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Caution: Math Geek at Work

  • #481
  • Dec 15, 2010 7:25pm Dec 15, 2010 7:25pm
Based on historical and current budget figures and some simplified assumptions, I once created a chart of GDP, government revenues, expenses, defecit, debt, interest payments and interest as a percentage of revenues. In 2092, all government revenues would be completely taken by interest on the debt alone. Here's the table:

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  • #482
  • Dec 16, 2010 2:44pm Dec 16, 2010 2:44pm
Turkey has cut its interest rate to 6.5% officially.

I would expect Oanda will drop the bid rate for TRY too.

Less interest to gain =(
  • #483
  • Dec 16, 2010 7:07pm Dec 16, 2010 7:07pm
Quoting ultrameg
Turkey has cut its interest rate to 6.5% officially.

I would expect Oanda will drop the bid rate for TRY too.

Less interest to gain =(

I didn't see that in their news site tonight. They must not have updated it yet. Anyway, Hungary may raise rates on Monday.

And Turkey better watch out. They risk creating bubbles in their economy I think.
  • #484
  • Dec 17, 2010 7:12am Dec 17, 2010 7:12am
Gosh, now my portfolio is 20% in red.

Unless Turkey goes bankrupt (99.99% impossible), else I will hold on to it
  • #485
  • Dec 20, 2010 7:16am Dec 20, 2010 7:16am
TRY still plunging,

Portforlio 35% in red.

How about you, Scotts?
  • #486
  • Dec 20, 2010 1:26pm Dec 20, 2010 1:26pm
My average entry in USD/TRY is 1.5239, so I just recently went into the red (by about $5). On the three charts on the homepage, there is a red or green profit/loss number in dollars for each position. The other two are well in the green.
  • #487
  • Dec 20, 2010 6:10pm Dec 20, 2010 6:10pm
Quoting capitalist88
My average entry in USD/TRY is 1.5239, so I just recently went into the red (by about $5). On the three charts on the homepage, there is a red or green profit/loss number in dollars for each position. The other two are well in the green.

Hi, Scott.
After I took a look at the 1 year chart on your 3 pairs, you have sold at a relative high price which is definitely good for your carry trade.

I am still in the midst of catching the falling knife for my TRY/JPY pair. I used the historical low as a reference point and kept adding to my existing position.

Unfortunately, I have left only 10% cash available. Looking at the trend, there is a high possibility that it might breach the historical low. Thus, I won't be adding any more position. Hopefully, my 10% spare cash and the daily interest will be able to withstand the losses.

Regards,
Judy
  • #488
  • Dec 20, 2010 7:17pm Dec 20, 2010 7:17pm
Since I have no idea which way price will go (at least in the short term), I just try to sell more at higher prices than I do at lower prices, and I buy back more at lower prices than I do at higher prices. This pushes my average entry price more in my favor over time. Here's a zoomed out view of all my remaining (after FIFO buybacks) entries into USD/TRY:

Attached Image
  • #489
  • Dec 22, 2010 9:18am Dec 22, 2010 9:18am
Quoting capitalist88
Since I have no idea which way price will go (at least in the short term), I just try to sell more at higher prices than I do at lower prices, and I buy back more at lower prices than I do at higher prices. This pushes my average entry price more in my favor over time. Here's a zoomed out view of all my remaining (after FIFO buybacks) entries into USD/TRY:
Hi, Scott.
With reference to the highlighted text, does that mean that you will periodically square off the profitable positions? In another words, you will turn lock in the capital gains.

Regards,
Judy
  • #490
  • Dec 22, 2010 1:32pm Dec 22, 2010 1:32pm
Quoting ultrameg
Hi, Scott.
With reference to the highlighted text, does that mean that you will periodically square off the profitable positions? In another words, you will turn lock in the capital gains.

Regards,
Judy
Hmmm... sort of, but I don't try to match the buybacks up with specific past sell orders or anything like that. Whenever I get a buyback order filled, it automatically matches up with one or more past orders, and possibly just with part of a past order. It's always FIFO, so if the past sale was at a price higher than my buyback, then I end up booking a profit, and if not then it books as a loss.

I haven't looked at the breakdown of my profit in a while, so I guess this is a good time to do it as an example.


Total deposits to date: $820
Equity: $1093
----------------------------------
Total Profit: $273

Of that, $108 is in open profit, subject to market fluctuation.

That leaves $165 in booked profit.

I haven't kept a record of interest earnings, but figuring an average of $10/month over the first year of the project, I'll estimate about $120 of that booked profit came from interest.

