January 2022


How to Use a Carry Trade in Forex Trading?

A carry trade is a strategy in which an investor will borrow money from a low-interest-rate environment to fund a high-interest rate investment.

The main components of the carry trade are:

  • Buying higher-yielding currency pairs
  • Borrowing lower-yielding currency pairs
  • Holding the position for a specific amount of time to benefit from any fluctuation in prices.

How Can You Use a Carry Trade in Forex Trading?

Identify the Higher-Yielding Currency Pair

When investing in the AUD/USD using a carry trade, it is essential to determine whether you want short-term or long-term capital growth.


If you’re only looking to invest for one month or less, consider buying USD/AUD if the current AUD/USD exchange rate is .8450 and selling AUD/USD at .8500. This could potentially provide an extra 3% profit per month on the capital gain alone; however, this excludes any interest received from borrowing money.


If you choose to use the carry trade for a more extended period, consider buying the AUD/USD at .8450 and selling it at .8500 long term. Although this will not provide an immediate cash flow advantage, it will potentially reap great rewards over time due to interest earned from borrowing money.

Identify Your Interest Rate

While determining whether you are looking to invest short-term or long-term is essential in judging your pair, it is equally as vital to know what interest rate you are willing to hand over your money to borrow. Brokers may offer two types of interest rates, both of which can affect how much return you get on your investment:

  • Deposit Rates: The interest rates will be earned on any money in your personal savings account. These are generally lower than the interest rate you would receive if you borrow money from a bank.
  • Borrowing Interest Rates: These rates will be higher than deposit rates and can be identified by looking at any financial information provided by the Reserve Bank of Australia (RBA). Ideally, it would help if you looked for borrowing interest rates close to or above 5%; however, this is entirely based on how successful you will manage risk.

Identify Your Risk Tolerance

A carry trade is only beneficial if there’s a positive gain at the end of your investment period. To ensure you can make money from this strategy, you must understand your tolerance to risk and which direction you think prices will move.

For example, if you believe the AUD/USD may increase from .8450 to a rate double that within three months, it would be wise not to use a carry trade. There will be no point in borrowing money with a higher interest rate if both currencies equal out. However, if you expect the exchange rates to remain constant within +/- 0.000025%, then a carry-trade would still provide a positive return.

Lend Your Money to the Bank

You will want to lend money either from yourself or your bank based on your interest rate. Lending money to yourself is far less risky as it is identified as an investment rather than a borrowing risk.

If you are lending money through your bank, however, some additional factors need to be considered before doing so:

  • Fees: There may be fees for adding or withdrawing funds into/out of the account, including small administration fees, hefty withdrawal fees, and holding periods where no interest is earned until specific criteria have been met.
  • Risks: As you are borrowing money from the bank rather than just investing in a currency pair, there are risks that interest rates may rise within the time frame chosen (thereby affecting both your returns and losses). There is also a risk in terms of whether or not you’ll be able to pay back the money when it’s due.

Hedge Your Position

After taking all necessary precautions, your security needs to make sure that if the AUD/USD falls in value or interest rates increase beyond what was initially planned, you will still be able to pay back your loan.

Hedging refers to the process of using futures contracts and options contracts to reduce risk. If hedging is too costly or impossible, I strongly recommend doing this step before lending your money to the bank.

Now that you know how, why not try using a carry trade in forex trading with Saxo Bank.

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Why is a Business Model Important?

A business model confirms the mechanisms by which an operation will make money. Without determining a viable business model before getting a business going, the CEO and management team must scramble to devise one that makes sense in the current market. To do this, it’s beneficial to use a business model canvas starting with a template and building out the model step-by-step. Doing so allows the team to visualize it and confirm that every part is feasible.

What is a Business Model?

A business model is designed to break down the steps for what the company fundamentally does to conduct business transactions.

What is the Unique Selling Point or value proposition of the company? Is it sufficient to beat out other competitors to the sale? Is it sustainable over the long term? Can competitors steal a march on them by developing something better?

Also, consider the sustainability of the business model. What would derail it? Could new technology do so? Will part of the process become impossible at a later time? Is the business seasonal where it cannot be run at certain times of the year – i.e., a local snow clearing business in Alaska – or are parts difficult to source from manufacturers?

It’s important to consider all these issues to ensure that the business model won’t work today but fall over two financial quarters from now.

How Is it Different from a Business Plan?

The business model and business plan are often confused by new entrepreneurs and people who haven’t studied business in college.

A business plan describes the strategy that the firm will have and how it expects to perform. While it will touch on the business model including how the business will make money, primarily this document covers expected sales, expenditures, and other considerations. Financial lenders will likely request to see a business plan to view the projected numbers. Then they’ll want to know how those estimates were arrived at.

Also, while the plan is helpful to develop, it changes with the operational reality. However, a business model is unlikely to do so unless it’s fundamentally wrong or how business is conducted changes significantly. For instance, while the products being sold may change, how they’re produced and where they’re sold may not. Due to this, the business model may remain largely unchanged.

