quote of the day: . It's like deja-vu all over again
Simple Question, maybe a dumb question 2 replies
Just a fast question - Need help for an exam trading question 0 replies
Question about swaps... 9 replies
Hedging Question - Quick Question Looking for A Quick Answer 1 reply
Swaps? 0 replies
Dislikedwhat regulations are in place to stop me opening a swap account with one broker and a swap free one with another and perfectly hedging in both, simply accumulating the swaps?Ignored
DislikedThere are no regulations...if you can do it, great...works fantastically.Ignored
DislikedOkay, dumb newbie question here. I have read a ton of threads discussing the mechanics of implementing this hedge. Mostly it is suggested to use a Sharia account for the short side of the hedge, although I think I have also seen it proposed to use an account that does not pay/charge interest if you are leveraged to the hilt. After a while the threads all peter out. I don't often see anyone come back months or years later reporting that it worked like a charm for them.
Point is, it does seem quite doable, and truly a great way to earn an exceptional return with very little work. So my question: what is the "if" about it that you mention? Does no one come back to report on these threads because they are too busy counting their money? Or is it because the "if" bit them?
DislikedOkay, so it works but it is likely the broker will eventually stop you. I too am looking at putting on some very large positions, which as you say increases the likelihood of being stopped.
I have seen some people claim that as long as you throw the broker some other small trades periodically they will not shut you down, can you comment on the likelihood of that?
I also read somewhere that some brokers don't pay/charge interest if your margin is above 50:1 or something like that, but I can no longer find the thread. I would never want to operate with such high leverage, but I think the thread advised funding the short side account with more than the minimal margin and letting the available margin just sit there. Assuming I have that right, this would be a swap-free non-Sharia account. Would the same likelihood of being shut down exist?
Another possibility seems to be to enter the long side only just before triple interest is paid on Wednesday and exit right after. I think the wide spread on NZD/JPY would cause you to get creamed, but it might work on USD/JPY. I have to do some checking. It's sort of like doing a dividend capture but without the risk of the stock declining afterwards. Is this also something the brokers are likely to shut me down for? Or maybe theywill just find some way to cream me during the few minutes I am in the trade each week...
Thanks for your help!