Carry Trading Overhaul

Greetings all!

I’ve interrupted my recent rants (ahem!), I mean my recent series of posts on economics for a week or so in order to concentrate on upgrading my carry trade strategy.

This is currently the only strategy I’m trading at the moment with the tiny amount left in my account. For those that don’t know, I was doing pretty well with my tick density trading, but had to empty my account out to cover living expenses. Since I had to get a new full time job, I needed to run a strategy that involves a low time commitment, and carry trading is well suited for that.

So anyway, I’ve been managing a position in TRY/JPY for a few months now, and due to the BOJ’s recent decision to go down the negative interest rate rabbit hole, my account enjoyed a nice 50%+ increase in value.

My approach to carry trading has always been to try to reduce risk and juice returns by trading around the core position. I want to do this using a Robert Lichello Automatic Investment Management (AIM) philosophy of “buy from the scared and sell to the greedy.” ┬áSo this is a contrarian strategy of buying when price is dropping and selling when it’s rising. The problem with this in a high leverage relative value market like Forex is that you can get wiped out pretty quickly when the market moves against you.

In my next post, I’ll go into more detail about how I’m trying to address this with my latest upgrade to the strategy. After that, I’ll get back to my series on economics and fundamental analysis.

So stay tuned and…keep pipping up!


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