Macro Trading the Carry Trade

By Bruce Theil

If you are into global macro you trade everything. You trade stocks, bonds, commodities, and even currencies. Essentially you are looking to trade anything that presents a great risk to reward opportunity that is not correlated with your other trades.

You trade not only different asset classes but also different strategies within the different asset classes. Aside from straight directional trading you likely do some relative value trading where you put pairs together and trade on their convergence or divergences. You might try some merger arbitrage, pairs trading, etc. Basically you are looking for great risk to reward opportunities and you don't care where you find them.

One of the best places for macro traders to really differentiate themselves from other categories is in the currency carry trade. While most people understand what a directional bet is, one in which you buy or short something and if it goes up or down you make money, many do not understand carry.

The carry trade consists of going long a high yielding currency and going short a low yielding currency to fund the trade. You make money in two ways. One is if the initial trade is profitable if the higher yielding currency goes up relative to the low yielder. The other way to earn money is to make money off the carry, or the interest rate differential.

To really juice the returns available from the carry trade you can and probably should use some degree of leverage. Some traders are modest and only use two to four times leverage while others are aggressive and use up to fifty times leverage. While high leverage is great when you are right they can be disaster when you are wrong as the losses are magnified on the way down just like they are on the way up. Of course is it that easy?

No, it is not. Yes, you can get the carry but if there is excess or even normal volatility depending upon the leverage being used you will blow up in traders terms. If this is the case, and it is, then what should a trade be focusing on when they are trying to execute the carry trade? Well the obvious answer is volatility.

You can use several different methods to estimate volatility. You can use the standard volatility index for the SP500. While it is designed and used primarily for equities it is a good estimate of volatility for most asset classes. Now days you can just use a currency volatility index like those from JP Morgan or many of the other investment banks.

If you are trading the carry trade then you should be using a volatility filter to greatly improve your results. If you are not trading the carry trade then you are also missing out on some great uncorrelated and relatively easy returns. And finally if you are not macro trading then you are missing out. You should be taking advantage of all the opportunities in the world and not just in stocks. - 23217

About the Author:

If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro trading advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.

What Are Stock Indexes? (Part II)

By Ahmad Hassam

Modified cap weighting involves adjustments to the capitalizations of the various components of the Nasdaq-100 index. The Nasdaq-100 is a modified capitalization weighted index. The NDX contract at the CBOE is based on Nasdaq-100 as is the MNX.

Frank Russell Company is one of the leading global investment consultants. It is also involved in performance measurement, analysis and investment management. Russell 2000 is the well known benchmark for small capitalization sector. Several Russell Indexes have become benchmarks for specific areas of investment management.

Russell 3000 Index as the name implies includes 3000 issues and these 3000 companies represent 98% of the investable US equities. The index is adjusted for certain factors such as cross holdings and the number of pairs in hands.

Russell 3000 is further split into subsets like Russell 1000 Index. It covers the top 1000 about 92% of the value of the entire 3,000 stock index. The Russell 2000 Index is the smallest 2000 companies in the Russell 3000 Index.

From the business point of view, the Wall Street Journal is probably one of the most perfect business franchises. A franchise that is very hard to duplicate. The net worth of most of its readers is in seven figures. Dow Jones is the publisher of this journal.

Over the year, DJIA became an important business barometer. It grew to encompass 30 large industrial companies. Dow Jones Industrial Average (DJIA) comprising 12 smokestack companies made its debut in the year 1896.

The DJIA is still one of the worlds best known stock measures. It consists of 30 largest and most liquid blue chip stocks in the US. The average is maintained by the editors of the Wall Street Journal.

The DJIA unlike the S&P 500, Russell 3000 Indexes or the Nasdaq-100 is a price weighted average. The highest price issues hold the most influence over the average. Recently Microsoft (MSFT) and Intel were added to the DJIA.

A 1% move in a $100 IBM stock would have a greater impact than a 1% move in a $40 Wal-Mart stock. ETFs exit on many Dow Indexes like the DJIA, the Dow Jones Total Market Index, the Dow Jones Global Titan Index and various sector indexes.

Wilshire flagship index is the Wilshire 5000 Total Market Index. Wilshire serves over 400 organizations in over 20 countries across the globe representing over $2 trillion in assets.

It represents the broadest index for the US equity markets. Over the years, it has increased to 6500 issues representing the increase in the number of companies in the US.

The Morgan Stanley Capital International (MSCI) database contains nearly 25,000 securities covering 50 countries. It calculates nearly 3,000 indexes daily and services a client base of over 1,200 worldwide. One of the advantages of MCSI and its foreign indexes is consistency. - 23217

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and forex. Get good Forex Training. Learn Forex Trading!

Success in Trading through Forex Training

By Bart Icles

Those who have set their eyes on forex trading often wonder about the things that they need to do in order to be successful in this field. We have so often heard about getting forex training as a start but with all the forex trainings available, is there one special training course that guarantees success? That kind of training might be out there but success in forex trading greatly depends on whether or not you have given yourself ample time for proper forex training.

