Japanese Carry Trades

[flizzoe]

First thing first, thanks to the admin who invited me to talk about Japanese Carry Trade here

Basically I will share how to do it, strategy I used and how do I calculate the risk.

Note: I'm doing this Japanese carry trades just for fun because I was testing a new broker.

If any of you guys are doing this kind of trades, feel free to share your experience, strategy and tips.

Note: I started to trade forex when I was 19 and now it's like 3 years (going 4 this September). I trade my own account and at the same time I manage other people's account (upon request) but that depends on my discretion (trading people's account is quite stressful). If you have any questions or need any help (other than the topic), I'll answer and I'll help, if I'm able to do so or I want to do so (that's the fine line).

I'll update this thread later

p/s: don't forget to digg this!

[flizzoe]

Hmm.. it seems like nobody interested with this carry trades. Never mind, I'll update some more.

Requirements:
1. A Forex Account that have swap or interest (nowadays some brokers only provide swap-free account)
2. Patient, a lot of patient

p/s: I'll wait and see if anybody interested with this

[italkcash]

This is truly a unique approach to do trading. Never tried the method but would love to give it a go.

[id62000]

I'm not a trader, so forgive me if i sound weird.
With a carry trade, one will have to use a very high leverage to yield considerable returns. Isnt that too risky? If I'm using the Yen/USD pair, and there is a slight fall in the USD, i will stand to lose nearly 150%.

[flizzoe]

Originally Posted by id62000

I'm not a trader, so forgive me if i sound weird.
With a carry trade, one will have to use a very high leverage to yield considerable returns. Isnt that too risky? If I'm using the Yen/USD pair, and there is a slight fall in the USD, i will stand to lose nearly 150%.

Well, I dont post anything about risk management yet. Never mind. I'll continue.
(i guess italkcash have read this before )

How to do it:
Go long (or buy) any or all of these pairs (the earlier has higher priority):
NZD/JPY, AUD/JPY, GBP/JPY, EUR/JPY, CAD/JPY, USD/JPY, CHF/JPY

When doing carry trades, you going to hold your position(s) for a few months (come on, you can wait for HYIP, why can't you wait for this?). Basically this strategy don't target to get the highest pips but to earn from the overnight interest. But usually you will earn both - pips and interest.

In example:
I went long NZD/USD with 0.01 lot (cost me around 15 cent), every day I will earn 2 cent in interest and that is 13% profit (2/15*100).

But that doesn't mean you need only 15 cent in your account. You need more than that to hold you position(s) just in case the price go against you.

So the key is to buy and hold because every night you earn the money! Sounds easy right? Not really.

I'll add later about strategy and calculating risk.

[flizzoe]

in order to get the most of this, it is important to buy at the lowest price you can get. buying at the lowest price also will reduce your risk to get margin call.

this is usually what i will do:
1. buy - at current price, or wait for buying signal (any technique/system).
2. set pending order (buy limit) 10 pips below the first position.
3. if the pending order enter the market, set the first position target profit 10 pips.
4. when the first position hit its target, repeat step 2 and 3.

p/s: if you have enough margin, then you can open new buy positions every 10 pips, hold the one at the lowest price, and let others hit their own target profit.

[flizzoe]

I'm going to share how I calculate my risk.

1. look at the monthly chart.
2. check the lowest price in the chart (maybe somewhere around 80's, 90's, depends on the pair)
3. i'll ask myself, what if, the price reach that price again? so it's like, if the range of current price and the lowest price ever is around 4000-5000 pips, then i'll make sure that my margin is enough to cover that much.

the bad side of this way is, you won't be able to maximize your capital usage, because you are reserving a lot of it to cover if something bad happen instead of trading. you will earn less than the most you can get.

but what ever it is, for me, better safe than sorry. i dont mind if i earn less, as long as my money is there. i prefer to play safe, rather than put my money at risk because ive faced that before.

for me carry trades is a marathon, go slow and steady

[flizzoe]

I manage to survive until today, the 4th week. I started to play this stuff with $1.95

Overall performance:


What I have right now:


I have no idea how far I can go

[flizzoe]

5th week:

What I have right now:


All time performance:


ROI
= 4.99/1.95 x 100
= 255.90%

[flizzoe]

Still survive until today.

What I have right now:


All time performance:


ROI
= 5.30/1.95 x 100
= 271.79%