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?
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.
You can still carry trade, only you have to go to a broker with high margin requirements. Look to IB ect.. No broker with 400:1 leverage. So you wil need about $20000 in your account. Its worth the time to check out their PDS. damo
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)
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