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Hello everyone, I am a new member of the great Dukascopy community and this will be my first of many articles. I feel like this is the perfect subject to start with because the explanation of a carry trade brings us back to the very basic fundamentals of forex trading. So here we go!
Definition of a carry trade:
A carry trade consists of borrowing money in a currency with low interest rates and investing the funds in another currency with higher interest rates.
This is a pretty straightforward definition, but let's use an example to put this information into context. If the interest rate of the European Central Bank is 0% while the US Federal Reserve is 1,75%, the interest rate spread would be 1,75% (1,75% - 0%). In this example, we would borrow Euro to invest in USD therefore the net yield of the carry trade would be a gain of 1.75% or 1,750$ a year for 1 lot traded.
How does this apply to trading?
Borrowing and investing in different countries would be way too complicated for an individual to do alone. This is why we do business with brokers. They can give us access to trade almost all the currencies in the world. As we know the FX market operates in pair, meaning that if you inv…
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Diana29 avatar
Diana29 29 Apr.

Nice job!

Sanju777 avatar
Sanju777 29 Apr.

good artilce

Sasha_spicy avatar

good one!

Maxim3 avatar
Maxim3 30 Apr.

useful article!

rajwinder avatar
rajwinder 30 Apr.

Well written, Good Luck

orto leave comments
I am writing an article about one of my new strategy for part time traders and for lazy traders like me, which is of long term strategy with very low risk but with more reward. Please read how to prepare the sandwich and taste it and let me know the taste of it by providing feedback which is very important for me.
Before going to my strategy I want to ask couple of questions for all of you traders:
1. Are you part time trader/lazy trader?
2. Don’t know much about fundamentals/ microeconomics and technical analysis?
3. If you can’t assess all the news or any political drama of different countries and it's impacts.
4. You don’t know the future direction of the pair?
If you say YES, for all my questions then you will fall in love with my strategy and my request is at least once taste it in demo account.
Pre-steps before making yummy sandwich:

1.You need to consider the pair where the pair is moving in the range for example I am taking USD/JPY pair to explain my strategy.
2. I think all the traders know about the basic concept of Forex trading irrespective of full time or part time or lazy trader. You must me thinking now what it is, you know I am just talking about support
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Muller avatar
Muller 15 Sep.

well done, need to try

samymahrous avatar

nice job

pushkina avatar
pushkina 23 Sep.

Good job

Sebine avatar
Sebine 24 Sep.


Miren avatar
Miren 28 Sep.

Good job, thank you!

orto leave comments
Fundamentals still supportive!
Lira versus Yen did not go quite the way I had expected for November, mainly due to suprise US elections outcome. As it was not a fundamental reason for TRY or JPY, the general reaction just occured later - during the current week. 7th and 8th of december were when both lines I sketched previous month (resistance and downtrend) were succefully broken. I believed more and more that it had to happen as the situation evolved. There were no real fundamentally bad news from Turkey, except the President being against Central Bank's decisions. Finally, the negative terrorism and coup-like streak of news from Turkey seem to have ceased for a while, or even for a longer time.
We had Current Account deficit tightening to -1.68B (11 Nov), Budget Balance ameliorating to -0.1B (15 Nov, from -16.9B), most of rates in Turkey hiked on 24 Nov together with steady Manufacturing Confidence (103.7 24 Nov) and Capacity Utilization (staying 76.4% 24 Nov). On 29 Nov we have seen foreign arrivals decline stopped a little (-25.8% from -32.84%) signalling maybe a start of reversal of tourism stagnation. Trade balance also improved (-4.16B from -4.36B, 30 Nov), exports rose to …
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ak10 avatar
ak10 10 Dec.

Useful knowledge for trading.

Beto avatar
Beto 13 Dec.

Very technical and fundamental bias, really good job.
Only I think you could put at the end a very short conclusion about your theory to make it easy to all that people how do not like more even the technical analysis.
Best regards.

arjaq avatar
arjaq 13 Dec.

Beto  , what exactly do you mean? TRYJPY is not a very technical (still technicals do work here to a certain extent) pair in general, it moves basically driven by fundamentals or risk sentiment. What should a conclusion consist of here?