Why Is the Business Model Essential for Businesses?

A business model is essential because it clarifies the way that the company will solve existing problems in the marketplace. The value creation must be evident to encourage customers to purchase their product(s).

Production costs must be low enough to allow for other expenditures and to still turn a profit. Could generic alternatives reach the market to dampen sales? What can be done, such as patents, copyrights, and trademarks, to prevent this?

Direct distribution or other methods employed so customers can receive the products is also important (the same is true of provided services too). How will this occur, will they remain viable channels, and will the cost of access remain the same?

Business models need to not fall apart when scaled in size fivefold or tenfold. The Zoom app at the beginning of the pandemic is a good reference point for successful rapid growth.

Must Business Models Necessarily Evolve?

Business models do need to evolve with the times. A good example of this is Blockbuster which failed to evolve sufficiently when media went digital. It took the creation of Netflix and faster internet access to completely change how filmed media was accessed and consumed by the public.

Why would people take a trip to the local Blockbuster store if they could access a movie instantly from their home? And on a big-screen TV? This question wasn’t explored by executives who believed their market position to be unassailable.

Business models need to evolve with changing markets and different customer expectations. However, companies must also stay on the lookout and be ready to seize on new ways to deliver their goods or services too. At which point, massive business model changes might be necessary.

Is Pivoting Always a Good Idea?

Business owners love to pivot from one idea to the next. Should this be done? There is a degree of shiny object syndrome when doing this. Entrepreneurs are no less susceptible to this than other people. It can sometimes be a good idea when the current plan isn’t working or there are better opportunities elsewhere in the market. However, it usually requires years for a new brand and/or product to establish itself. Switching strategies doesn’t always allow enough time for growth to happen.

While a pivot may still rely on the same business model, it will play havoc on existing plans. Pivots should be justified not just to demonstrate the viability of the new idea, but also to confirm that the old idea was wrong or won’t work.

Business models are an essential part of a successful business. When the founder is unaware of what the model is, then they won’t be clear when something has broken down or proven it to be invalid. The future from that point will not bode well.

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Factors To Consider When Looking For The Best Answering Service For Your Business

No matter what type of business you have, hiring the right answering service company is crucial to your business. When figuring out which answering service company to choose, the most important thing is to ensure that it will be an exemplary service for your business. Here are some factors to consider while selecting the best answering service company to help you achieve your business goals.

1.   Experience And Expertise Of Their Staff

The first thing you should consider when choosing the best answering service for your business is the experience of their staff. A company that hires inexperienced people will not give you the best service and may even inconvenience your customers who call.

When selecting the best 24 hour answering service company, hiring a company with a successful history of working with a similar business is essential. You can be sure that they will answer your questions and offer a personal touch that can make all the difference. Prompt and accurate information is crucial when dealing with your customers.

2.   Safety and Secure Communication Connections

It’s of great importance to hire an answering service company that offers an extra level of security for communication and identity fraud prevention. Secure communications come with an additional level of safety as well. Security of your business communications and data is essential to consider when choosing an answering service.

Organizations usually have a lot of private information to handle, so it is necessary to ensure that the communication channel you choose is secure enough and safe from any eavesdropping. The ability to provide secure communication may depend mainly on their communication equipment and systems and their expertise in the field. Therefore, it’s crucial to secure your business communications channels as per the law of the land.

A professional answering service business should have a professional VoIP system to ensure secure and trustworthy connections. Today’s market means implementing encrypted communication channels to be safe.

3.   The Integrity of The Employees And Their Ability To Keep Secrets

It does no good to have an answering service when your employees can’t keep secrets. Hence, it’s essential to pick an answering company with a reputation for honest and trustworthy employees. The call answering service employee needs to be a very reliable person and can keep secrets. Because of their work’s nature and sensitivity, there is a need to abide by the rule, “thou shall not tell anybody the client’s personal information”.

They should avoid disclosing any details of the calls they processed, more so if they were personal. Employees should avoid any unnecessary discussions about clients with their co-workers. Avoid answering service workers who will share clients information with the public without hesitation. Customer service is an essential part of customer retention and customer satisfaction!

4.   A Company That Gives Value For Your Money

It’s essential to choose an answering service that will provide you with a solid level of services and efficiency at an affordable cost for your business. You don’t want to pay a lot, but you want to receive high-quality service from answering service companies. You need to hire a company that will not give you less than what you pay for or less than your expectations.

The key to getting the most affordable and best answering service is shopping around the marketplace and comparing services and prices. It’s also of great benefit to select an answering company with the policies that fit your needs to avoid having to sift through dozens of other companies with similar services


Having a solid answering service team is crucial for your business to retain its customer base. Customer service representatives need to possess the ability to multitask under pressure and the knowledge necessary to solve your customers’ problems quickly and efficiently. When considering customer service representatives, look for those who present themselves well and answer questions effectively and accurately. They should also be able to remain calm in high-stress situations to provide effective solutions for your customers. AnswerMTI is a 24-hour partner who will provide you with answering services with all the professionalism it deserves

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