What’s a “Macro” Trade? 
Its just a term we use to describe a trade that is based on Longterm fundamental analysis and TA using weekly and monthy bars. These trades can last as long as 1-24 months
This trade lastest almost 2 years.
What’s a “Carry’ Trade?
The best most concise and clearly written explination of it I could find is here:
“A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates – which can often be substantial, depending on the amount of leverage the investor chooses to use.”
Also just go to Google and search the phrase (“what is a carry trade”), you can find plenty of examples of Carrys and the definition
Basically what it means is this:
Lets say you buy 1 standard lot ($100K) of GBP/JPY, you make the spread between the 2 interest rates. Since you are long the pair you get paid the spread, if you are short the pair you are cgarged the spread.
As of this posting FXCM is posting a +$22 and -$26 to hold it after the daily role at 2100GMT.
Some strategies for carry trades perform much better with higher margin % use up to 10 in some of our models. These trades however, are also hedged with futures contracts.
But there are more straight forward strategies that offer very good returns also.
Stay tuned………by the way we currently have 1 Macro position open. See the trade here.
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Updated 22:00 GMT 9/19/08
Two Very SuccessFul Carry Trades
We posted two carry trade ideas yesterday on the Home Page
we sold almost 100% of our positions this morning after waking up to a combined +530 Profit while we slept, hey…………we’re traders we gotta take +500 pips in 12 hours……..
But we did keep very small amounts of the position open, they each equate to about 5% of our account value (100k account value, position size 5K or half 1 mini lot)
Why keep such small positions open anyway?
Its the interest rate spreads. We are borroing yen @ 0.5% and buying Aud which earns 7.0% so the net is 6.5%, and with the NZD/JPY trade we are earning 7.5% (net 7.0%) on FREE MONEY.
Our position size is such that the pairs could drop 1000pips and we’d still have a huge profit left from the psrts of the poditions we took profits on thise morning…………So its like someone gave you money, that you didn’t have to pay back, and you earn bewtween 7%-7.5% interest on it.
So back to why?……………Well where they hell else am I going to get 6.5-7.0% on my money……………
I could close the balance of the open positions and take a little bit of $$ profit…………….but what am I going to do with it?………………..give it to my wife to spend……………..she gets enough already….o)
Our entry prices and current +/- pip levels for both trades are as follows
AUD/JPY Entry price 85.21 Closed the week @ 89.56 +435 Pips
NZD/JPY Entry price 71.30 Closed the week @ 73.89 +259 Pips
Keep you upadted on how much interest we earn…………have a great weekend
Updated: 22:11 GMT 9/1/08
We have adjusted our stop on this trade to reduce risk. Read this post for details
Updated: 06112 GMT 9/2/08
After revisiting reasons why we opened the trade, and the current price levels we realized we were not comfortable in the trade even thoughwe were up +100 pips. We closed the trade at that +100 profit. We got very luck. Not because I think the euro is going to rally, but because our original trade “plan” was flawed.
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