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help needed please

Discussion in 'General Forex Talk' started by dkami, Apr 20, 2010.

  1. dkami

    dkami Sergeant

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    Hope there is some one in the FPA that can shed some light on this veiwed 113 times Hi i am looking for some advice or your thoughts on this i have been trading currency cfds for about six months or so and live in Australia looking to open a long term account (investment) i was thinking if i say for eg. i buy AUD/USD @ .92 and then @ .91 then @ .90 and so on and so on not using stops just for the intrest.the ones i brought @ .92 i would sell if it went to .93 then wait for it to come back to .92 and pick them up again this is just an eg. i would try to get in @ as low as i could and only use this currency pair cfds.would this eg. be a good way to do it or not? any advice or thoughts on this or how i could do it better to start a long term investment will be much appriciated thanks

    regards dkami
     
    #1 dkami, Apr 20, 2010
    Last edited: Apr 24, 2010
  2. Barrel Head

    Barrel Head Private

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    Seems tough for a "recruit" to get a reply in a call for help.
     
  3. Pharaoh

    Pharaoh Colonel

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    A lot of those initial views are search engines indexing things and other recruits who don't know. The FPA can always use more people answering questions.


    Buying for the sake of collecting interest is called a carry trade. You can do this, but if the pair moves far enough against you, you'll eventually get a margin call.

    Doing this without stops is extremely risky. Unless you drop your leverage down close to 1:1 (or lower), a big enough move against you ends the game.

    The best carry trade is when you are getting interest on a pair that you've locked in some profit on via moving your stop loss into positive territory. Then you can leave the trade open as long as you like (or until the market moves back to your stop level).
     
  4. dkami

    dkami Sergeant

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    Thanks Barrel Head for looking and replying

    Pharaoh thank you so much for telling me what this trade is correcly called and how i should exacte it i guess there is no long term trade unless its in the black this ? must sound so stupid to people that read it but i am new to currency trading and do not know any trades so i have no one i cant ask my dumb ? to FPA is a great site i just wish i found it earlyer thanks again Pharaoh:)

    Regards dkami
     
  5. Pharaoh

    Pharaoh Colonel

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    Some people do use super-low leverage on high yielding pairs. If the rollover interest earned is big enough to cover losses, you can do this. There are a few problems.

    1. Positive swap is always significantly less than negative swap.

    2. Brokers have used the economic crisis to make #1 even worse than it used to be for the same difference in interest rates.

    3. A big enough move against you can still push you towards margin call territory.

    4. A lot of Central Banks are still keeping interest rates very low. This narrows the difference between interest rates for a lot of possible carry trades.
     
  6. dkami

    dkami Sergeant

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    Thanks Pharaoh for your honest replys the info. you gave is much appriciated you have a kind heart god bless:)

    Regards dkami
     

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