Carry trading question

[TimBryce]

Hello fellow traders, I set up a demo account to test the carry trade strategy: holding a position for the daily interest profits.

I decide to sell 3 lots of the USD/INR pair.

Based on my math, my profits should be like this: US rate: 0.25 India rate: 8.00 (According to Central Bank Rates | Worldwide Interest Rates)

So 7.75% interest gain. So 300 000 X 0.0775 = 23250, Divided by 365 = 63.70$ That I should be receiving every day from interest.

But as you can see from the screenshot, i'm only getting 33.75. Why ?

Also note that i'm currently losing -2701$ from my position, but that is because I simply did not wait for a good peak of the pair before entering short, I just wanted to see what carry profits results I could get with that pair.

 

[RahmanSL]

Who is your broker?......for your money safety, you better ensure & be with a well regulated broker because a lot of brokers don't like "carry trade" traders since they depend on trade volumes for their commissions.

Swap values vary from broker to broker and some don't even give any positive swap at all.....which makes me to wonder what happen to these "overnight" rates which are being paid by large banks who are in turn the broker's LP.

I cannot answer your question, but you can check that out at "myfxbook" site....go to top right hand under "brokers"....click on "forex broker swap" and see swaps from different brokers.

"Carry trade" is a good long term trading strategy and I personally use that almost on all my trades.....it's rather boring and takes time to realized profits, BUT very effective over the long term....over 3 months.

As for initial losses on your open/running trades, don't worry too much about that...........just ensure you don't over trade and have plenty of free margin to cushion those initial losses.

 

[TimBryce]

Hello RahmanSL, thank you for your reply. Yes the brokers agenda make sense, you are right. I am with Oanda tho, who have solid regulatory compliance, to my knowledge

On the website you referred me, I'm not too sure to understand those swaps comparison.. Is it in % ? For example, if I go on the Oanda swaps comparison page, at the USD/INR pair, it show 0.00, short or long swap...

So that would mean I'm supposed to not receive any interest on my position at all ? And if it would be -0.06, it would mean I'm at -6% for my position ?

 

[Pharaoh]

Most brokers shave some of the positive swap and add extra to negative swap. Some are much greedier than others.