Breakout

Identify when a trend might be forming.When consolidation happened, markets sometimes range between bands of support and resistance.

A breakout is when the market market moves beyond the boundaries of its consolidation, to new highs or lows. Usually breakout will occur first before a new trend occurs. Therefore, seen as potential signals that a new trend has begun. But remember, not all breakouts result in new trends.

The length of the period can help determine the highest high or the lowest low. A breakout beyond the highest high or the lowest low for a longer period suggests a longer trend. A breakout for a short period suggests a short-term trend. In other words, trader can tune a breakout strategy to react more quickly or more slowly to the formation of a trend. Reacting quicker allows traders to ride a trend earlier in the curve, but may result in following more shorter-term trends.

Moving Average Crossover

Use a simple moving average (SMA). SMA is a lagging indicator that uses older price data than most strategies, and moves more slowly than the current market price. The longer the period over which the SMA is averaged, the slower it moves. Often, we use a longer SMA in conjunction with a shorter SMA.

As example;

Short SMA : 25 days moving average

Long SMA: 200 days moving average.

When short SMA move above the longer one, it means newer prices are higher than older ones (bullish trend). Means its is buy signal.

When the short SMA moves below the longer SMA, it suggests a bearish trend, and this is our sell signal.

Carry Trade

The essence of the carry trade is to profit from the difference in yield between two currencies.

Imagine a trader borrows a sum of Japanese Yen. Because the benchmark Japanese interest rate is extremely low, the cost of holding this debt is negligible. The trader then exchanges the yen into Canadian dollars and invests the proceeds into a goverment bond, which yields 0.6%. The interest received on the bond should exceed the cost of financing the Yen debt.

But there is a drawback:

Obviously a currency risk is baked into the trade. If the Yen appreciated enough against the Canadian dollar, the trader would end up losing money. The same principles apply when trading FX, but you have the convenience of it all being in one trade. If you buy a currency pair where the first-named ”base currency” has a sufficiently high interest rate, in relation to the second-named ”quote currency”, then your account will receive funds from the positive swap rate.