So the other $45 or so comes from closed out trade profits.
  • #491
  • Dec 22, 2010 7:35pm Dec 22, 2010 7:35pm
Quoting capitalist88
Hmmm... sort of, but I don't try to match the buybacks up with specific past sell orders or anything like that....
Hi, Scotts.

Just would like to share with you on my idea. I think I might have mentioned it bits and piecesbefore, but just want to reiterate the idea again.

For example, if the carry trade can give me 50% a year with the amount of money invested (margain + additional $ if the price hits the historical low) I have allocated, ideally, I would get back the invested money back after 2 years.

If in the event that an open position have already earn at least more than 2 weeks of carry interest, I would have closed the position and look for an entry again. Why is this so? Reason being, effectively, I am already at least 14 days ahead. With the capital gain lock in, I would be able to open a bigger position and attracting more carry interest.

As of now, I am seeing that TRY/JPY pair is stablising now. It is roughly only 100 pips away from historical low. The yield on the carry interest is superb.
As long as there is no catastrophic event occurs, it is unlikely it will weaken further.

Regards,
Judy
  • #492
  • Dec 25, 2010 12:36am Dec 25, 2010 12:36am
Happy Holidays, Forex Factory!!
  • #493
  • Dec 29, 2010 9:43am Dec 29, 2010 9:43am
Hi, Scott.

My turkish pairs broke historical low, and my account is at the verge on bursting, ie. closing position automatically.

Guess it didn't turn out well enough. I have learnt a BIG lesson, going on, I will tweak my strategy again. This time, I will try to see whether can I blend in Graeme's teachings.

He is the greatest mentor whom is generous in teaching us his tricks on forex.

You can visit this link to learn from his great way,

http://www.forexfactory.com/showthre...=245149&page=1

Regards,
Judy
  • #494
  • Dec 29, 2010 2:03pm Dec 29, 2010 2:03pm
Thanks!

I'm still trailing my sell order on USD/TRY. It's up to to 1470 more units at 1.4900 now. That's my most underweight position though. The short USD/ZAR position is helping cushion the loss on Turkey.

Still, USD/TRY has been in a sideways (slightly down) band between 1.40 and 1.70 for a couple of years now. It would be nice to see it continue like that for another 10!
  • #495
  • Dec 31, 2010 6:22pm Dec 31, 2010 6:22pm
HAPPY NEW YEAR!!
  • #496
  • Mar 3, 2011 8:05pm Mar 3, 2011 8:05pm
I don't think I've been keeping up with posting these here, since they're on my site, but here they are.


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  • #497
  • Mar 12, 2011 7:03am Mar 12, 2011 7:03am
  •  leemo
  • | Joined Oct 2009 | Status: Frankie Howard lives on... | 42 Posts
Hi Scott,
Just came across your Marketgeek website. Great information there and a very interesting read.

Thanks for publishing this information.

Good luck,
Paul
  • #498
  • Mar 14, 2011 2:08pm Mar 14, 2011 2:08pm
Welcome leemo! Thanks.
  • #499
  • Mar 15, 2011 2:04am Mar 15, 2011 2:04am
Hi Capitalist88

I really think that your 10-year Carry Trade Plan is nice, and is the way to give you longterm consistency: by adding $150 every month for 10 years, you reduce risk on big drawdown (your average price will become the average of 10 years) and then you simply get the carry trade interest with a leverage of about 6 (your margin is about 16% now) which is more than 30% per year (6 x 5%), very nice.
I have a few questions about the order sizing.
First, on a daily basis you compute the overall size of orders:
Order = (deposit/equity)*(projected position) - (actual position)
But I don't get how you compute 'deposit'? Is it the interpolation of your real deposit every day given that you make a $150 deposit the first day of each month?
Then, how do you dipatch this order amount within the 3 pairs you trade? You mentioned that pairs doing well, you do not rush in, but pairs doing bad, you add a little bit more position. How do you implement that exactly?

Thanks again for your great journal.
E
  • #500
  • Mar 15, 2011 1:27pm Mar 15, 2011 1:27pm
Welcome eleman!

The answer to you first question is easy. I just need to change the confusing terminology on that summary. By "Deposit Base" I just mean the amount of cash in the account. I should just call it "Cash Balance" instead I think. So as of last night's update, my "Deposit Base" was $1994.90. It's just the cash balance.

As for the second question, I'll need to wait until I get home tonight to give you an accurate answer. The general answer is that I look at the difference between the "target allocation" of a position (which is a function of its interest rate return relative to the others) and the "actual allocation" of the position in the account (which changes as my trades fill). This difference is part of the calculation, but I need to look at my spreadsheet to give you actual formula.

Tonight I'll post that along with an actual example of how I come up with the order sizes.
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