Fx and interest

[zdo 20]

Anyone up here on TL specializing in trading the higher interest paying pairs (for the interest) ??

 

big picture, methods and techniques stuff you can share ?? thx.

 

For example, I've had some good results using cycles with pairs long the AUS, NZD and also, for the last 15 months or so, the INR.

For INR, the spreads / transaction costs are abysimal...but interest payments are great and more than offset costs if hold for longer period.

 

Any pro's or specialist who can contribute some insights into playing the high rate countries?? Many thanks.

[SIUYA 11]

never really played it from the point of view of only interest rates, but I guy I knew about two years ago put together a great model from a portfolio point of view and traded the carry spread. According to him it worked best from a portfolio point of view as there are always the shocks that carry you out, and you need to diversify a bit, and take the longer term view on it.

Otherwise it something I have never really looked at, except from the point of view of understanding the big effect interest rates can have on such models.

[zdo 20]

lazy, sloppy entries, avg price ~54.28 (horizontal cursor line on (hard to see) attachment)

and a very ugly spread

but ka ching on the daily interest payments - for over a month now

[zdo 20]

hm… India…

tangentially related …

India Joins Asian Dollar Exclusion Zone -- Will Transact With Iran In Rupees - BlackListedNews.com

 

Governments Will Allow Much, Much Higher Gold Prices Soon! Here

[zdo 20]

... and out. (actually 80% out)

 

...mostly for moving funds to other opps right now... ie wouldn't be surprised to see USD go down even more in this pair for a couple more months. As I mentioned before, the daily interest in this trade far more than offsets additional transaction costs.

 

Long AUDUSD, AUDJPY, NZDUSD, and NZDJPY, etc have also been a good trades lately but the daily interest, while good, is not great like in short USDINR

 

...same questions from OP re methods,etc are still open... thanks

 

Have a great weekend all,

 

zdo

[Obsidian 10]

you may want to check try/jpy

[zdo 20]

you may want to check try/jpy

 

Thanks. I have looked at them … for me with TRYJPY in comparison to AUDJPY, etc

they are all pretty correlated directionally in price…

so more looking for sweet spots in the planned holding periods. ie it would be better for holding period in TRYJPY to be longer in relation to AUDJPY's, etc … full point difference in the spreads but (only , nothing to sneeze at) ~1.75 diff in the rates.

 

Wonder why the INR isn’t more liquid / spread is so high?

[Obsidian 10]

I know it changes during market hours but 7.5-20 pips...not that bad for such currencies

[SIUYA 11]

Zdo - thought you might like this comment from the article

 

Australia

 

“There’s too much froth in the Australian currency,” which economic fundamentals indicate ought to be worth 90 to 95 U.S. cents, Ridout, outgoing head of the Australian Industry Group, said in an interview in Sydney yesterday. She said “speculative” buying stoked by rate differentials had spurred the local dollar, which traded at $1.0791 late yesterday.

 

so is it speculative buying OR the interest rate differentials pushing the AUD.....I would have thought that the interest rate differentials where part of the economic fundamentals. I love when the two get intertwined to push a barrow.

 

and this doozy.....

"The so-called Aussie has appreciated 54 percent since the end of 2008," yeah after collapsing first.

[Obsidian 10]

try/jpy 2.2 pips spread...hmm I should check this pair more often...

[zdo 20]

try/jpy 2.2 pips spread...hmm I should check this pair more often...

 

Yep… me too. Great spread or not, it seems to always be an afterthought mkt for me… go days without any thoughts of it at all … still, with it engaged and active or not, have been building a small sized long position since early April.

 

Also, trying to build a larger ~53.40 avg price short position in USDINR…

USDINR spread sucks! But the interest – ka ching !

[zdo 20]

What is it that makes Keynesians so insanely self destructive? Is it their mindless blind faith in the power of government? Their unfortunate ignorance of the mechanics of monetary stimulus? Their pompous self-righteousness derived from years of intellectual idiocy? Actually, I suspect all of these factors play a role. Needless to say, many of them truly believe that the strategy of fiat injection is viable, even though years of application have proven absolutely fruitless. Anyone with any sense would begin to question what kind of madness it takes to pursue or champion the mindset of the private Federal Reserve bank… Quantitative easing has shown itself to be impotent in the improvement of America’s economic situation. Despite four years of free reign in central banking, employment remains dismal in the U.S., the housing market continues its freefall, and, our national debt swirls like a vortex at the heart of the Bermuda Triangle. Despite this abject failure of Keynesian theory, the Federal Reserve is attempting once again to convince you, the happy-go-lucky American citizen, that somehow, this time around, everything will be “different”.

