Is there anyone who has to deal with the carry Trade ?
Did you know there is a trading system that can make money if price stayed exactly the same for long periods of time?
Well there is and it's one the most popular ways of making money by
many of the biggest and baddest money manager mamajamas in the financial
It's called the "Carry Trade"
A carry trade involves borrowing or selling a financial instrument
with a low interest rate, then using it to purchase a financial
instrument with a higher interest rate.
While you are paying the low interest rate on the financial
instrument you borrowed/sold, you are collecting higher interest on the
financial instrument you purchased. Thus your profit is the money you
collect from the interest rate differential.
Let's say you go to a bank and borrow $10,000. Their lending fee is 1% of the $10,000 every year.
With that borrowed money, you turn around and purchase a $10,000 bond that pays 5% a year.
What's your profit?
You got it! It's 4% a year! The difference between interest rates!
However, when you apply it to the spot forex market, with its higher
leverage and daily interest payments, sitting back and watching your
account grow daily can get pretty sexy.
To give you an idea, a 3% interest rate differential becomes 60%
annual interest a year on an account that is 20 times leveraged!
In this section, we will discuss how carry trades work, when they will work, and when they will NOT work.
We will also tackle risk aversion (WTH is that?!? Don't worry, like we said, we'll be talking more about it later).
hi toni I know what is carry trade, and i visit this link. :(
I don't know if I can post link directly?
my system on carry trade
yup, i know my dd is 40%, my system / strategy is like that
u need to look deeper than that.
for those system whose dd is small, then what is their equity/balance dd?
it is either u look at my balance or my equity growth. :)