Replies to post #10992 on FOREX TRADERS

[jrbscrazy]

You are correct about the interest. You get paid daily with oanda. If you are long eur/usd, you have to pay 1.25% interest. Being short xau/usd about 500 units pays somewhere around $45 a day interest, but that pair(gold) can move 1000 pips in 10 minutes and break your bank. cross/jpy pairs pay the best interest because jpy only has a .50% rate. However, if jpy hikes rates, it will cause a mess in the pairs. Most of the jpy pairs seem to be slowly turning into short plays at the moment. If you are short, you have to pay the interest differential. I'm still holding aud/usd short. What a poring pair today! I should've stayed in bed!

[Capitalist]

Right, in addition to the straight long/short positions in FOREX there is also the strategy of "carry trading" which is one of my favorites. The high leverage in this market can turn a 1% interest rate difference between two countries into a 100% return for a carry trader, but the risks can be high too.

Carry trading can also be one of the "hot button" issues for the global movers and shakers. Dr. Glance just posted a story about some people who are very critical of carry traders like me. A few months ago I wrote a long rant about the subject; you can see it here:
http://market-geeks.com/tradingblog/2007/04/09/geekly-weekly-rant-i-mean-review-4907/

Anyway, one great thing about FOREX over penny stocks is that the arguments we have over here are actually INTELLIGENT, LOL. We argue with each other over things like globalization, trade imbalances, economic policies, central bank intervention, etc. We don't sit around shouting "to da moon!" and calling each other bashers and pumper clowns, lol.