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absolut Support in near Zero Currency pair.

  • #1
  • First Post: Edited Jan 17, 2008 7:35pm Apr 23, 2007 10:44am | Edited Jan 17, 2008 7:35pm
Since i don't know the name of the system or theory (if exist) i can't do searching..... please tell me if there is.

Start with example:
today usd/jpy = 118,90 = 11.890 pip to zero
in usd base currency 1 pip in micro lot is about 0,85 cent. so 11.890 pip = 10.106,5 cent or $ 101,07
so with $ 102 we can have 1 micro lot open without any worry ( isn't it? )
in the same condition if usd/jpy goes to 78,00 = 7800 pip = $66.30
we can put 1 micro lot for $67 of equity without "worry"

we see that if currency pair is priced near zero, the risk of buying is lessen...( this is the thing that i looking for....(and there is no "absolut resistance" in any forex dictionary))
here is some example of near zero currency pair(it should be counted by pip)
Aud/Usd : 0.8323
Nzd/Usd : 0.7440
Eur/Gbp : 0.6777
Chf/Jpy : 98.12
Aud/Cad : 0.9355
Aud/Jpy : 98.96
Nzd/Jpy : 88.46

too bad this kind of currency pair has lower swap rates than usd/jpy...
1 micro pip of usd-jpy will generate about $0.013 per day= $4.75 per year(365days)= 559 pip per year
($4.75 is about 4.65% from $102, it will take 102/4.75 = 21,5 years for the swap to catch up with the price.)
or , if you can trade 1 micro lot for 10 pip a day for 261 (365-2*52)= 2610 pip = $22.19
($22.19 is about 21.75% from $102)
so anually we can hope a profit return 4.65% - 21.75% with simple way of trading:
put The position, should it goes against you , let it be , put another one, ( just count the equity ). take profit in any place you want (oh,, i do mention 10 pip a day...).
within 21 years, the crucial thing in your way will be interest rate and a question " will my broker last that long?"
  • #2
  • Apr 23, 2007 8:24pm Apr 23, 2007 8:24pm
another "i don't know what the theory name " words

imagine a pair of A - B currency
at first A=B so the price would be 1.00
then somehow A= 2B now the price 2.00
but then 2A = B which make the price goes to 0.50

see that when the A currency goes up as 2 x B we can see 1.00 diffrence
but when B currency goes up 2 x A we only get 0.50 difference

not stop in that way, nomater how much the B currency goes up against A, it won't exceed the 1.00 bear (starting price)

seeeee? since there is no pair started with Jpy in front . ... we can assume nomater how much jpy increase, we won't be affected much....

i begin to think that Forex is not a fair world after all ,
  • #3
  • Apr 26, 2007 7:58am Apr 26, 2007 7:58am
i don't know what is it for but i found it interesting to cut a few loss at a time, anyway , it is fit with the previous post.

say, we have buy an usd/jpy, but the position moved lower, we then put another buy....
after the position is goes back upward with positive value more than the spread,,, we close the uper position.

since i put position in interval, it mostly have losing position in a row ... so when the lowest position get a positive, i use this methode to "move" the last pip in the line....

to manage the lost of pip from the closed one, i use the closed taking profit position. should there is many position, i spread that loss in all open position....

ps : there is no stop loss too
  • #4
  • Apr 27, 2007 2:39am Apr 27, 2007 2:39am
another silly theory that works with the above "i don't know" theory....

by doing the above arangement, i never leave te market...( there is always open position)

like pulling a string, i do that "moving position" into better location while put the profit i get into better number,

not into equity, not a hedge either, but into better position.

it is like martingale in a way, but instead just adding position, i move it and do the martingale in the taking profit level.

i wish by this arrangement i can "clean up some mess" periodically and grow a fond of averaging up (that's a way to trap my self in better position).

ps: all of the arrangement is done per micro lot , it need too much clicking to be perfect, so a big lot is not reccomended. should a big oportunity is at hand, forget all of this theory .
  • #5
  • Apr 30, 2007 12:15am Apr 30, 2007 12:15am
just realized,

the ability to maintain open position is greatly affect the utilisation of the swap.

when in the middle of confusion ( plenty open, and many (+) & (-) position of it), which one is to be chosen first?
by moving the position back and forth, i still can taking a few profit.
no mater which one to be replaced. as long as the replacement has few positive pips (bigger than 1 x spread),
that few pips along with the swap of closed position is the harvested profit .....

in short:

if i moved the position higher, i convert some number(price) into pips
if i moved the position lower , i convert some pips into number(price)

and so the circle is complete....

this is done with a few micro lot in gbp-jpy in attempt to convert drawdown into equity for reduced loss (the total lot of open position almost the same before and after the process),
i do think it works better in usd-jpy,
  • #6
  • Apr 30, 2007 5:34am Apr 30, 2007 5:34am
Gwan

A lot of thought and work went into this. Very much appreciated and thanks for sharing
  • #7
  • Apr 30, 2007 8:37am Apr 30, 2007 8:37am
here 's where all the confusion from / sample of the confusion which i try to settle with the above arrangement, i only see dailly pivot, forget about the other indicator, they are just being there without knowing anything,
Attached Image (click to enlarge)
Click to Enlarge Name: sample.jpg Size: 69 KB
  • #8
  • Apr 30, 2007 6:21pm Apr 30, 2007 6:21pm
Hi Gwan,

I am a newbie, so I am having a lot of difficulty understanding what you are saying. I am trying to read between the lines though. Are you saying that there is a way to put on a position so small that there can never be a margin call against it even if the position goes against you? Essentially a free call option with no expiration date?

