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Super Carry Trade Trading System

  • #361
  • Apr 25, 2008 9:37am Apr 25, 2008 9:37am
Quoting petero
I'm still reading the thread. This is FACINATING!
I actually devoted all day yesterday to try to get my arms around this thing.
The hell with work!

Just wanted to say THANKS for sharing, Dreamliner.
Thanks everyone, too, for sharing & contributing.
This is really captivating reading....and fortuitous, too.

I was thinking that there must be a better way to confront this Forex beast and still remain basically whole. Though, I've never been one to shy from a challenge. And I've been known to pick myself up & dust myself off & jump right back in... perhaps one too many times. Hence the source of my trepedations.

One thing I need to get straight before the weekend.......

The "danglers" thing has got me spooked.
Now, as I understand things, we deal with them as part of our AVERAGED position cost, and just live with them until such time as we have a plus total AVERAGED position, then we dump everything, regardless if it's + 1 pip (averaged) or + 1000 pips (averaged) & then start the clean slate again?

Am I getting this correctly? Basic concept, at least?
Please help me out here!

This thread is a breath of fresh air. All contributors...THANKS.
This is intelligent discussion here. Lots of learning & sharing going on, too.

And, again, Thank you Dreamliner.
I'd like to tag along for the ride & contribute when I can be of benefit.

Good weekend to all.

Peter O.
You got it and welcome to the thread.
  • #362
  • Apr 25, 2008 10:12am Apr 25, 2008 10:12am
hi all,

like many others here i've read everything in this wonderful thread. I started this strategy a few days ago in oanda too and everything goes well so far.
It's very easy to maintain and i have to say it's by far the most relaxing strategy i've ever tried especially when all your average positions are down!! You know it will be balanced with next days averaging positions or even better, with next wins on retracement.

I have only one question, you said : "at any time if you have more than one average position open and one is positive, close all." . Is it really at any time in the day ? or when you check everyday ?

thank you again for sharing this , i guess you help making money for a lot of traders here.
gold is gold.
  • #363
  • Apr 25, 2008 2:03pm Apr 25, 2008 2:03pm
Welcome! Glad you are all here. I think this is one of the best ways to trade forex, for these reasons:

1. You don't have to predict which way the market is going.

2. You don't have to stare at charts all day.

3. You don't use any indicators.

4. You profit in rising and falling markets.

This is a bad way to trade forex if you are opposed to drawdown. I got nearly a 40 percent drawdown awhile back. Just trade cautiously.

In answer to your question, you want to close your trades any time you check and notice that you are positive, if you have more than one trade on. This is just to reduce used margin. You could leave them open if you like, it is up to you.

Quoting sergevi
hi all,

like many others here i've read everything in this wonderful thread. I started this strategy a few days ago in oanda too and everything goes well so far.
It's very easy to maintain and i have to say it's by far the most relaxing strategy i've ever tried especially when all your average positions are down!! You know it will be balanced with next days averaging positions or even better, with next wins on retracement.

I have only one question, you said : "at any time if you have more than one average position open and one is positive, close all." . Is it really at any time in the day ? or when you check everyday ?

thank you again for sharing this , i guess you help making money for a lot of traders here.
  • #364
  • Apr 25, 2008 4:25pm Apr 25, 2008 4:25pm
Dreamliner,

Are you using .5% of the account balance to equal what the $ per pip is or the amount of margin to use to open each position?

Do you re-enter with a market order as soon as you close out all your "average positions" when greater than of equal to 1 pip?

Thanks, Lcfx
  • #365
  • Apr 25, 2008 4:32pm Apr 25, 2008 4:32pm
Quoting lcfxtrader
Dreamliner,

Are you using .5% of the account balance to equal what the $ per pip is or the amount of margin to use to open each position?

Do you re-enter with a market order as soon as you close out all your "average positions" when greater than of equal to 1 pip?

Thanks, Lcfx
I select .05% on Oanda's user preferences, it's that simple.

Yes, I reenter with a market order as soon as I close out.
  • #366
  • Apr 27, 2008 3:06pm Apr 27, 2008 3:06pm
For anyone using MT4, can you please provide an example of the proper lot sizing based on this .05% with a 10K starting balance with 100:1 leverage. Thank you.
  • #367
  • Apr 27, 2008 4:39pm Apr 27, 2008 4:39pm
Quoting lcfxtrader
For anyone using MT4, can you please provide an example of the proper lot sizing based on this .05% with a 10K starting balance with 100:1 leverage. Thank you.
Trading GBP/JPY:
Assume GBP/USD's current price is 1.9800.

$10,000 * 100 (Leverage) * .005 (NAV Size) = 5000 Units (Pounds)

5000 Units / 1.9800 = 2525 Units (Dollars)

2525 Units / 100,000 (1 Standard Lot) = 0.025 Standard Lots or rounding up 3 Micro lots or $0.30 per pip.

And I think you want 0.5% NAV, not 0.05%. That's really, really small.

