Can someone tell me the best place to learn how to Carry Trade. I understand the basics but figure there is more out there to get started. Is it tru that some brokers dont charge interest? Wouldnt this be a direct hedge?
Carry Trade - How to?
- Thread starter scottyb159
- Start date
Did you mean Teade or Tweed?
Never wear in months without an "R"......
Never wear in months without an "R"......
Sooner or later ElectricSavant will reply...
Also, I have been reading all the information about the Unwinding and the "end" of the carry trade, however, I may not necessarily be sold on the "end". While I may not get involved now, I would like to be ready as the opportunities arise.
JS,
Thanks, I guess there will NEVER be another opportunity for a carry trade?? I am looking for some guidance from someone for the time another carry will come along.
Thanks, I guess there will NEVER be another opportunity for a carry trade?? I am looking for some guidance from someone for the time another carry will come along.
WHy a broker like IB? WHat is their advantage? They pay higher interest?
carry trade manual:
1) go IB
2) buy usdjpy, usdchf, or other pairs: audjpy, audchf, nzdjpy or nzdchf...
3) let it sit, and if you really want use some of your new assets to buy equity indexes. otherwise, on unleveraged trade you make the spread (3.5-4.5% or so) assuming currency exchange rates remain the same.
4) trade isn't over, but who knows within a few years the carry trade may have to be redefined as opposite.. (long jpy against usd)
1) go IB
2) buy usdjpy, usdchf, or other pairs: audjpy, audchf, nzdjpy or nzdchf...
3) let it sit, and if you really want use some of your new assets to buy equity indexes. otherwise, on unleveraged trade you make the spread (3.5-4.5% or so) assuming currency exchange rates remain the same.
4) trade isn't over, but who knows within a few years the carry trade may have to be redefined as opposite.. (long jpy against usd)
Last Thursday was one of the best yielding days in carry trade history so it's clearly not over yet.
BUT
The Friday-Monday period before it was among the worst (esp Tokyo session on Monday - check out GBP/Y pair).
It gets done a lot in banks - they/we borrow 10 yards of yen on money market overnight at say 0.53% - switch it all into gbp or dollar and lend it overnight at 5.32% or 5.24% respectively. Hardcore types switch into HUF or ZAR or NZD for even more yield.
Your biggest risk is fx rates moving overnight.
You need the following:
Bloomberg
Reuters
Account in pretty much every darn country whose currency you wish to deal in as this is a cash settled game
At least $100,000 in cash to go as this is usually the minimum amount - to make good $$ on it you need to add few zeros
Back office to make the payments
Credit rating from S&P/Moody's otherwise noone will lend you 10bn yen
Access to top tier spreads when changing currencies
Yeah so it's not for the retail trader really....better to think of how yen and swiss rate rises will cause carry to affect pairs indirectly
BUT
The Friday-Monday period before it was among the worst (esp Tokyo session on Monday - check out GBP/Y pair).
It gets done a lot in banks - they/we borrow 10 yards of yen on money market overnight at say 0.53% - switch it all into gbp or dollar and lend it overnight at 5.32% or 5.24% respectively. Hardcore types switch into HUF or ZAR or NZD for even more yield.
Your biggest risk is fx rates moving overnight.
You need the following:
Bloomberg
Reuters
Account in pretty much every darn country whose currency you wish to deal in as this is a cash settled game
At least $100,000 in cash to go as this is usually the minimum amount - to make good $$ on it you need to add few zeros
Back office to make the payments
Credit rating from S&P/Moody's otherwise noone will lend you 10bn yen
Access to top tier spreads when changing currencies
Yeah so it's not for the retail trader really....better to think of how yen and swiss rate rises will cause carry to affect pairs indirectly