| you've heard of the carry trade as it has been getting | | | | So now that we know the basics of interest rates, |
| a lot media attention in the wake of 2008 financial | | | | how do we apply them to a carry trade? The neat |
| crisis. This a forex trading strategy that has been | | | | thing about a carry trade is that we don't the pair |
| around for over two decades and is typically used by | | | | we're trading to move a lot to make money on the |
| the pros, but even novice and intermediate traders | | | | trade, so we can program our forex robots to use |
| would do well to learn about the carry trade. | | | | some conservative stop-loss orders and still make a |
| Unfortunately, many traders just hear the term carry | | | | profitable trade. Why is this the case? Given that a |
| trade and they become intimidated, thinking this is | | | | carry trade exploits discrepancies in the interest rates |
| something best left to the pros at the big banks and | | | | of two currencies, the trade acts as a high-yielding |
| hedge funds. Well we're hear to tell you different and | | | | savings account, allowing us to collect interest on a |
| show you that it is possible to even program your | | | | daily basis even if the pair doesn't move much. Sounds |
| forex robot to automatically place carry trades for | | | | like a pretty good deal, huh? |
| you. | | | | Programming Your Forex Robot To Take Carry |
| What Is A Carry Trade? | | | | Trades |
| Even if you only been trading forex for a short amount | | | | To program your forex robot to take carry trades |
| of time, you're probably keenly aware of the | | | | automatically, you need to know what pairs are best |
| importance of interest rates in the market. When we | | | | to carry trade with. Traditionally, the yen is part of |
| say interest rates, we're talking about the rates set by | | | | most carry trades because Japan has had artificially |
| the central banks of countries all over the globe, but | | | | low interest rates for decades. Knowing this, traders |
| only the interest rates of the world's major economies | | | | will use yen to buy higher yielding currencies like the |
| are worth following for the purposes of forex trading. | | | | Australian and New Zealand dollars, so if you want to |
| Most countries have two interest rates. One is the rate | | | | carry trade, the two main pairs to do so with are JPY |
| that banks pay to borrow money from the home | | | | AUD and JPY/NZD. |
| central bank. The other rate is the rate banks charge | | | | Other pairs that are used for carry trades include GBP |
| to lend money to each other and other borrowers. | | | | JPY and GBP/CHF. It is possible to program your |
| Conventional wisdom holds that when a country's | | | | forex robot to take carry trades for, just make sure |
| interest rates are high, its currency appreciates in value | | | | you're having your forex robot use one currency with |
| and when a central bank lowers interest rates, more | | | | a low interest rate to buy another currency with a high |
| often than not, the currency will decline in value. | | | | interest rate. |