Glen
  • #368
  • Edited 3:49am Apr 28, 2008 3:21am | Edited 3:49am
Hi,

Firstly, Dreamliner, thank you for sharing your system and ideas.

I've been demoing this system for about 2 weeks now, with pretty good success. I have increased my account by 4.5% in 2 weeks, by using the original rules

I would just like to echo everyone else's opinions and reinforce the idea that you need to use small lots, and prepare for a drawdown.

If I was optimistic and assumed that the biggest unwind was 3400 pips then can some verify my logic below?

Before the unwind would begin, I would not know or be aware of the fact.

So I would go long at 200 pips below my original entry (or average), the next day it may go down another 200, so I have entered again, the next day a further 200. At this stage, I may begin to think that the currency pair may be in an unwind. So now I start going down in 400 pip segments.

By the time the price stabileses I think I would be down by about -20,800 pips. ie 3400 pips from my first position, then 3200 from the next, then 3000 etc. Let me try to tabulise the results:

position 1 3400
position 2 3200
position 3 3000
position 4 2600
position 5 2200
position 6 1800
position 7 1400
position 8 1000
position 9 800
position 10 400
position 11 0

giving a total of -20,800 pips.

Ofcourse, this is purely matematical, and not including the fact that I may pick up pips on several retraces. Also I may increase my pip period to 500-800 pips, I may use a hedge, etc

But if I prepare for a fairly small unwind, then -20,800 pips seems realistic. I wonder if I've missed anything here, before I calculate my position sizes and go live with this?

Once again, thank you to all who are contributors to knowledge and sharing.

Regards

FaxFxFx
Just for today, do not worry...
  • #369
  • Apr 28, 2008 2:59pm Apr 28, 2008 2:59pm
Quoting faxfxfx
Hi,

Firstly, Dreamliner, thank you for sharing your system and ideas.

I've been demoing this system for about 2 weeks now, with pretty good success. I have increased my account by 4.5% in 2 weeks, by using the original rules

I would just like to echo everyone else's opinions and reinforce the idea that you need to use small lots, and prepare for a drawdown.

If I was optimistic and assumed that the biggest unwind was 3400 pips then can some verify my logic below?

Before the unwind would begin, I would not know or be aware of the fact.

So I would go long at 200 pips below my original entry (or average), the next day it may go down another 200, so I have entered again, the next day a further 200. At this stage, I may begin to think that the currency pair may be in an unwind. So now I start going down in 400 pip segments.

By the time the price stabileses I think I would be down by about -20,800 pips. ie 3400 pips from my first position, then 3200 from the next, then 3000 etc. Let me try to tabulise the results:

position 1 3400
position 2 3200
position 3 3000
position 4 2600
position 5 2200
position 6 1800
position 7 1400
position 8 1000
position 9 800
position 10 400
position 11 0

giving a total of -20,800 pips.

Ofcourse, this is purely matematical, and not including the fact that I may pick up pips on several retraces. Also I may increase my pip period to 500-800 pips, I may use a hedge, etc

But if I prepare for a fairly small unwind, then -20,800 pips seems realistic. I wonder if I've missed anything here, before I calculate my position sizes and go live with this?

Once again, thank you to all who are contributors to knowledge and sharing.

Regards

FaxFxFx
I think this all looks good. I would say however, that when planning your trading, be pessimistic rather than optimistic, and set your lot sizes accordingly. You're right, 3400 is indeed a "fairly small unwind", as I have seen much larger, which you need to be prepared for.

The way I have prepared is to throw AUS/USD and NZD/USD in to the mix. This allows me to use the same lot sizes because there is in essence a "hedge" in this, plus I get more interest every day. I think this is nearly the perfect trading system. Not the "holy grail", as we know that does not exist, but to make 200% or more on our account every year with little drawdown, not much screen time, no fortune telling as to the direction of the market, seems to me to be nearly perfect.

Let us know how you do.
  • #370
  • Apr 28, 2008 3:45pm Apr 28, 2008 3:45pm
Dreamliner,

Why Nzd/Usd and Aud/Usd? Strictly for the swap amount?

Pete
  • #371
  • Apr 28, 2008 3:55pm Apr 28, 2008 3:55pm
Quoting PTOURNIS
Dreamliner,

Why Nzd/Usd and Aud/Usd? Strictly for the swap amount?

Pete
Pete, they are both positive swap, plus they work opposite to GBP/GPY so as to somewhat hedge.
  • #372
  • Apr 29, 2008 5:35pm Apr 29, 2008 5:35pm
Y'all!

