2024-08-05 · USD/JPY
The Carry Trade Unwind
The yen soars as the carry trade collapses
MarketUSD/JPY
Biggest move-3.2%
Extreme at (UTC)06:00
Difficulty★★★★★
What happened
On 5 August 2024 the yen carry trade unwound violently after a Bank of Japan hike and weak US jobs data. The Nikkei fell 12% in a day.
USD/JPY dropped more than 3% during the Asian session as leveraged positions were forced out.
How to survive a day like this
- Check the economic calendar and the news before you trade: these days were announced or brewing for hours.
- Reduce your risk: on extreme days, 0.5% per trade is plenty, because stops can slip far beyond where you placed them.
- Do not fight the first move. The first candles of a shock set the direction for the rest of the session more often than not.