VictoriaVika avatar

Good luck in article contest, nice job.

k_morocco avatar
k_morocco 16 Dec.

great analysis , liked your fundamental point of view

orto leave comments

In this article I want to share with you my thoughts on current situation and possible future developments of four major currency pairs : EURUSD, GBPUSD, USDCHF and USDJPY.
It is crucial that you have read my previous article Trading The Levels Correctly. If you have not done so this may not make sense for you.
Markings used in this article are as follows :
Green ellipse with a letter ( no number ) means that this is a level from where everything basically starts. It is a level that has had a fake breakout in regards to it. Green ellipse with letter and number represents a fake breakout. Therefore A1 is a fake breakout of level A. Blue lines are support and the red ones are resistance levels.
Purple dashed lines represent round numbers that are or might be important to particular currency pair.
Rectangles are used just to draw more attention to the selected area.

There are two charts dedicated for each pair - monthly and weekly. Let's go ahead.
1.1.EURUSD Monthly chart
Direction of a pair is clearly bearish. Price has gone through the very strong level 1.2402 ( C ) with an impulsive move. This level served as a strong support for 8 years in conjunction wit…
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Julia_Zhulinskaya avatar

good info

bibo avatar
bibo 24 Oct.

good one

mcquak avatar
mcquak 28 Oct.

good analytics

Vlad73 avatar
Vlad73 2 Nov.

very good

Natasha888 avatar
Natasha888 10 Feb.


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Как мы знаем пара евродоллар является самой торгуемой. Именно на ней мы можем наблюдать самые большие объемы торгов. В свете последних событий данная пара не теряет своей привлекательности, скорее наоборот!
Что же такого интересного произошло за последнее время, что выделило ее среди остальных? Конечно же голубиные заявления Марио Драги, после которых пара буквально за две недели спустилась к минимумам первых двух кварталов 2015 года, пройдя порядка 700 пунктов!
Есть в трейдерских кругах такое поверие "покупай на слухах, продавай на фактах". К чему это я? Рассмотрим недельный график пары и нанесем на него старую добрую линейку Фибоначчи, которая являетя поистине универсальным инструментом, позволяющим четко видеть уровни поддиржки и сопротивления. Итак взглянем на рисунок:
Рис.1. Возможная точка разворота

На рисунке видно, что цена достигла уровня поддержки 127,2 и оттолкнулась от него. Дело в том, что в гармоничной торговле существует множество паттернов, в которых данный уровень является разворотной точкой. Так что же - евродоллар находится на стадии разворота? Давайте обратимся к другому небезызвестному индикатору стохастик, показывающему зоны перекупленности и перепроданности:
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Starsmil avatar
Starsmil 28 Dec.

"голубиные заявления Марио" - звучит
А вообще надо дождаться хотя бы разворота Стохастика, чтобы говорить о росте пары. Да и период его можно взять побольше, где меньше шума, например 14.

wisdom_consultant avatar

хорошая статья

ALFCORP avatar

Отличный анализ!

Frey avatar
Frey 29 Dec.


DaShik avatar
DaShik 31 Dec.

спасибо. как я понимаю, почти так все и было. очень понятно написано, даже я поняла)

orto leave comments
I have some reasons to believe that going long on EUR/CHF is a very good Idea in the long term (above 3 months).

Take a look at them, and lets have a green full discussion .

1) The stress in the euro area is fading away, slowly but steadily
Systemic risk has faded in the euro zone, and further progress will be made to tackle the solvency issues of euro zone countries, the Swiss franc should lose its appeal as an alternative investment,

as said by Societe Generale

This is good for EUR(not EUR/USD) in the long term
At the same time not so good for CHF, Which gains when risk aversion flares up.
Traditionally USD, CHF and JPY enjoy the safe haven tag.
But lately the BOJ decision to have a weaker yen took the sheen away from JPY.
And USD will only become more attractive as the tapering measures unwind.

2) Swiss Franc is supported by big current account surplus (10.25% of GDP)
A large part of this inflow is through the banking sector.
The image below clearly shows how closely the current account surplus and the banking sector are related.
During the 2008 banking sector collapse, the current account surplus went negative.

But it will be very difficult for the bank
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Skif avatar
Skif 12 Feb.

