Carry Trade

With gold seen once more as a strategic asset, central bank buying has been steadily on the rise. One obvious reason is to diversify foreign exchange reserves away from US dollars.

The forward collar is a trade-off strategy where you give up some gains to limit losses. It's useful if you expect an asset to stay range bound.

The carry trade has a simple aim: Borrow low and lend high. Japanese yen is often the borrowed currency in carry trades. This is because it’s cheap.

This post looks at three alternative strategies that you can use to trade Japanese yen. Yen has some unique attributes that set it apart from other currencies. It is the third most traded currency after the US dollar and the euro.

The reverse carry trade is what’s called an event driven strategy. It’s not a trading system you can use every day – yet at the right time it can generate enormous profits very quickly, and is therefore one you should keep up your sleeve ready to use.

Yield curves for a currency pair can reveal a wealth of valuable information. They tell you the expectations for the economies and the interest cycle.

Because interest rates and the debt markets have such a significant effect in forex, it pays to keep a close eye on them. It isn’t enough just to wait for the announcements and guidance from central banks.

In tactical carry trading, short-term "technical" trades are entered in the direction of carry interest. This allows interest income to be accrued.

A profitable carry trade involves selecting the right combination of currency pair and broker. This article looks at the factors a trader must consider.