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Carry Trading

Posted: 2019-May-04 19:59 by Auvastar

Swap spread differentials on currency pairs leave a residual daily cash flow. The win is by selling a low-interest rate currency and buying the same amount of a high-interest-rate currency for every day payments. The daily flows are small, but I see many brokers offer 25, 50, sometimes even 100 to 1 leverage on fx positions. This seems like free money. What am I missing?

Posted: 2019-May-21 01:13 by Reina

The money is free but leverage cuts both ways. If you go too high it's like picking up a penny in front of a steamroller.

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