Help me please, need an advice about this technique (interest arbitrage)

Hi

I found an interesting article from a site at gainscxxx (I can't tell the details on here, because my previous thread is deleted because I mentioned. I don't know why... ).

So Is it possible if I using 2 platforms to hedge my positions and gain from the interest earning?

The ilustration is :

I using 2 platforms, which the platform A don't charge an interest (0% overnight interest), and platform B have a standard interbank interest rate.

So I buy (for example USD/JPY) on the platform B to gain the interest and then I sell the USD/JPY on platform A (to lock/hedge my position with arbitrage strategy). Because Platform A don't have interest

(I would earn 5% interest based on USD/JPY)

and everyday I would earn the interest from platform B perfectly.
And if I using a contract size with 1 lot standard forex or 100,000 x 5% and divide by my capital, for the example my capital is $10,000 (separate by $5000 on platform A, $5000 on platform B). My anually gain (ROI) would be about 30% to 40% NET (after spread calculation, etc)

and I set my target profit automatically and also the stop loss to 350 pips to 400 pips each (on 2 platforms), because to avoid a margin call.

I think this technique is very low risk, and suitable with a busy people that don't have a time to watch his trading monitor everyday.

Have anybody tried this technique ?

please give me a comment and suggestion

Thanks a lot


Annie
[email protected]

Which brokers has 0% interest?

Don't most brokers offer swap-free account for muslims? We may use advantage of this privilege.

the brokers have strict regulation about this..
your account face the risk of being suspended if they find this..
however, good luck..

Yes, this is realy interesting. I'm trying to do the same thing. I talked with a few brokers who do offer no interest accounts, but they object to this kind of business. There is an alternative, you can simply open one standard lot of gbp/jpj (there you will find much figher interest than the one you would get by hedging usd/jpj) and do normal trading activities to cover this up.

BUT, you still have to wory, what if they catch you, close your account, hold your money and so on...

I'm not checking even a better way. FXDD pays around 40 $ for gbp/jpj, instead of normal 20 as all others do. But I'm still checking this out, it's not sure, some people clai, that they get paid 40 $ every single day! So, you probably can guess what are the posibilities...

I'm interested on this strategy, and I've done some calculation,
When a position go down to 0, we have to close positions and rebalance the two accounts.
This operation has some costs for USD/JPY (pips spread 3-4 + e-gold fees + withdrawn fees) for a standard lot about 35 * 2 + 1%*3500 + 20 = 125 $ or more.

To earn in interest 125 $ with a standard lot at 4.75 % it could require 10 days (about 13 $/day).

So according to last price movements a margin of 350 pips could be enough for an average of 30 days (it's a subjective estimation) some month could be more some month less, (and we have to take into account that the stop loss limit could be not executed if we are in a very volatile market)

And 350 pips with 1 lot require at least 3500 $ * 2 accounts = 7000$.

So every month I have to rebalance my accounts with 125 $ fees, in this month I have earned 390 $ net 265$, if I don't re-put earned money, in a year I earn 3180 $ over a 7500 $ investment.

If I put less money I earn less interest but I don't reduce by the same the costs (withdraw fees) and net profit will reduce, if I reduce pips spread to close position I have to rebalance accounts more often.

Do you agree with this calculation?

An other question is it real the risk of being the account suspended?

as long as you make other trades on the swap free account they will not care. they just dont like you getting an account and not giving them money.

if you can find one with micros then you can have full lots for the hedge and they just trade micros so your account is active