This can be used with futures, since they don't have a swap.
Great idea, thanks for sharing. I hedged gold vs silver before but commission for both of them are high, US500 & US30 are perfect with much lower spread & commission. Thanks mate. JANET @ Melbourne
Hi Janet, do you get profit on gold vs silver?
i just do correlation and z-score on us500 vs us30, if the wrong hedge on this pair will get more loss
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You are right, i try to make sure we are on the right trend, but if with about 96% correlation with proper position, the loss will goes to even or profit, i know it's not easy to understand but theoretical it should be true.
Hello Everyone
I have been trading this strategy for the past week and was mostly able to make profit. The problem for me is when US500 Falls drastically the drawdown becomes very large scaring me off. But so far i have not exited the trade until it finally makes profit.
I would like to know , if there any specific action to take if US500 falls drastically. And also would like to know the results, if someone is trading this strategy now.
Thanks SVT
I have been trading this strategy for the past week and was mostly able to make profit. The problem for me is when US500 Falls drastically the drawdown becomes very large scaring me off. But so far i have not exited the trade until it finally makes profit.
I would like to know , if there any specific action to take if US500 falls drastically. And also would like to know the results, if someone is trading this strategy now.
Thanks SVT
Hi everybody, Lately I have had some success in trading with a hedge involving the US500 and US30 symbol. This is a somewhat of a scalp trade, lasting minutes to a few hours. It can be done on US accounts since its technically not "hedging" in the traditional sense as you are using 2 different symbols. I guess this can be done with futures, CFD's, etc etc. First a bit of background: Over the last 10 years, the US500 index has outperformed the US30 index almost every year. On most timeframes from H1 upwards, these two symbols remain above 90% correlation....
At least not a perfect hedge.
Let's assume based on the picture above
1 Lot of SPX USD = 1 Share of SP500 = for convenience purposes, I will round it up to 5991.
1 lot of USD30 = 1 share of USD30 =for convenience purposes, I will round it up to 43549
So how on earth are 10 shares of SP500 which is 59,910 equal to 1 share of US30 equal to 43549?
You have 59910-43549 =USD 16,361 discrepancy here which explains that when the US500 goes down rapidly you will experience greater floating loss.
I think it is better to adjust the value to be the same value, at least try to make the value of both instruments in terms of dollars close/equal/same.