FOREX, ADVANCED STRATEGIES
forex, fx, currency, finance, economy, investments
There are many strategies FOREX advanced that are used generally by those speculators professional that work for them large firms financial.
These firms include banks, mutual funds and Hedge Funds managers. This last is a mode of investment similar to those funds of investment, with the difference of that them Hedge Funds use strategies more complex of investment. Their operations are more oriented to the speculations aggressive in the short and medium term.
Between them strategies more common is is the hedging (coverage), the carry trade, the systems automated based on the mathematical quantum. And a great amount of combinations between the different strategies of options.
The Carry Trade
The central idea of the Carry Trade is to buy a pair in which the base currency has an interest rate considerably higher than the quoted currency. To win is the difference of types without import if the quote of the pair goes up or low.
Suppose that we buy a lot of $100,000 of the pair AUDJPY, which according to the chart types would prove to be the ideal instrument in this example to use the strategy of carry trade Forex.
As our capital is in US dollars, we have to take for our example, the following necessary contributions for the calculations of place:
AUD / JPY = 80.00
USD / JPY = 85.00
What happens internally in your broker is as follows.
1. warranty with $1,000 of his $50,000 of capital (assumed for this example), deposited in your account, you have access to $100,000 virtual (this is what is known as leverage); or you put $1,000 and your broker you lends 99,000.
2. with those $100,000 dollars virtual, your broker takes borrowed in their name ¥ 8,500,000 yen Japanese (85 × 100, 000) to the 0.1% of interest annual still Bank Japanese.
3. with those ¥ 8,500,000 yen Japanese his broker buys to$ 106,250 dollars Australian (8,500,000/80) and those deposited in a bank Australian where receives in name of you a 4.5% of interest annual.
4. one year after (and regardless of profit or loss that is generated by the movement of the pair), your benefit will be the difference between the rate of AUD and the rate of the JPY, or:
Profit = (tasaAUD)-(tasaJPY)-(cost of the 2 changes of currency)
Profit = (4.5%)-(0.1%)-(0.1% to 1%)
The great advantage of them strategies FOREX of the carry trade, is that this profit percentage is applied to the $100,000 of the batch standard; the broker you transferred all the benefit to you, although you only have contributed $1,000. On the other hand, if you went through the inverse of this operation, this benefit of the carry trade Forex becomes a cost (swap), and you assume full.
We must remember that the carry trade FOREX strategies, are recommended for pairs which differ considerable interest rates, as it just see in our example.
These strategies FOREX nor should be used of way isolated. The idea is that through technical analysis you identify when would be the ideal time to enter the market using their carry trade Forex strategy, and multiply your winnings significantly.