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The Advantage of Trading Interest Rate Differentials

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Noviarini

The Advantage of Trading Interest Rate Differentials in Forex Education_xx
The benefits of this type of trading are pretty obvious. By trading in the direction of positive interest, you would collect a premium payment every day. This would pad your bottom line profit over and over again. Not to mention, forex trading can be done with leverage, so your actual return on capital is amplified.
Trading to collect positive interest rate differentials is called Carry Trading, and it is far from a new idea. While it seems like a given, trading interest rate differentials require some experience in handling the unexpected and knowing when to get out. If you plan on trading interest differentials, be sure to observe history and see what can happen if you are on the wrong side of a trade without protection. The life you save may be your own.


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#1 - February 05, 2019, 04:07:59 AM

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The Advantage of Trading Interest Rate Differentials in Forex Education_xx
The benefits of this type of trading are pretty obvious. By trading in the direction of positive interest, you would collect a premium payment every day. This would pad your bottom line profit over and over again. Not to mention, forex trading can be done with leverage, so your actual return on capital is amplified.
Trading to collect positive interest rate differentials is called Carry Trading, and it is far from a new idea. While it seems like a given, trading interest rate differentials require some experience in handling the unexpected and knowing when to get out. If you plan on trading interest differentials, be sure to observe history and see what can happen if you are on the wrong side of a trade without protection. The life you save may be your own.

Trading by utilizing interest rate differences / swaps is often called carry trade or trade ballance unfortunatelly such trading strategies are mostly prohibited by brokers.

One way to be able to trade by utilizing interest rate differences is trading at a different broker.
#2 - February 07, 2019, 11:05:04 AM

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The Advantage of Trading Interest Rate Differentials in Forex Education_xx
One exact thing we can get into interest rate trading is to understand what's going on with specific currency we're about to trade with. For example, if we want to trade with CAD then focus on its latest news and update to find any information about upcoming release with its interest rate. Sometimes, unchanged rates may also give the currency a little boost about 50 pips and sometimes it gives spike in market. This kind of trading is optional and hard to understand because the risk is higher.
#3 - February 07, 2019, 02:11:39 PM

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