How to make 200% per year with the Carry Trade Forex Strategy
Watch the video for the explanation
This is the book used in the video.
http://amzn.to/2aDThW4
How to make 200% return per year with the carry trade forex strategy.
It’s a long term strategy. In the foreign exchange market, you're collecting the difference in interest between the two currencies. Buying the higher interest rate currency using a lower interest rate currency.
For example, let's say that Nzd has an interest rate of %2.5 and Usd has an interest rate of 0.5%. That's a difference of 2%.
So If you did this with $10,000, you would make $200 in one year, or 2%. But wait, why does the title say 200%? Well, because we're trading forex, and it's leverage is 50:1. So for that 10,000, you have control over 500,000. So 2% of $500,000 is $10,000.
But that still isn't 200%. Yes, because the 50:1 leverage is the max for the US only. For all other countries, it's much higher. 100:1 200:1 even 500:1 and up. I think the standard for non-US accounts is 200:1.
So using 200:1 we'll get $40,000 from the $10,000 account. That's 400%. So why does it say 200%?
The reason is because you won't be in the trade the entire time.
Another way to use this strategy is to filter out your trades by taking only positive carry trade entries. So with your gains, or losses, on your normal strategies, you will get the profit from the interest rate difference. This is done automatically by the broker on a daily basis. So daytrading won't apply here. It's gotta be swing trading or longer term trading.
That's it for this strategy. Remember that forex trading is risky and you can easily blow your account if you are not careful.