Thanks.

yokumoku
  • #9
  • Apr 30, 2007 9:58pm Apr 30, 2007 9:58pm
i try to find minimum lot i should trade .... it doesn't mean you can't lose, but you won't be bankcrupted. and with a positive swap, as long as the condition is possible you can get the money back.
this arrangement needs a bit more fundamental analysis than technical
... & i found it works best in stable market (side way in long term).

some application of this arrangement for medium time frame:
* - the yen may strenghten, to $112 late of this year (found in bloomberg ) -*
* - japan is based on export, so they won't increase their currency value soo fast that we can't catch up the price.*
* - no country want to be bancrupted -*

and that is only about 700 pips from today price, so if we reserve $10 per 1 micro lot, there is big possibilities that we won't bankcrupted this year.

Quoting yokumoku
Hi Gwan,

I am a newbie, so I am having a lot of difficulty understanding what you are saying. I am trying to read between the lines though. Are you saying that there is a way to put on a position so small that there can never be a margin call against it even if the position goes against you? Essentially a free call option with no expiration date?

Thanks.

yokumoku
(i try to change my way of tought about the market, sorry if still confusing)
  • #10
  • May 1, 2007 10:29pm May 1, 2007 10:29pm
Quoting Gwan
i try to find minimum lot i should trade .... it doesn't mean you can't lose, but you won't be bankcrupted. and with a positive swap, as long as the condition is possible you can get the money back.
Sorry Gwan, I am still confused. If the position goes against you, how can you avoid a margin call and eventual termination (bankruptcy)? If you fall below the required margin as a result of a losing position this is the usual outcome, no? How can you avoid this by selecting some minimum lot size?

Thanks,

yokumoku
  • #11
  • May 2, 2007 11:20am May 2, 2007 11:20am
1. "moving position" is pip eater that is more fun than usefull
2. it looks like dion's pyramid, grid sys, martingale & one way trading in a mix
3. by changing the way of thinking, the nature of the open position is changed too.
4. is it worthed to eliminate indicators and do all of this trouble?
5. i don't think i can test it as sole system... and with more than 40 (micro lot) trade per day ,, it is not feasible to create journal.
  • #12
  • May 2, 2007 2:13pm May 2, 2007 2:13pm
Gwan,

Have you considered that pips will change in value as the currency pair fluctuates? If for example USD/JPY plunged to 50, one pip on a microlot would rise to $0.20. Your account would not withstand that move unless you were using very little margin (less than 2:1 at today's USD/JPY rate). You would get a margin call.

You need to multiply and divide in your calculations, not add and subtract.

yokumoku
  • #13
  • May 2, 2007 11:20pm May 2, 2007 11:20pm
aah yes, i forget about that,,,,,, thank you thank you....
so , the problem is because the base curency is usd, and convertion from jpy is affecting the pip value.... should we use jpy as base currency , we won't get that problem..... ( if we trade in USD base currency for any pair XXX / USD the value of pip is always 0.01 for 1 micro lot )

(OMG... Base currency IS important....... )

Quoting yokumoku
Gwan,

Have you considered that pips will change in value as the currency pair fluctuates? If for example USD/JPY plunged to 50, one pip on a microlot would rise to $0.20. Your account would not withstand that move unless you were using very little margin (less than 2:1 at today's USD/JPY rate). You would get a margin call.

You need to multiply and divide in your calculations, not add and subtract.

yokumoku
  • #14
  • May 2, 2007 11:47pm May 2, 2007 11:47pm
Quoting Gwan
oday usd/jpy = 118,90 = 11.890 pip to zero
in usd base currency 1 pip in micro lot is about 0,85 cent. so 11.890 pip = 10.106,5 cent or $ 101,07
one pip is 0.01 for usd/jpy, so that there are 118,90 / 0.01 = 11890 pips

for mini lot, pip value will be for example 85 cent or 0.85 dollar
for macro lot, it's going to be something like 0.085 dollar or 8.5 cent.

correct me if im wrong.
  • #15
  • May 3, 2007 12:15am May 3, 2007 12:15am
Quoting lobo
one pip is 0.01 for usd/jpy, so that there are 118,90 / 0.01 = 11890 pips

for mini lot, pip value will be for example 85 cent or 0.85 dollar
for macro lot, it's going to be something like 0.085 dollar or 8.5 cent.

