Making money, another quiet week

22 Apr 2019

Another quiet week in the foreign exchange market is over. Traders and investors are getting used to calmness. Although each in such conditions behaves differently. Some optimize trading strategies for existing conditions. Others go to emerging markets where volatility is high. Accordingly, the carry trade is back in fashion.

You can use temporary imbalances in capital flows for the purpose of speculative earnings. The most obvious trading strategy is buying of developing countries’ currencies with a high-interest rate of the Central Bank in exchange for the currencies of developed countries with a zero or even negative rate so earn on the interest rate differential. Indian rupee and Chinese yuan can be mentioned as the most obvious buying candidates. And you can sell the Japanese yen and the euro.

For those who decided to continue to trade the "majors" in the foreign exchange market, we would recommend dramatically increasing the aggressiveness of trading. In the absence of directed movements, even oscillator works as extremely efficient.

Another option is to earn money with options. Obviously, the period of ultra-low volatility cannot last forever and sooner or later the markets will “shoot”. In order to make money on it, you can use basic option strategies, for example, buying both put and call options in the hope of a strong move no matter where (options strategy is straddle). Considering the extent to which option premiums have fallen in price, this strategy may well lead to super-profits.

Returning to the news background, we note that this week will be pretty calm. Bursts of volatility are possible in yen pairs. The fact is that on Thursday the Bank of Japan will announce its decision on the parameters of monetary policy, and on Friday a whole block of important statistical data from Japan will be published (data on the labor market, inflation, industrial production, and retail sales).

As for our trading preferences, we will continue to look for points for selling dollar in the foreign exchange market (with the exception of USDJPY, which we are still buying), buying of gold and oil in the commodity markets, in addition, we will continue to sell the Russian ruble.