A few questions about forex trading (and not trading haha)

[Saltynuts]

wow sufferring, thanks a ton. will definately check out babypips.com and will have a ton of follow up questions. One question on the "carry trades" off hand. that is where you could earn interest in holding of one country/currency greater than debt of other country/currency. So it sounds like swiss fracs might be a negative carry. but is that really significant if I were to but swiss stocks once i bought the france? of course if the franc declines becaue of the negative carry while i'm in it that will hurt me, but there is no reason I would have to directly face the nagative carry, is there?

one other even more newbie question, if all i hold is us dollars, how do i go long dollars versus other currencies? futures, i would suppose.

checking out baby pips now. thanks so much!

 

[maximumpossiblesuffering]

wow sufferring, thanks a ton. will definately check out babypips.com and will have a ton of follow up questions. One question on the "carry trades" off hand. that is where you could earn interest in holding of one country/currency greater than debt of other country/currency. So it sounds like swiss fracs might be a negative carry. but is that really significant if I were to but swiss stocks once i bought the france? of course if the franc declines becaue of the negative carry while i'm in it that will hurt me, but there is no reason I would have to directly face the nagative carry, is there?

one other even more newbie question, if all i hold is us dollars, how do i go long dollars versus other currencies? futures, i would suppose.

checking out baby pips now. thanks so much!

It is my understanding you may trade forex as a U.S. Citizen with Interactive Brokers (IB) if you have a large enough balance, say $100,000 plus(?).

To do a carry trade look up the various countries' interest rates and after considering interest rate outlooks, consider buying the high yielding currency and selling the lower yielding one. For example and not a recommodation, let's say you find that Mexico has a relatively high rate. Upon further research, you realize that the Mexican Peso(MXP) is strongly correlated to oil prices and you happen to be bullish on oil prices. In addition, let's say you notice the Swiss Franc(CHF) showing both a negative interest rate and poor relative performance versus the other major currencies. Your trade might be to short CHF/MXP.

Please understand and burn or chisel into your mind that carry trades can get "crowded" and are subject to quick and massive corrections. You do not want to over leverage these trades or get sloppy with your money management. Although IB has conservative margins, you still can get hurt using their full margin allowance.

You will pay or receive interest on your forex positions according to your position and the countries respective interest rates. Settlement day for such purposes is Wednesday, as I understand it. In futures, the interest rate differential is a major component in the carry between the various contract months.

Babypips will answer many of your questions. After a few days, if you still have some questions, I will be happy to try to answer them for you.

 

[Saltynuts]

thanks suffering!

 

[Variss]

I think you heard right as I believe longterm trading is more easy than the shortterm. I am saying this because you can predict whats going to be happen in the next three to four days than three to four minutes. Do you agree with me in this regard?

 

[wwatson1]

No it definitely isn’t as easy as that, following long term trends is as difficult as short term.

 

[wwatson1]

You need to have a solid strategy for which ever scale trend you are trying to ride, or try a range bound strategy they are easier in my opinion as there is a lot of range bound movement in forex

 

[ElectricSavant]

I can agree with you.

ES

I think you heard right as I believe longterm trading is more easy than the shortterm. I am saying this because you can predict whats going to be happen in the next three to four days than three to four minutes. Do you agree with me in this regard?

 

[tomorton]

I think you heard right as I believe longterm trading is more easy than the shortterm. I am saying this because you can predict whats going to be happen in the next three to four days than three to four minutes. Do you agree with me in this regard?

I certainly do. As I see it, its easy to assume the weather will be hotter in July than in June. But its very hard to be sure that the temperature in the next 2 hours will reach 21.6 degrees but not reach 21.9 degrees.