AUD/JPY Strategy

This is a simple trading strategy that on aggregate will be good for bringing in a few PIPs. While it can only be deployed weekly on a Wednesday, the system highlights a pricing anomaly that occurs on Wednesday in the immediate run up to interest payments, which are made at 11.00am GMT. The interest earned from positions held of the weekend is credited every Wednesday at 11.00am, however the market tends to fade away in the run up to the credit as hedge funds and other institutions trade off their positions without seriously affecting the market price. To execute this strategy, you simply go short at 10.00am and close out at 11. While some weeks this may not pan out, over time you will be backing a historically proven trend of price movement which can deliver you a few leveraged PIPs in return for your capital.

What You’re Looking For

Conveniently enough, this strategy almost trades itself. Where you may be spending time otherwise researching positions and potential future opportunities, the Wednesday AUD/JPY trade comes around once a week like clockwork, and using the strategy outlined above with a medium transaction size, you can actually benefit quite significantly from this one trade alone. The best way to manage this strategy is in tandem with other trading outlooks, and you might only find yourself spending a few minutes on this one trade each week. However, the benefits when it goes right, and indeed over time, make it a worthwhile consideration for boosting your weekly returns.

Which Trader Does This Suit

There is no specific trader type that fits particularly well with this particular trade, and in fact there’s nothing to stop everyone getting involved in this market. While it isn’t 100% fool-proof, there is enough of a picture of this pre-interest tail off to make it a viable strategy to implement over the long-term, and it proves to be the case more often than not with traders investing around these times. Assuming you’re able to spare some capital and you’re around your trading desk during the relevant time period, this is an opportunity for you to grab easy PIPs for very little research work or ongoing hassle.

Strengths and Weaknesses

Perhaps the biggest strength with this strategy is the consistency of the anomaly. It happens week in, week out, and with the odd exception caused by some supervening circumstance excused, it’s a straightforward way to bag a few extra points to help your overall trading account. Where the problems come is when these odd exceptions happen on two consecutive weeks or more. If there happens to be a bad run of performances on Wednesdays as far as this strategy is concerned, it could cost you money. Of course, this is a risk inherent in all forex trading, so it may be the case that this threat isn’t sufficient to dissuade you from testing out the Wednesday AUD/JPY anomaly for yourself.