A1 Trading

Carry Trade Scanner

The carry trade presents a valuable opportunity for traders to profit from interest rate differentials between currencies by borrowing in low-interest rate currencies and investing in higher-yielding ones.
HOW DOES THE carry trade scanner WORK?
The table shows several different currency pairs. In order to calculate the swap rate, it takes the base currency rate minus the quote currency rate to get the interest rate divergence. The positive carry direction is telling you which direction you would have to trade in order to collect a positive swap. For instance if the base minus quote is positive, you would need to buy in order to get paid interest. If the difference between base and quote is negative, you would need to short in order to get paid interest.
HOW CAN TRADERS USE THIS?
This metric is good for finding which pairs will pay positive swap rates. If you’re looking to take a carry trade, this table will show you which pairs to long or short in order to collect a swap. So why would traders want to see this? Some traders may look to avoid paying swaps so they’ll make sure they don’t hold a pair through the swap. Others might just want to collect interest though the carry trade regardless of price action because of their tolerance to potential lower moves.

How is carry trade scanner Calculated on the EdgeFinder?

carry trade scanner calculation

For example, the table above shows a list of currencies. If you were to buy and hold USDJPY through the swap, you would collect interest. However, if you were to short and hold USDJPY through the swap, you would pay interest. The pairs marked in blue will tell you which pairs you should buy to collect a positive swap, and the pairs in red show you which to short if you want to collect a swap.

The dollar carries a 5.5% interest, while the quote currency, JPY carries a negative interest rate. To calculate the approximate interest you would earn on each swap, we simply take the difference of the base rate minus the quote rate. In this case, We will subtract -0.10% from 5.50%. It will look something like this:

[(5.5 - (-0.10)] = 5.60%

This means you will collect around 5.6% for holding this pair to the long side during each swap.
Frequently Asked Questions (FAQs)
View more FAQs here.

What time frames can you use the edgeFinder on?

The EdgeFinder gives directional bias and is not time based. Therefore, there is not a specific time frame that is best for the EdgeFinder.

What assets are included on the EdgeFinder?

Forex Majors:
AUDUSD, NZDUSD, USDZAR, GBPUSD, USDJPY, USDCAD, USDCHF, EURUSD

Forex Minors:
AUDCAD, AUDCHF, AUDJPY, AUDNZD, CADCHF, CADJPY, CHFJPY, EURAUD, EURCAD, EURCHF, EURGBP, EURJPY, EURNZD, GBPAUD, GBPCAD, GBPCHF, GBPJPY, GBPNZD, NZDCAD, NZDCHF, NZDJPY

Metals:
XAUUSD, PLATINUM, SILVER, COPPER

Energy:
USOIL

Indices:
GER30, US30, SPX500, US10Y, NAS100, JP225, UK100, RUSSELL

Bonds:
US10Y

Is the EdgeFinder realtime?

While the EdgeFinder is not necessarily realtime, it is fully automatic in its data collection. The EdgeFinder uses a variety of data sources and inputs. Most price data updates are on a 15 minute timer, while economic data updates every few hours. COT data updates weekly (as it only releases 1 time per week), and retail sentiment updates every 30 minutes.

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A1 Trading is a leading financial analysis and trading education company dedicated to empowering traders of all levels. Our team combines extensive market knowledge with cutting-edge technology to provide valuable insights and tools for traders worldwide.
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There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.
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