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Safe Hedging System - Daily Swap

  • #101
  • May 2, 2007 12:18am May 2, 2007 12:18am
neo,have you ever close your set when these 4 pairs currency with positive pips?

i am up 28% now for 6 trading days with 3 sets.both G/J and G/U are in positive pips
  • #102
  • May 2, 2007 2:40am May 2, 2007 2:40am
Quoting amenlo9
neo,have you ever close your set when these 4 pairs currency with positive pips?

i am up 28% now for 6 trading days with 3 sets.both G/J and G/U are in positive pips

Not really. But I have closed my positions when the NET SUM of my trades are positive. 28% is great!!! Depending on your actually margined amount, you can either take some profits or keep on riding the move.


neo
  • #103
  • May 2, 2007 2:43am May 2, 2007 2:43am
Quoting Yukoner
Guys,
With all due respect... what your doing doesnīt make sense. All it is is basically trading one of two strategies
1) Net Long gbp/jpy expecting it to move up
2) Net Long usd/jpy

Your not protected if either one of these markets should tank. Doesnīt matter what interest your getting per day.... and it doesnīt matter how many orders you place below the market. All you do then is scale down.

I said it in an earlier post, but let me point it out again... just trade a small position to be long either usd-jpy or usd-gbp. THATīs IT! You will create the same results, same drawdown, same expectancy. Your fooling yourself if you think having four pairs that arenīt balanced out will essentially hedge a position for you with positive interest.

Good Trades,
Yukoner

When the market start to DUMP GPBJPY, what is going to happen to CHFJPY and GBPUSD? I am assuming they will both be down, basic supply and demand? SO in essence the hedge part will work, whereas if you were only in GBP/JPY Long you would be wiped out.

neo

P.S. I thought I went over this...
  • #104
  • May 2, 2007 2:55am May 2, 2007 2:55am
i think i agree with people that say, it is better to just put long in gbp/jpy or usd/jpy....

done a few calculation and split the trade to 1micro per trade only, spread it in every few pip interval in usd jpy....

i think it is better to hedge with differ currency pair, ,, we sort the highest to lowest by interest rate and pick it with the least volatile in the edge and the highest volatility in the middle..... (sorry , i forget the thread)
  • #105
  • May 2, 2007 9:24am May 2, 2007 9:24am
Quoting simplecoders
.

Is it? I have demo traded Neo's strategy yesterday with mini lots (10K). I got a net swap of $1.27. So for standard lot it should be 1.27 * 10 = $11.27 which is aproximately the same as Neo put in his first post in this thread.
Well that's what I would expect, but here are my results so far:

Currency Pair Lot type Swap (P/L)

GBP/JPY STD (100k) 299.15 (258.14)
CHF/JPY STD (100k) -53.07 (-556.94)
GBP/USD STD (100k) -3.84 (1590)
USD/CHF STD (100k) -115.50 (-658)
GBP/JPY STD (10k) 174.20 (102.34)
CHF/JPY STD (10k) -35.36 (-50.80)
GBP/USD STD (10k) -2.24 (147)
USD/CHF STD (10k) -73.50 (-83.90)

I opened the mini lots above two days after I opened the standard lots. The 1 standard lot set and three minis I have open net about $44 in swap per day. Could it be because of the 400:1 leverage? Or perhaps this is just an error?

On another note, can you really have an account with 400:1 leverage with FXDD or either of the two brokers MeteTrader asks you to choose from?
  • #106
  • May 2, 2007 10:19am May 2, 2007 10:19am
I once read a analysis by a team of great traders. They said if the jpy carry trade were to go down, the next one for carry trades is chf pairs.

So...
The future depends on what we do in the present.
  • #107
  • May 3, 2007 11:25am May 3, 2007 11:25am
Neo,

What is the best resourcefor the correlation factors between the currencies?

PT
  • #108
  • May 3, 2007 11:47am May 3, 2007 11:47am
http://www.mataf.net/en/analysis-cor...etVsMarket.htm
  • #109
  • May 3, 2007 1:35pm May 3, 2007 1:35pm
Labrat407,

Thanks. I was looking at that but the trend they give is only for 1 day. I was looking for a little longer trend, e.g. 6 months or longer. I also was looking at Oanada's but they only offer few pairs.

PT
  • #110
  • May 3, 2007 1:54pm May 3, 2007 1:54pm
Neo,
I understand you are shorting and longing all the currencies, but I was wondering that since there is about an 85% positive correlation on the eur/usd and gbp/usd if it might not work out even better to short the eur/usd instead of the gbp/usd. You would get substantial swap on the euro short.
I have been hedging a long usd/chf against long euro/usd and gbp/usd and have done pretty well so far. Do you think your hedge is overall less drawdown risk?

Thanks, Midas
  • #111
  • May 3, 2007 1:54pm May 3, 2007 1:54pm
Mataf only shows daily correlation now

Quoting Labrat407
http://www.mataf.net/en/analysis-cor...etVsMarket.htm
  • #112
  • May 4, 2007 3:38am May 4, 2007 3:38am
Quoting midas
Neo,
I understand you are shorting and longing all the currencies, but I was wondering that since there is about an 85% positive correlation on the eur/usd and gbp/usd if it might not work out even better to short the eur/usd instead of the gbp/usd. You would get substantial swap on the euro short.
I have been hedging a long usd/chf against long euro/usd and gbp/usd and have done pretty well so far. Do you think your hedge is overall less drawdown risk?

