Forex Carry Trade

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This is a easy forex carry trading system that I use in conjunction with a few other systems. In this forex system we only use one currency pair. The USD/JPY currency pair. For money management we will use 0.5 percent on each trade. The direction of each trade is long. In other words we are using 0.5 percent of our account to buy the USD/JPY currency pair. Easy so far right? Right! now lets get to the details of how we make money. First by going long (or buying) the USD/JPY we are always interest positive. This way during draw downs on our account we are still making money as long as we are still in the trade. The system uses an averaging in and out method to profit from currency appreciation. Lets use an example of this system because I believe its easier to learn from examples.

Now first we open up our forex charts. We then place a buy order on the USD/JPY currency pair at 109.00 price. That’s it we are done until the next day. Fast forward to tomorrow. The price is now at 107.29. Uh Oh we are at a loss. Well not exactly. Remember a loss isn’t a loss until you close the trade. So instead we place a buy order at 107.29 and close our chart till tomorrow. So tomorrow comes and the price is now at 108.48. Remember we have two open trades. One at 109.00 and one at 107.29. The average price of those two is 108.14 so we are actually at a profit even though the price is below our first trade of 109.00. When the price is going down I usually place buy orders every 200 hundred pips. During major carry trade unwinds were the price is dropping fast I wait until I see stalling in the price for a couple days before placing more buy orders. Try it out on a demo first before committing any real money to it.

Remember that the system is very simple. Its using a small percentage of your account per trade to place buy order on the USD/JPY to average in. The system is extremely simple but the key to this system is to use proper money management. Be patience, don’t get greedy, and don’t over trade or you can easily blow up your account with this method.


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