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Broker Scalp Trade strategy is one of the most popular fundamental Forex trading strategies. It is used not only by the common retail traders but also by the big hedge funds. The main principle of the carry trade strategies is to buy currency with a high interest rate and sell one with a low interest rate. Such setup offers profit not only from the currency pair's fluctuations but also from the interest rate difference (overnight interest rate). This strategy should only be applied under the normal global economic conditions. You should never use it during the crisis. Remember that your Forex broker should be one of those that actually pay overnight interest rate difference if you want to earn from it. You will not be able to earn from it if your broker is "swap-free".
- Long-term potential.
- Two sources of profit.
- Works only with the growing global economy.
How to Trade?
- Choose a currency pair with a rather high positive interest rate difference (AUDJPY, NZDJPY and GBPJPY are good historical examples of such pairs).
- Go Long or Short on the chosen pair, depending on the direction with the positive overnight interest rate for this pair.
- Choose moderate position size, so that it would be able to withstand a significant paper loss.
- Do not set a stop-loss (one of the few Forex trading strategies where stop-loss is not recommended).
- When you feel that you earned enough or you expect some global financial turmoil, close the position.