correct me if im wrong.
by comparison,
if in gbp-usd with the 10.000 contract size you get 1 cent a pip,
in usd/jpy you get 10.000(contract size)/12000(today pip value) = 0.83 cent a pip

i don't know it exactly, but i guess it is about like that....
  • #16
  • May 3, 2007 10:29am May 3, 2007 10:29am
no offence, thanks for posting the thoughts here, but i don't quite follow it, it feels like some jokes. looks like there is a underlying assumption that your capital is massive enough to perform your thoughts.
  • #17
  • May 3, 2007 10:42am May 3, 2007 10:42am
Gwan, I am a complete newbie so I am not 100% yet on calculating pip values and such. However I can tell you that pips are just a bookkeeping device. The economic reality behind them is that you are trading currencies. The absolute value of your position will vary as the exchange rate between the currencies vary. If you choose the yen as your base currency it won't change anything. In that case, suppose the yen falls in value relative to the dollar by more than 50% from today's rate (e.g we go from 120 yen/dollar to 240 yen/dollar). If you enter that position at 120 yen/dollar and are margined more than 2:1 you will go broke. This is because the economic value of your position (the yen vs. the dollar) has decreased in value by 50%. It doesn't matter what calculation you do with pip values. You will still be broke.

yokumoku
  • #18
  • May 4, 2007 10:42pm May 4, 2007 10:42pm
Quoting yokumoku
Gwan, I am a complete newbie so I am not 100% yet on calculating pip values and such. However I can tell you that pips are just a bookkeeping device. The economic reality behind them is that you are trading currencies. The absolute value of your position will vary as the exchange rate between the currencies vary. If you choose the yen as your base currency it won't change anything. In that case, suppose the yen falls in value relative to the dollar by more than 50% from today's rate (e.g we go from 120 yen/dollar to 240 yen/dollar). If you enter that position at 120 yen/dollar and are margined more than 2:1 you will go broke. This is because the economic value of your position (the yen vs. the dollar) has decreased in value by 50%. It doesn't matter what calculation you do with pip values. You will still be broke.

yokumoku
i'm newbie too, and was study in architec, and no economic background.... you may see it as a design , it may not efficient ,( seeing equity as space and position as the building)
ps : i don't put sell position, so i won't put sell in 120 .... it is the arrangement... the sky is limitless, let the unlimited to the positive side..

eg: we have jpy base currency (1 micro pip = 0.01 yen in mini account),
Put buy in 240.00 and now 120.00 ,we get 12000 pip (120 yen) draw down,
should 1 yen=1usd , we got 239 yen draw down,
since we has yen base currency, the value of our equity is increased. since we start with 240 yen= 1 $, and in the end 1 yen = 1$
if we trade back that 1 yen left in equity, we still get back 1$ while loosing 239 yen....
(do i count correctly?)(i hope changing base currency became more common if fx)

Quoting charvo
no offence, thanks for posting the thoughts here, but i don't quite follow it, it feels like some jokes. looks like there is a underlying assumption that your capital is massive enough to perform your thoughts.
it is not about massive equity, it is about calculating the most drawdown we can get. i do it with micro lot in mini account...
  • #19
  • May 5, 2007 3:17am May 5, 2007 3:17am
Quoting Gwan
by comparison,
if in gbp-usd with the 10.000 contract size you get 1 cent a pip,
in usd/jpy you get 10.000(contract size)/12000(today pip value) = 0.83 cent a pip

i don't know it exactly, but i guess it is about like that....

again, 1 pip is 0.01 for usd/jpy

Pip value for standard lot should be

0.01/120 * 100,000 = $8.3 per pip

Pip value for mini lot:

0.01/120 * 10,000 = $0.83 per pip

Pip value for micro lot:

0.01/120 * 10,000 = $0.083 per pip

$1 = 100 cents

so, you can say a pip value of a mini lot at $120 around 8.3 cents or 0.083 dollar. Which is not 0.83 cent.

pips from current price to 1

($120 - 1) / 0.01 = 11900 pips <= that is number of pips, not pip value

price will never fall below or equal to 0.
  • #20
  • Edited 3:55pm May 7, 2007 8:11am | Edited 3:55pm
i thoguht of this idea a little while ago and it seems quite good (as long as your broker hangs around, and interest is positive. however the currency you quoted
Quoting Gwan
Aud/Usd : 0.8323
Nzd/Usd : 0.7440
Eur/Gbp : 0.6777
Chf/Jpy : 98.12
Aud/Cad : 0.9355
Aud/Jpy : 98.96
Nzd/Jpy : 88.46
you can reverse other pairs ie, GBP/USD = 1.99522, USD/GBP = 0.501199, which would be the same as selling GBP/USD, but interest would be negative. it may be still worth a look at other pairs in this view.

something else you may want to consider is very long term martingale, such as adding to a position every 1000pip drop
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