Thanks, Midas
Is it Long USD/CHF, Long EUR/USD, Long GBP/USD?
  • #113
  • May 4, 2007 10:03am May 4, 2007 10:03am
Yes it is long on all of them, but the lots are more heavily weighted on the usd/chf. Example would be 292,000 usd/chf, 115,000 eur/usd and only 82,000 on gbp/usd. I get 400:1 leverage and a good rate that pays about 18.00 a day net interest on this amount of currencies. After 5 months of trading these, they seem very reliable, but the swings can sometimes yield some pretty hefty drawdowns, but they have always come back. Plus, when you are long these 3, you can also keep very small limit orders in play and lock in sure small profits along which add up nicely over time.
I am going to demo this 1 long, 3 short system to see how it compares over time.
Midas
  • #114
  • May 4, 2007 10:05am May 4, 2007 10:05am
Quoting midas
Yes it is long on all of them, but the lots are more heavily weighted on the usd/chf. Example would be 292,000 usd/chf, 115,000 eur/usd and only 82,000 on gbp/usd. I get 400:1 leverage and a good rate that pays about 18.00 a day net interest on this amount of currencies. After 5 months of trading these, they seem very reliable, but the swings can sometimes yield some pretty hefty drawdowns, but they have always come back. Plus, when you are long these 3, you can also keep very small limit orders in play and lock in sure small profits along which add up nicely over time.
I am going to demo this 1 long, 3 short system to see how it compares over time.
Midas
What is your plan of attack when they go down and do not come back? How do you prepare in advance for this to occur?
  • #115
  • May 4, 2007 12:24pm May 4, 2007 12:24pm
Good question. The best and safest plan involves having an 400:1 account and enough unused margin to weather the worst storms. If you have 15,000 at 400:1 and only risk 10% (1500), you can weather a very bad storm. I went in with 1 account Jan 31 and by mid Feb after the big crash and carry unwinding, my account had lost about 50%, but I still had a lot of margin left and within a few weeks, it had gained all of it back. And now has made considerably more.
It can be pretty safe and pretty good return if done right.
  • #116
  • May 4, 2007 12:28pm May 4, 2007 12:28pm
So how many standard lots is this?

Quoting midas
Good question. The best and safest plan involves having an 400:1 account and enough unused margin to weather the worst storms. If you have 15,000 at 400:1 and only risk 10% (1500), you can weather a very bad storm. I went in with 1 account Jan 31 and by mid Feb after the big crash and carry unwinding, my account had lost about 50%, but I still had a lot of margin left and within a few weeks, it had gained all of it back. And now has made considerably more.
It can be pretty safe and pretty good return if done right.
  • #117
  • May 4, 2007 1:12pm May 4, 2007 1:12pm
1500 worth of currencies at 400:1 leverage is the numbers I listed before. 292,000 usd/chf, 115,000 eur/usd and 82,000 gbp/usd. Obviously with this system, the more capital you have to invest, the more you can lower your risk level and still make good money. I think Neo talks about buying 4 standard lots with only 3500 at 200:1 leverage but this only leaves about 700 in margin. That sounds too close for me. On the one I'm doing, you have to have a lot more cushion than that.
  • #118
  • May 5, 2007 4:11pm May 5, 2007 4:11pm
Quoting neo1001
When the market start to DUMP GPBJPY, what is going to happen to CHFJPY and GBPUSD? I am assuming they will both be down, basic supply and demand? SO in essence the hedge part will work, whereas if you were only in GBP/JPY Long you would be wiped out.

neo

P.S. I thought I went over this...
Neo,

Let me go over this again.... When the market starts to dump GBP/JPY it will probably dump USD/JPY at the same time. JPY tends to strengthen and effect most other carry pairs. Regardless of what happens, your raw 4 pair hedge depends on long usd/jpy and your hedge strategy depends on having a stop loss 1 pip past your gbp/jpy entry once it goes 100 pips in your favor. Whether you scale down or not, the exposure is still there as you set it up.

Therefore the bottom line of this 4 pair hedge, is that you wonīt be protected or hedged should usd/jpy or gbp/jpy really sell off. Do this.... run the exact numbers, with currency conversion and LOOK at exactly what your net exposure on the position is. Sure if you want to compare the gross numbers it can look like a way to put a hedge in, but the bottom line is that you are simply net long a small amount of mainly usd/jpy.

You write you would be stopped out if it was simply a small position long usd/jpy OR long gbp/jpy should it sell off... my question is, arenīt you stopped out anyhow with your 1 pip stop loss past the gbp/jpy entry?
If I take a drawdown of 15% in your hedge strategy, or a drawdown in the same position, same exposure of long usd/jpy... it makes no difference.

I know i am hammering away at this point, but it appears there is a bunch of interest in this 4 hedge strategy from beginners who think they are hedged should a sell off occur. The botton line is you are exposed to unlimited risk without a stop loss of some kind in place.

Good Trades,
Yukoner
  • #119
  • May 6, 2007 10:30pm May 6, 2007 10:30pm
use jpy as base currency, 1:1 leverage
buy usd /jpy

if the jpy goes strong, the equity can be withdraw as $$$ profit
if the jpy goes weak, the buy position profit goes to equity....

this way, no negative swap & hedged
  • #120
  • May 8, 2007 3:31pm May 8, 2007 3:31pm
Quoting Gwan
use jpy as base currency, 1:1 leverage
buy usd /jpy

if the jpy goes strong, the equity can be withdraw as $$$ profit
if the jpy goes weak, the buy position profit goes to equity....

this way, no negative swap & hedged
i didn't understand....
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