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8/31
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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

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3/30
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Introduction

The most important aspect of Forex trading is having a working strategy and one of the most widely used rule is of diversification of the trading portfolio. Diversification of the trading portfolio means getting exposure to various currency pairs so that the trading result is not influenced by any single currency pair. As an example, a trader may trade ten different currency pairs at a time with the maximum loss per pair allowed of 0.5% of the global portfolio value. However in implementing this diversification strategy it is important to know various aspects of the different pairs like the pip value, overnight rate and margin for these have a great impact on the chosen strategy. The Dukascopy website has great Forex calculators that can be used for this purpose. This article looks at these forex calculators and how they can aid the trader in implementing their trading and risk management strategies.
How to get to the Forex Calculators

The Forex calculators are found in the “market info” section of the Dukascopy website . On the drop down menu that appears when you point the cursor to this section, click on the “Forex calculator” section as shown in steps in …
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Vlad73 avatar
Vlad73 26 Dec.

good article

Nastasiia_ avatar
Nastasiia_ 27 Dec.

Well done!

md1fk1 avatar
md1fk1 27 Dec.

well done

kish avatar
kish 28 Dec.

хорошая статья

klintons avatar
klintons 19 Jan.

Gut Artikel

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14/58
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In the year 70 AD the city of Jerusalem was Sieged by Roman legions commanded by Titus Flavius Caesar Vespasianus Augustus.
Jerusalem was guarded by three walls: on the 25th of May 70 AD the Roman legions breached the city’s third wall, Jerusalem’s external wall; and five days later they’ve breached successfully the city’s second wall.
Titus next move detached the legions. Half we’re committed with earthworks in order to attack the Temple and Antonia Fortress, while the other half was focused on assaulting the Upper City.
Titus knew that their enemies commanded by Simon bar Giora and John of Gischala would fight for every inch of their city and understood that the Siege of Jerusalem would take a long time.
The Jews under the leadership of John of Gischala endorsed a strategy to settle fire on Roman’s earthworks structures. In order to accomplish that task they’ve built an underground passage to reach the Roman’s occupied territory.
However, building windows at such a low level undermines the ground’s load capacity. And one night, the wall of Antonia Fortress collapsed and opened the way for the conquest of Jerusalem by the Romans.
As Jerusalem’s Siege, the European Union is no…
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fx_lmcap avatar
fx_lmcap 25 Sep.

“The euro is far stronger than they want, and stronger than the economy deserves, but they don’t know how to weaken it,” Hans Redeker, head of currency at Morgan Stanley, told The Telegraph recently. “This is exactly what happened to the Japanese.”

fx_lmcap avatar
fx_lmcap 26 Sep.

On the 25th of September 70 AD the Romans took the Upper City and on the 24th/25th of September 2016 the German leader ruled out to step into Deutsche’s legal imbroglio with the U.S. Justice Department!

fx_lmcap avatar
fx_lmcap 26 Sep.

A day after, on the 26th of September 70 AD the Romans were in control over the whole city and settled fire in Jerusalem.
On the 26th of September 2016 Deutsche Bank shares dropped to a record low. The shares dropped 6% to nearly 10,7 EUR.

tatskiyd avatar
tatskiyd 28 Sep.

great article

SikmaN avatar
SikmaN 30 Sep.

good job!

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3/66
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Helpful Links for This Article
As someone using multiple brokers, I can confirm Dukascopy has tighter spreads and commissions. I'm not cheer-leading just honest opinion from a high-frequency trader – where tight spreads matter. Consider screenshots from other two brokers I use versus Dukascopy.
Spreads 2nd Nov 2015
Volume Commissions 2nd Nov 2015
The spread difference isn't impressive, but note the difference in commissions between Dukascopy and my other broker. Such pricing is the reason I may consider moving my accounts over to Dukascopy if JForex4 meets all the hype.
This article is about lowering overall charges not comparing brokers so let’s get into it.
Set Reasonable Global Stop Loss on Your Account

This won’t lower your charges per se, set a conservative stop loss on your live account. This applies to total drop in equity not per trade.
In the image, I'm not willing to lose more than 20% of a 20,000 account so, stop loss is 18,000.
It’s up to you to choose partial hedge or total close on …
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SikmaN avatar
SikmaN 26 Nov.