The importance of having proper forex training has been stressed again and again over time. In any forex training program, it is vital that you are able to have a review of the actual basics of the forex market, as well as a preview of the things that actually make this special market work. If you go online, you will find a lot of materials on forex market background. Remember not get yourself overwhelmed with the amount of information you will come across with as information on the forex market background is relatively easy to remember.

A background of the forex market is an essential part of any forex training program. The things that actually happen in this global marketplace change every now and then and it is therefore valuable to have information on these different driving forces. Strategies are part of these driving forces and you must know that forex trading strategies change with the varying market conditions.

It is important that a forex training program is able to help you develop trading strategies that can minimize the risks involved. Knowing how to develop trading strategies also helps you achieve high returns on your portfolios. While the forex market is known to be volatile, it is also a very rewarding trading arena.

You should also set your eyes on having free demo accounts. Free demo accounts allow you to have a feel of what it is like to participate in actual trading without having to unnecessarily hurt your assets. These accounts not only serve as training tools but they also double as trading tools. Through free demo accounts, you will be able to execute competitive online spreads and learn how to go about full hedging. Most free demo accounts also supply charts that can guide you in placing limit, market, and stop orders.

There are many ways by which you can have forex training. What is important is that you are able to give yourself sufficient time to learn the basics plus some advanced points. - 23217

About the Author:

Forex are powerful when coupled with a desire to learn and a drive to become a great trader. Learning forex tip trading takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

Craigslist Technique To Find Buyers

By Jesse Davis

One aspect that is very difficult in today's real estate market is finding buyers for your deals or basically selling your house. Financing is tough and many people are just holding on to there money trying to see what is going to happen in this crazy economy.

Once you get online I am sure you will read about or hear about Craigslist.com as a great way to find real estate deals and find buyers for your deals. However if you don't know how to use craigslist properly then you will probably just waste your time.

Many gurus online, disguise their criagslist techniques very well but in reality they are just spamming techniques that really don't work. Craigslist has made me a lot of money in my real estate business and will do the same for you if you do it right.

The proper way to do it is just go to your town on craigslist and look at all the listings and start reading them. When you read one that looks like or makes you think it is some one that buys and sells multiple houses and not just a home owner then respond to them and let them know that you have something to sell and give them the details on the deal. It's that easy.

Also post your deal online on craigslist in everyday. Craigslist has some rules about posting everyday the same ad but if you want to find out how to get around that rule very eaisly and ethically then follow the resource link at the end of the article. Its not very hard to figure out but take it from some one who has sold 65 houses last year it makes a difference. - 23217

About the Author:

For more techniques on how to use the internet to find wholesale buyersfor your deals and to start building a mssive monthly income in real estate this year you need to find more techniques about Jesse Davis in jackson mississippi. He knows his stuff.

Good Property Investment in Costa Rica

By Randy Berg

Property investment in Costa Rica is a thriving business today. A lot of people from all over the world are flocking to this country in the urge to buy property. There are a lot of properties that are available at economical prices today which are expected to increase in value in a few years time. This beautiful country which is located in Central America offers a lot of options for foreigners to invest in property here.

The beauty of Costa Rica is very enchanting and captivating. This country was so long unexplored and unexploited. However, as more and more tourists pour into this pleasant country, its fame is spreading far and wide. Almost every tourist who visits this country carries with him/her the dream of buying property in Costa Rica.

There are numerous reasons why Costa Rica is becoming a preferred choice for property investment. Costa Rica is a land beyond just sensuous beaches, picturesque landscape, lush greenery and majestic mountains. It is a land of happy and content people. The natives of Costa Rica, also referred to as "ticos", are warm and friendly in nature.

The various options that Costa Rica offers for property investment are beach properties, upscale residential homes, farms and mountain properties. Some of the places in Costa Rica where your investment in property will prove worthwhile are in the Central Provinces of Heredia and Alajuela, locations in San Jose such as Escazu and Santa Ana and places like Puerto Viejo, Punta Uva and Dominical.

There are many reasons why people should look towards this country for investing in property. First of all, this country has an amazing countryside, lovely beaches, rich and bountiful flora and fauna and relatively untouched nature which makes this place a great option for investment. Secondly, Costa Rica is considered to be one of the safest places, though crime thrives in certain parts of this country. Costa Rican government is one of the oldest democratic governments in Central America.

Costa Rica property investment is a good option because this place is also safe to a great extent, and offers peace of mind and protection to the foreigners who invest their money here in purchasing property. The government of Costa Rica has introduced many liberal economic policies that are in favor of the investors looking to invest in property here. As compared to many other Central American countries, Costa Rica has the longest and strongest democracy too.

For many people who go there, the social culture of Costa Rica will come as a rude shock, especially to the Americans. Costa Ricans do not value time as much as Americans. So, expecting people to be punctual and efficient in their work is like asking too much. The people in Costa Rica are very laid back and casual in their approach to various tasks.

The final aspect to consider before investing in property here is to decide on the legal status. Costa Rica offers the status of "pensionado" to a gringo who has a monthly income of at least $600. They offer the status of "rentista" to a gringo who can show a monthly income of $1000 continuously for the past five years. The status should be renewed once every two years. - 23217

About the Author:

Let Randy Berg help you find affordable properties at Costa Rica Real Estate. Interact with us through our forum.