 

That said ...

... and notwithstanding...

I would like to thank Ben. Almost overnight, the (in the red) 'risk-on' (AUD,NZD, etc) and interest paying (mostly INR, but some TRY, etc) positions I have been building went significantly KaChingable if closed

 

However -

...The only surprise left is a negative one. Chairman Bernanke and his fellow doves will soon realize the consequences of over-promising and under-delivering. It works better the other way around, but now it's too late.

CHSmith

 

...so moving stops into the green...

 

Also, discussed entry plan with SI and AU a while back with MO - which is also working ok...

but would not be surprised at all to see that move retrace back quickly (and maybe beyond)

:haha:... it's been a long while since my own little subjective internal wall of worry for the inner bull to climb got triggered... will be processing and clearing that bs/ideation this weekend big time

 

Have a great weekend all.

 

zdo

[Mysticforex 13]

Sorry, not really addressing your question.

 

It reminds me of when someone turned me on to something we called "The HedgeHog".

 

In 2008 my broker was paying 2.8 pips a day for a long position on GBP/JPY, 7 days a week,

365 a year. Someone told me about opening an acct with a "non interest" broker. Short with the "non interest" broker, long with the interest paying broker . Set TP an SL accordingly ( both positions close out together ). I did it for about 4 months . The hardest part was the bank wires to even out the accts when they closed. After bank wire fees it came out to about $160 a week. Call me stupid, but I stopped because it felt like cheating.

 

I wouldn't mind a real return of a "Carry Trade".

[Obsidian 10]

Sorry, not really addressing your question.

 

It reminds me of when someone turned me on to something we called "The HedgeHog".

 

In 2008 my broker was paying 2.8 pips a day for a long position on GBP/JPY, 7 days a week,

365 a year. Someone told me about opening an acct with a "non interest" broker. Short with the "non interest" broker, long with the interest paying broker . Set TP an SL accordingly ( both positions close out together ). I did it for about 4 months . The hardest part was the bank wires to even out the accts when they closed. After bank wire fees it came out to about $160 a week. Call me stupid, but I stopped because it felt like cheating.

 

I wouldn't mind a real return of a "Carry Trade".

 

I do not think that is cheating

[Mysticforex 13]

I do not think that is cheating

 

 

I'm as greedy as the next person, Thinking about it now it was probably a matter of size. I was using 1 standard of per side. If I had been using say 5 lots per side, for about $800 or so aweek I would have gooten over the cheating feeling.

[Obsidian 10]

I wonder if there is broker which will let me have a swap free subaccount in addition to a regular account so that I can get rid of wire fees :rofl:

[zdo 20]

fwiw, lifted 60% of USD/INR shorts earlier this morning ... probably it's a bit early, but...

 

placing an array of sell orders above and (for now, far) below to re-enter...

 

ideally will move/creep those stop entry orders that are below back up close to price

 

I like this play because, if you hold it for some time, the interest income ameloriates much more of the risk than many other FX position trades...

[zdo 20]

I wonder if there is broker which will let me have a swap free subaccount in addition to a regular account so that I can get rid of wire fees :rofl:

 

re the subtopic on interest/noninterest accts : What about just scaling back (and slowing down) ...

and ordering and sending checks via snail mail to maintain relative 'balance'... ?

[Obsidian 10]

fwiw, lifted 60% of USD/INR shorts earlier this morning ... probably it's a bit early, but...

 

placing an array of sell orders above and (for now, far) below to re-enter...

 

ideally will move/creep those stop entry orders that are below back up close to price

 

I like this play because, if you hold it for some time, the interest income ameloriates much more of the risk than many other FX position trades...

 

thanks for reminding INR, while watching mostly major currencies, i miss better opportunities which less traded currencies offer...

 

at the moment i only hold a small try/jpy position which i opened around beginning of september

[zdo 20]

... was just skimming http://www.traderslaboratory.com/forums/money-management/14530-position-sizing-diversification.html

... someone mentioned TIPS

 

Easing back into a short USDINR position

Currently at ~ 5% loaded and orders resting above and below…

 

Have a great weekend all

[Obsidian 10]

try/jpy is at the top of channel...I wonder if it will go back to 42.xx again...waiting to hear what BoJ will say tomorrow

 

meanwhile keeping an eye on usd/inr...54.00-54.50 seems important