Carry Trading Advisor

Carry Trading Advisor

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This Metatrader indicator is an essential tool for those who want to use carry trading strategies. It’s also useful for keeping check on the interest charges (swap fees) you are paying to your broker on every trade.

The tool calculates the following:

• The net interest amounts received (or paid)
• The net interest yield
• The annual rate of return
• The return on investment (for your margin amount)
• The broker’s interest rate spread (fee)

When attached to a chart, the indicator displays the interest cash flows for both the long and short side of a trading position. In addition, the indicator lists the interest rates for all symbols in the market watch window. The broker’s average interest rate spread is also shown and this can be used as a fee comparison.

Example 1:

Suppose you want to know the amount of carry interest received on the following trade:

Buy 0.1 x lots AUDJPY
Holding period: 30 days
Margin used: 300 USD (account currency)
Show interest in deposit currency

The indicator is attached to the chart AUDJPY and the following inputs are set:

Figure 1: Input settings box © forexop

The result is displayed as follows

Holding 0.1 lots (1 x mini lot) AUDJPY for 30 days:

That is, buying and holding a mini lot position in AUDJPY for 30 days results in an interest payment of USD 15.27. On the sell side, interest of USD 22.27 would need to be paid.

Figure 2: Example checking AUDJPY carry trade © forexop

The margin used to hold the position is USD 300 (the deposit currency is USD). This gives a return on investment of 5.09% for the 30 day carry trade (buy/long side). This gives an annual return of 61.07%.

Where a trade position results in positive cash flows, the display is shown green otherwise it is shown in red.

The interest cash flows can be displayed in the deposit currency, the base currency or the quote currency. Changing the output to the base currency of the symbol (AUD) and setting the margin amount in AUD gives:

Example 2:

Buy 0.1 x lots NZDCHF
Holding period: 360 days
Margin used: 300 USD (account currency)
Show interest in deposit currency

Figure 3: Example checking NZDCHF carry trade, 1 year hold period © forexop

The cash flows for both sides of the position held for 360 days are:

Holding 0.1 lots NZDCHF for 360 days:

For more information please see the technical guide.