Care-Carrie Trade and How to Earn Some Money

On TV screens constantly hear words of analysts and other smart uncle: «Strategy Carrie Trade», or «In the market dominated by Carey Trade» and the like. What is Carry Trade and how you can use the knowledge of the nature of the phenomenon itself for the benefit of the rest of this article.

Despite increased attention to this subject, not all well understood how to make money and this is why around this such a big rush.

It's not so difficult. Strategy Curry trade is a means by playing on the difference in interest rates. The fact is that in different countries, central banks set interest rates independently. Consequently, the cost of attracting money to do business everywhere is different. Using such a variation, you can earn. And traders are widely used in their work.

The implications of this. Borrow the currency with a small rate and pay to use her small bank interest. Convert to «expensive» currency. I already invest «expensive» no money in risky assets of the country where interest rates on deposits are high. For example, take the Japanese yen from near zero interest rate and convert into rubles. On the ruble debt buy government debt with Russia return of 5%.

If the ruble exchange rate against the yen will remain stable, you will receive income for the year at 5%, and not investing a penny. Risk as you can see in the fact that the ruble this year not fallen in price more than 5% of the yen.

You can use financial leverage and debt to buy government debt with a shoulder. But it increases not only the probability of profit in a few times, but the risk is proportionally higher if the exchange rate change is not there and strong.

From a practical point of view on the Forex it is possible to apply so by writing a simple trading system. Play only in the direction of Curry trade. That is, if the pair EUR / USD interest rate at the ECB's higher than in America, it will always be more profitable to sell dollars and buy euros, while the situation does not change.

That is why, looking at the daily chart of EUR / USD, we see the appreciation of European currencies. Now you know what happens on the «fault» Carry Trade. And so bude yet it has not lowered interest rates and Fed. Reserve starts to raise. So I think his head. With it is possible not only to eat)).