Хороший вариант , только пока eurchf ниже 1.24 . поход наверх под большим вопросом (((

rokasltu avatar
rokasltu 19 Feb.

I think that SNB's 1.20 EUR/CHF floor is very brave decision; but I think this floor will be taken away (or broken) sooner or later and if this will be done it is very difficult to predict what will happen with EUR/CHF longs (I mean slippage of SL might be huge)

500nm avatar
500nm 20 Feb.

I do not think that SNB will take away the floor, it has mentioned several times that the floor is necessary and most importantly the increase in euro reserves by SNB is an indication that they will fight to save the 1.2 level

500nm avatar
500nm 20 Feb.

But when a situation arises that hedge funds or some other power tries to break the floor, there will be some fight before it breaks and we will have time to come out. that is why i said forget about the trade unless a new fact emerges which changes the analysis

500nm avatar
500nm 20 Feb.

When i googled about eur/chf stop loss at 1.2, i found my article among the top. that was cool, but i also found this

orto leave comments
This article details a trade I took this past week, my first trade of 2014 in fact.
It was a simple setup from a level which I identified last month. After the level was confirmed I entered the trade and it moved quite quickly in my direction and ultimately to the target.
Daily Analysis
The main level from which I traded was on the daily chart as always, and this was a demand level. Price left the area in a very strong
fashion. The supply and demand imbalance was so great that price gapped away from the level and rallied over 200 pips. I normally look for drop base rallies for qualifying demand and though there is no real base at the level, the gap was very significant and it was clear that a lot of demand was present.
As I mentioned in a previous article I don’t trade directly from the daily levels themselves, I like to wait for confirmation and for this I go to the H1 chart. I waited for the nearest opposing levels on the H1 chart, (supply) to be broken which indicated that the daily demand level was indeed high quality.
The move which broke the supply levels came from a strong rally and there was a clear demand level on the 30m chart which I believed to be the sourc…
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Likerty avatar
Likerty 7 Jan.

Why dont you split your trade in to few separate entries? Close half before the enxt road bump and re-enter if it comes back to your entry point.. Such management halepd me a lot in my tradign.. Sadly such approach is imposible in the trading contest, because of contest rules limitations..

MaximumLots avatar

I've not tried that before. I'm usually all in till target or stop once I've done my analysis. I can see how that could be useful for limiting the downside though. I know some traders who do adopt that approach. It can also limit the upside and you end up being long with only half your standard lot size and price never comes back. I may test that approach on demo and see what the results are like. Thanks

Skif avatar
Skif 11 Jan.

Yes it is useful!

MaximumLots avatar

I'm glad you found it useful Skif

Airmike avatar
Airmike 19 Jan.

Very nice trade and good analysis

orto leave comments
If you have read some of my articles and/or comments, or watched the few webinars I've done, by now you probably know that I prefer a long term approach in my trading, and that I don't recommend day trading, especially to inexperienced traders. It is a known fact that most retails traders use short time frames, and they have the opinion that long term trading is riskier, so they stick to their intraday charts believing that they are taking less risk. And this myth of the supposed safety of intraday trading is repeated ad infinitum until almost everyone believes in it. However, that's what it really is: a myth, nothing more than that. _____________________________ ► Trading costs and slippage No matter how long you hold your positions for, there is a fixed cost that is the same in all situations: the spread. And then there are commissions based in your trading volumes and capital deposited (using Dukascopy's fee structure). Imagine that a currency pair has a total cost of 2 pips per order (spread + commissions). A day-trader will usually have small profit targets, lets say 20 pips. So he will pay 10% of his profits to the broker, and likewise his losses are also inflated by…
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OneGoodTrade avatar

You are so right SpecialFx. And some wonder why the day traders lose ...however there is a catch...the longer timeframe, the more difficult is to predict the prices. Great article.

Nicco avatar
Nicco 31 Jan.

Amazing...I understand (day)trading can't be a hobby or (day)trading is an expesive hobby!

Nicco avatar
Nicco 31 Jan.

I will print this paper!

belman avatar
belman 31 Jan.

Interesting. best of luck +1

doctortyby avatar
doctortyby 31 Jan.

