Trading The EUR/AUD

I've spent the better part of a year focusing my attention on the AUD/JPY. I think it's time to start looking into other pairs...

Last week I started trading (shorting) the EURAUD.

The EURAUD is another pair suitable for the carry trade. [For you beginners, some currency pairs earn interest while you hold them. Those that do allow you to participate in the so-called carry trade. See my recent forex roadmap post for a nice list.] However, I've been trading it instead of trying to hold onto it... and so far it's been good to me.

The question is, what will next week bring?

I haven't focused on active day trading before. I've got a chunk of carry trade holdings across a variety of currencies, but that is a completely different game. Basically, as long as you don't overtrade [buy too much and hence expose yourself to excessive risk] it's very slow paced. When you have some extra capital in your account look for an opportunistic pricing situation and grab a small slice of a pair you are willing to hang on to.

Active trading is a lot faster paced. I'm finding that if I want to spend a lot of time on the market I need to be have the lure of gains. Yes, that means risk! So, I've created a sub-account where I put a few dollars at extreme risk. Assuming I can make some wins I'll shuttle those wins to a safer sub-account.

So, I'm no longer executing a purely boring long-term carry strategy. Seriously, it's very boring to put a few bucks into your account from time to time and then make a purchase once in a blue moon when your capital reserve makes it safe to do so. I want to do this, but I also need to drive the Ferrari once in a while, y'know?

Yep, shorting the EURAUD is my currency trading Ferrari. It seems to sidestep the volatility of the AUDJPY somewhat by avoiding the EURUSD and USDJPY influences. It handles well since the EUR is such a huge and active market and acquires some nimble moves from the AUD.