How can **practically** a retail trader implement a FX carry trade on IBKR?

L

lime

I am a IBKR "pro" user and say I wanna trade standard FX carry, such AUDJPY, NZDJPY, ZARJPY, US$100k notional each pair. How can a tiny retail guy like me trade ? I mean the spot FX and holding it for months will get interest rate marked up and down, substantially narrowing the interest rate differentials.

To get "better" interest rates implied in GME Forex futures (all USD pairs), I have to trade two non-USD crosses, like AUDUSD and JPYUSD contracts to trade AUDJPY and those contracts have wide bid-ask, eating the interest spreads.

Say if I am long 150k AUDJPY, IBKR pays about 3.5-3.6% interest on AUD and charges about 1.25% financing on JPY, so my carry collapses to 2% and change from 4%ish wholesale carry, transforming the carry to a directional trade.

Are they any alternatives to access the carry? Like a carry ETF? Or I long/short FX ETFs FXA/FXY ?
 
There used to be an FX carry etf years ago which was called DBV if I recall. But it shut down.

Why not just do futures? No financing or ON swap games there.
 
Can you use the local currency to buy government bonds?

lime said:
I am a IBKR "pro" user and say I wanna trade standard FX carry, such AUDJPY, NZDJPY, ZARJPY, US$100k notional each pair. How can a tiny retail guy like me trade ? I mean the spot FX and holding it for months will get interest rate marked up and down, substantially narrowing the interest rate differentials.

To get "better" interest rates implied in GME Forex futures (all USD pairs), I have to trade two non-USD crosses, like AUDUSD and JPYUSD contracts to trade AUDJPY and those contracts have wide bid-ask, eating the interest spreads.

Say if I am long 150k AUDJPY, IBKR pays about 3.5-3.6% interest on AUD and charges about 1.25% financing on JPY, so my carry collapses to 2% and change from 4%ish wholesale carry, transforming the carry to a directional trade.

Are they any alternatives to access the carry? Like a carry ETF? Or I long/short FX ETFs FXA/FXY ?
More...
 
R1234 said:
There used to be an FX carry etf years ago which was called DBV if I recall. But it shut down.

Why not just do futures? No financing or ON swap games there.
More...

Look at the bid-ask, FX futures are illiquid and to do two legs can cost a lot of interests. Maybe okay, if the "trade" is for 1 year, but who knows..I might want to get in and out
 
You must log in or register to reply here.
Back
Top