Another element that makes sense to me is to pick pairs that, together, make up several interconnected triangles. Trade each pair in one direction in one account, and in the opposite directions in another account. EAs would be just about a must for this.
Here's a suggested basket of pairs, representing many triangles:
It's much simpler of course to do this with one single triangle. Remember, you only enter the buys when below the anchor bids and the sells when above the anchor asks. This arrangement provides a means of becoming profitably hedged within each account and across the two accounts. The likelihood of becoming profitably hedged is high.
As one absorbs the number of triangles in this arrangement, an important thing to realize is the number of ways it is possible to become profitably hedged for any single trade that can be opened. I found it worthwhile to analyze exactly what those ways are. The illustrations I've come up with helped me with the analysis.
Let's take one pair and unpack what needs to happen if a trade gets opened on the pair.
Let's say a buy trade for EURUSD gets opened because its ask fell below its anchor bid. There are four ways for a EURUSD buy to get profitably hedged as long as we are using two accounts to trade every pair in both directions.
1. A EURUSD sell gets opened on the other account, at a higher price than the EURUSD buy.
2. A EURGBP sell gets opened above its anchor ask and a GBPUSD sell gets opened above its anchor ask.
3. A EURJPY sell gets opened above its anchor ask and a USDJPY buy gets opened below its anchor bid.
4. A EURCHF sell gets opened above its anchor ask and a USDCHF buy gets opened below its anchor bid.
What are the odds that one of these 4 scenarios occurs after the EURUSD buy?
Below is a list of the triangles of which each currency pair is a member.
Every currency pair is a member of 3 different hedge triangles. There are 5 individual currencies, 10 currency pairs and 10 unique hedge triangles. Each triangle appears below 3 times with the pairs ordered differently.
Remember, we would not open all pairs at once. We open buys when the ask falls below the snapshotted anchor bid for that pair. We open sells when the bid rises above the snapshotted anchor ask for that pair. This is not arbitrage. It's simply letting profitable hedges come to us.
I'm assuming your position sizes of 0.1 are 1000 units of base currency. Based on your positions and prices, this is what you've done: 1 EUR = 1.48750 CAD You bought 1000 EUR sold 1487 CAD 1 EUR = 1.1119 USD You sold 1000 EUR bought 1119 USD 1 USD = 1.3290 CAD You sold 1000 USD bought 1329 CAD EUR Total = 1000 - 1000 = Flat EUR CAD Total = -1487 + 1329 = Short 158 CAD USD Total = 1119 - 1000 = Long 119 USD So you're really trading the USDCAD long. Look at the chart of the USDCAD. Its down approximately 250 pips over the past 3 days. This is why...
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I do sometimes basket shopping. where im long or short on particular currency and opposite on others.
but what i see here is usdcad trade made in expensive way.
i think u miss some details about proportions. what i mean here is : every pairs lot is different. lets take simplest case where eurusd is zero lots usdcad position is like 1 lot and eurcad position is like -2 lot.
so 2 lots eur short , 1 lot usd long and 1.48*2 -1.329 or sth .. cad long
that portfolio behave differently that its main components that is eurcad and usdcad
moreover u can land with so called mean reverting portfolios.
anyway. u re missing a point. number of lots per instrument should differ in order to whole this thing have any sense
So you mean to say if no edge means how we make profit for holding the position for long period. I mean in any market condition we are safe to take the profit right with less risk involved. But we need more equity to hold the position
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different composition - lot size or timing is a key, here u have example behaviour of different lot sizes