Thank you. A useful material))

PipNovice avatar
PipNovice 30 Nov.

Hi All, I'm a novice in trading.

I'm using the Jforex platform. I downloaded the Pipx 1Min Scalper, it is installed on my platform as can be seen on screenshot. I've also opened it to run, but that is just all I can understand so far.

I would like to be assisted as to how I actually trade using the strategy. Does it work on it's own. Do I have to look for something else on my chart to see that it is working/to get it working... or the fact that now it is running is enough it will just make pips rain into my small account? 

Please explain in "English", not some coding language. Lol... Thanx

PipNovice avatar
PipNovice 30 Nov.

Oops, sorry screenshot doesn't show the strategy on above image... but I have installed and it's running as I post, so I would like clarity on how Pipx 1Min strategy works. Best regards,

pipx avatar
pipx 30 Nov.

PipNovice is the strategy running - either in remote or local? If yes, then all you have to do is let it open trades and manage them itself.

pipx avatar
pipx 30 Nov.


PipNovice Read the description of the strategy on JStore: https://www.dukascopy.com/jstore/. You will get a better understanding than what I can write on the comments. Also test it on a demo to see how it works.

Best Regards

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13/23
Ranking
Introduction :
I've looked at the Carry trade in short bursts across previous articles, but I thought I should have a more detailed look at them this time around. Furthermore, I want to explore some other possibilities around the carry trade, such as the best way to bet against it and so on.
First of all though, we need to consider that carry is in fact a very powerful aspect, it really is. I will demonstrate this by first looking at the Argentine Peso. Now the ARS is no ordinary currency, sure. In fact it currently has a yield of around 32%! as shown by this chart.
We must remember that in late January this year, the ARS crashed 15% in one day. A huge move, something frankly unthinkable for a major currency such as the EUR or AUD. This huge volatility is why traders and investors demand such a high interest rate.
But even though the ARS had a devaluation event earlier this year, it is still positive YTD. That is, if you had bought the ARS on January the 1st, you would have made money.
This to me is an absolutely incredible reminder at how powerful carry is! As even after a currency crashes, the interest afforded to you still means you profit.
A longer time series shows the quite …
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mimuspolyglottos avatar

Is the first chart in ARS terms or in USD terms?

AdrianWS avatar
AdrianWS 8 July

The implied yield one? doesn't really matter as its a %. But it is calculated with USD being the base currency. Likewise with the total return graphs, they are USD base.

mimuspolyglottos avatar

I meant second one. Having problem with my new monitor in portrait mode. Thanks.

Airmike avatar
Airmike 14 July

very nice article. put options and carry is one of my favorite strategy,  but I am going to trade AUD , definitely :)

Tinktank avatar
Tinktank 20 July

Very nice article! I still remember when carry trades were very popular some 5years ago when the US interest rate was above 4%. It was a lot easier trading the USD/ JPY.

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20/38
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Introduction: There are various views of how market mechanisms work, but broadly speaking there are those that believe that every piece of available information is priced into the markets and therefore at any given time the interaction of supply and demand gives a value for any security whether it bonds, stocks or currencies. On the other hand, and most traders would agree, that a currency can deviate from fair value if only for an hour and this leads to trading opportunities. My aim is to look into ways of how to value a currency rate and from there how to trade from it.__________________________________________________________________________________ Purchasing Power Parity:Purchasing power parity (PPP) is a measure of a currencies real value when purchasing actual good, for example, once you've taken your Euros and seen the amount you can get in dollars and then compare that to the relative value of two identical goods in various currency zones. The most commonly referred to study on this is the famous "Big Mac Index" produced by The Economist. This is looking at the cost of a McDonalds Big Mac and converting it into US dollars at the Current FX rate. From here you can see wheth…
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xtrader360 avatar
xtrader360 24 June

good article +

xtrader360 avatar
xtrader360 24 June

+1

MyiDEA avatar
MyiDEA 24 June

interesting...

Alex_N avatar
Alex_N 28 June

Liked the idea

lubosh avatar
lubosh 2 July

I cannot see the photos in the article, but interesting reading.

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4/38
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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!

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