Carry trade strategy

Usually trader pays for swap when decides to leave his position for one more day. Now imagine that you can earn swap money instead of spending. It becomes possible if there are a big difference between interest rates of 2 countries. You can borrow one currency with low interest rate and buy another currency with high interest rate. Thanks to difference of interest rates you can make positive swaps day by day.

Currently popular pair for these strategy would be AUD/JPY.

Let's take a look at the chart.



As far as I remember interest rates from february of 2009 till now were not changed for both AUD and JPY.

Than means if you made a buy on this pair at 1st february 2009 you could make a lot of pips plus everyday swaps.

Of course, there is a catch. Although, this chart shows us a bull market, it still could be bear and you would catch a margin call very fast. This is a risky technique yet there are some positive moments. Just think about it for a sec. Many banks, hedge funds and individual traders would try to make money on this opportunity. The rate would go higher and higher because of new players getting it. This is like a pyramid and while there are positive area in interest rates of both currencies then its more likely the rate will go in the direction you need.

PS. If you need to find out what swap you'll get then go to MetaTrader and try to locate where all currency pairs are listed (usually on the left side). There you can right click and select "Symbols". In the opened window choose a pair and click to see it properties.