 6500 Pips. Under these points of view Carry Trade Strategie for this period would have allowed huge profits.

Is not to be forgotten that Carry Trade Strategie contains a certain risk. In 2007 the upward trend was finished suddenly, so that only little time remained to close the concerning positions. Traders should be aware of the risk always and exactly consider whether you Carry Trade Strategie would like to apply.

Carry Trade Strategie test

To reduce the risk of Carry Trade Strategie it makes sense to test this to begin with thoroughly. Most brokers offer moreover a free demo account. Use our broker to comparison around the best Forex broker  for Carry Trade Strategie to find.

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