What is carry trading and how can I learn this field of investing?
In Japan individual investors have learned to speculate in currency like hedge funds do. The strategy has to do with borrowing in yen(low interest rates) to invest in another countries Currencies, looking for higher returns.
This is known as the yen carry trade. Japan currently has very low interest rates compared to the US. What investors in Japan have been doing is that they have been investing in the US, hoping that the extra interest they earn on USD (US dollar) investments exceeds any appreciation in the Yen (JPY). Therefore they would exceed the return of just investing in JPY denominated assets. They are essentially short JPY, long USD.
As a US investor, you would typically just invest in USD. To do the yen carry trade, you would still invest in USD denominated assets, but you would then short the JPY.
Note that this is speculative in nature and I would not recommend it unless you understand the risks. If the USD appreciates vs the JPY, you will lose money vs. just investing in USD.
Forex Multiple Timeframe Trading Strategy – FX Solutions
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