BE CERTAIN TO CLOSE ALL PENDING TRADES BEFORE CRITICAL NEWS RELEASES! I cannot emphasize this enough! Today's GBP news caused the Oanda spread to widen at 25 pips! Thank goodness only 1 of my pendings was filled @ 25 pips for the spread.

ALWAYS BE COGNIZANT OF THE CURRENT OANDA SPREAD! It generally varies from about 4.5 to 8 pips. As we are only taking 10 pip profits per trade, the higher spreads can eat you alive if you are not careful.

Having stated this, I am highly supportive of this method of trading, and I very much appreciate Dreamliner's approach to mitigate the drawdown effects.
  • #373
  • Apr 30, 2008 10:44pm Apr 30, 2008 10:44pm
Hi Dreamliner,
Thank you for sharing. My first experience 400 pips down and up. I just followed your rules and when I checked the chart this morning, the current price was above my average price 100 pips. I closed all trades and collected all the pips from limit orders. Now my next experience is 1000 pips down.
  • #374
  • May 4, 2008 7:18pm May 4, 2008 7:18pm
Hey Mike,

Have you thought any more about ditching the limit orders? Is your son still getting similar results as you without them?

Glen
  • #375
  • May 4, 2008 7:20pm May 4, 2008 7:20pm
Quoting gnllr
Hey Mike,

Have you thought any more about ditching the limit orders? Is your son still getting similar results as you without them?

Glen
I actually went back to the limit orders and am using them again. Yes my sons drawdown is less, but so is his profit. It just depends on what you want I guess.
  • #376
  • May 5, 2008 7:13am May 5, 2008 7:13am
Quoting Dreamliner
I actually went back to the limit orders and am using them again. Yes my sons drawdown is less, but so is his profit. It just depends on what you want I guess.
Two options for a great system.

Glen
  • #377
  • May 5, 2008 7:22am May 5, 2008 7:22am
you don't need to put any stop limit orders.

what you do is when you average in, you take each top and each entry and take the average of that, and you will make just as much profit and more, because you wont have the spread. The average of course is your exit, but always leave one position on.

ie. enter with one long, wait for the top. there must be at least 200 pips pullback before you know it has reached the top. if the next entry long is at least 200 pips, then take the average of the 2nd entry price and the top of the market, (the second entry is 2 contracts) at the average, sell 2 contracts and leave one on.

always have one contract on long.

check it out, the numbers work.
  • #378
  • May 6, 2008 8:20pm May 6, 2008 8:20pm
Scottie,

Sounds interesting, but in my futile efforts, I have not been able to implement your directions with positive results. Would it be possible for you to post a brief example?

Thanks in advance,
tb
  • #379
  • May 7, 2008 12:22pm May 7, 2008 12:22pm
Quoting tboyett
Scottie,

Sounds interesting, but in my futile efforts, I have not been able to implement your directions with positive results. Would it be possible for you to post a brief example?

Thanks in advance,
tb

lets say you went long on feb 20, at 209.8 because the moving averages started to turn up and the price pulled back to them. you then wait for the top of the market. how do you know its the top, it has to pull back far enough for you to reenter which would be greater than 200 pips because your entry must be at least 200 pips from the top.

why the top, because in the original system, you bought the top by placing stop orders all the way up.

so the top is 213.4 and change. the total pips here is 360. you are going to make 360 on this move period. because you now know how big the move was.

your next purchase was 204.7 because the ma's started to turn up, the price crossed it with conviction and pulled back to the moving average. so you buy 2 contracts. that is 870 pips down from the high. the average of the high and the second entry is 435 pips. so you are looking for an exit on 2 positions - because you have 3 and always want to be long - of 209.05. if it gets to 209.05, you will make 360 pips.

well it makes a new high of 207.7 and doesn't get to 209.05. so if you were trading the original system, then you would have a buy at 207.7. so now you are looking for an entry at least 200 below this and you will average the price in.

on mar 10, the price bottoms and crosses the ma's and you enter at 204.6 - 2 contracts. the high was 207.7 your last entry was 204.7, so you want to make 300 pips on the last up move. so the average of the 4 numbers is 207.6. that will be your new exit numbers for 4 contracts leaving you with 1 contract on because you always want to be long.

the next high was 207.9 so you are out of the market with 660 pips. and 1 contract on the table in case it continues up.

only paid spreads on 5 contracts and still take the same number of pips.

draw downs are less.

thanks to dreamliner for spawning this idea.

your welcome,

Scottie

by the way, i just went live with this, and i'm trading it both long and short.
  • #380
  • Edited 2:28pm May 7, 2008 1:40pm | Edited 2:28pm
Scottie,

Can you demonstrate your strategy on a chart starting @ 08.08.2007, which was the beginning of a substantial unwind, using IBFX chart? I am trying to understand your strategy and I hope a more visual presentation with charts would help.

Thanks in advance,

TimeFreedom
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