I agree with the fact that technical analysis works better on the higher time frames (at least Daily), but there are also ups and downs for the intraweek, medium and long term trading too :)

orto leave comments
This article will describe this long term trading strategy, used mostly by institutional investors, highlighting rewards and risks in a simple way, to make it possible for you to use it as well. With carry trade you can make or lose money even if the price of a currency pair remains static for a long time. It will also help you understand the reasons behind some of the market's moves, especially during volatile and risk-off periods.____________________ ► What is carry trade? Even though it's possible to have carry trades in a variety of financial instruments and investments, the basic premise is the same. Positive carry trade occurs when someone borrows an asset with low interest rates to finance the investment in an asset with a higher return. For example, borrowing money at 2%, and then investing the funds in an asset that pays 5%. This is easily done in the Forex market, because currencies are traded in pairs, so a positive carry trade is obtained when a trader buys ("carries") a high interest rate currency (for example, AUD), and sells a low interest rate one, such as JPY. Negative carry trade, as expected, is the opposite. This situation happens when the yield of holding an…
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bmg avatar
bmg 30 Oct.

Good article

brazandeh avatar
brazandeh 16 Dec.

You really are a Special FX!.Thank you so much for the clarification

SpecialFX avatar
SpecialFX 17 Dec.

You are welcome brazandeh, I am glad you liked it! :)

brazandeh avatar
brazandeh 22 July

Is it rally possible to get pips by carry trade?If I understand it correctly, so as a position to be profitable , the value of positive carry trade must be higher than the spread of that instrument and at the same time the direction of that position must be in favor of the market.Am I right or did I miss something?

FXRabbit avatar
FXRabbit 14 Sep.

Thank you for writing this article and sharing it with us!

orto leave comments
If John Maynard
Keynes had been a Forex trader, he may have been one of the best short-term
traders because of his preference for immediate action. As he was an advocate
of proactive fiscal measures to combat severe economic imbalances, he is also
likely to have preferred the benefits of short-term moves in the Forex instead
of the long-term trends in the midst of global economic uncertainty.
Long-term trends
in the Forex market – lasting at least 2 weeks – tend to smooth out the
short-term volatility and allow the trader to benefit from larger ranges. They
also provide a larger cushion for losses given the wider Risk-Reward ratio and
give the trader a lot more time in between trades to analyze the market.
However, the commitment to this approach assumes a high level of accuracy in
the traders´ forecast based on technical and/or fundamental analysis- an
accuracy beyond that of the average full-time trader.
Such a trader,
who depends on the Forex for his immediate financial needs, is likely to prefer short-term certainty. Thus, choosing the longer term trends, though
more profitable per trade, would introduce an unnecessary amount of dependence
and pressure o…
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Dow Theory ow Theory is a form of Technical Analysis derived from the works of Charles H. Dow, the founder of the wall street journal and Dow Jones Company (now most famously heard of in Dow Jones Industrial Average - The index of the 30 of the largest companies on the NYSE and acts as a benchmark for the world.)It has been around for about 100 years and has been proven to be succesfulDow theory is mainly comprised of different sections which all combine into one trend for the market.Market Movements :The market at any one time is in one of three modes - Primary, Secondary or intra-day.Primary - Primary represents the overall, longer trend which depending can last from many months, to years or even decades. This will either be a "bull" or "bear" market or when a market is rising in price or falling respectively.Once a trend has been established it is in effect until the trend changes, however the longevity of this move is hard - even impossible - to determine.Success, according to some is seen in identifying the primary trend and trading with it.Secondary - These movements of the market are counter primary trend and move against the market for some time but are not changes just m…
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AdrianWS avatar
AdrianWS 27 Jan.

@Quattro - Would you mind gsharing what Currency oair and time frame you are looking at so I can have a look and see if it fits. Thanks.

masterfxtrader avatar

Adrian, I do to someextent agree with Quattro here, I find thi abit outdated and useless, dont get me wrong its a good article and very informative but not really useful anymore in my opinion.

Quattrotrader avatar

Adrian I was looking at pairs Like AUDUSD and EURAUD if that helps.

AdrianWS avatar
AdrianWS 28 Jan.

I think I can see where you are coming from but I think you must be using too small of a time frame, try to go weekly or even monthly and try again, Hope this helps.

Quattrotrader avatar

Ok thanks.

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