ikkyu

Rising Interest in Currency Funds

Greetings,

As always, a great overview by Mr. Shaw

To throw my 2 yen into the discussion, I think the carry trade makes sense as a default position for engaging in currency markets. I don't think that is highly disputed among currency experts. Of the three major techniques for trading currencies, valuation (PPP), momentum, and carry, carry has by far the best risk-adjusted returns. Don't take my word for it though. Compare various indices:
https://index.db.com/d...

Also, carry trading really compliments a bond heavy portfolio, as there is a fairly constant negative correlation.

Cheers from Osaka,
john

Currencies: Dead Cats and Yapping Dogs

Greeting Ray,

Thanks for the ongoing articles about FX carry. It is amazing to see how little info there is out there for such an awesome strategy. You are about the only mainstream writer that details it.

Also, thanks for alerting us to JEM, not sure how i missed that.

I think that you will find JEM and DBV have strong correlation in a rising to high volatility market, so i am afraid that i don't share your diversity views with respect to regions and countries. Just compare USD/TRY and NZD/JPY over the last couple years to see what i mean. Many people look at fx carry as a trade with a risk premium because the reversals are so violent. I see FX carry collectively as being either ON or OFF.

I also do not believe the principle moneymaking of FX carry lies in collecting interest, but then i only employ pairs with a spread >3%.

Nonetheless, i share your enthusiasm. And look forward to more thoughts.

Cheers from Osaka,
john

Strategies for Currency Investors

nice post. I would recommend carry trading as the default strategy and maybe go from there if you are ambitious. Also OANDA is the best retail broker in my opinion. The have no minimum size trading lot, which has huge ramifications for P/L. You can make a one dollar trade if you wish. Oanda is a favorite for carry traders.

For instance, you could mirror the DBV strategy with no fund-fees just the spread. (also DBV is 2X fund).
cheers from osaka,
john