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Super Carry Trade Trading System

  • #621
  • Sep 8, 2008 8:42am Sep 8, 2008 8:42am
Quoting finian204rea
please how do i get your system?
Have you read post #1?
  • #622
  • Sep 11, 2008 12:28pm Sep 11, 2008 12:28pm
Hi all,

I read this thread with great interest and had applied it to my LIVE account for 4 days , seems the result doesn;t looked good , too many danglers trade ,
I haven't finish reading the whole thread yet, I;'m still at page 12.

from this 4 days observations, this strategic only work in UPTREND or RANGING market. In downtrend market , example massive drop of 1000---5000pips, this strategy would kill most of accounts. If that's the case, might as well as use 100% GRID trading , earning both ways of the market, well, need to forfeit the swap .....

any thoughs on that ?

Thanks,
paogeh
  • #623
  • Sep 13, 2008 10:11am Sep 13, 2008 10:11am
I have been following this thread from the beginning and have the following observations.

Original method of having no TP on the average down order will help keep the average price near the current price. But the limit order grid with TP's can cause multiple danglers especially if the price ranges for awhile and you reload the grid every night. If the price suddenly drops the next day you are stuck with multiple danglers.

One posted mod has a TP on the average down order and the limit grid but the average price then is continually going up as TP's are taken making it hard to catch up to the average price.

The last variation posted makes a lot of sense. It keeps the average price as low as possible while still allowing for additional pip gain profits.

Contrary to the original method I think that picking your initial entry is crucial. Waiting until an unwind is several months old will save you thousands of pips in drawdown. Can it go down further? Sure it can. Nobody can pick a bottom. Look at AUD/JPY. It has gone down 2000 pips in the last two months and may go further. Getting in now will have saved you the initial 2000 pip drawdown and may be the difference between making money and a margin call. Keeping an eye on fundamentals and waiting for the big boys to get back on the carry bandwagon may be the way to go.

Bob
  • #624
  • Sep 13, 2008 11:30am Sep 13, 2008 11:30am
Quoting gnllr
After a 40% DD on my account, I have come to the painful conclusion that these methods are not for me. I cannot be a no S/L person anymore. The psychology just doesn't fit me. I can't stomach a large drop just to make a few percent at a time. I know that I pushed for a 5-star rating on this thread, and it still may be. There have to be new ways to limit DD, which I haven't learned yet. I'm taking my loss, learning more about myself and my trading style, and moving on.

Good luck to Dreamliner and everyone else here.

Glen
This strategy will definetely give you an ulcer ... The only thing that will save a portion of your account is Margin Call ... If you are using this strategy, you're better off going in the opposite direction, pay the interest, and it will, inevitably sooner or later unwind. That's when you can collect the rewards.
  • #625
  • Sep 13, 2008 4:59pm Sep 13, 2008 4:59pm
I have been trading this method for about six months now, as almost everyone is saying it is very risky but if you have good money management you will survive big falls like the recent ones. I have about 20 open positions and about 20% drawdown.
  • #626
  • Sep 14, 2008 8:03am Sep 14, 2008 8:03am
14 September

* 32 positions open
* Average 195.606
* Bought friday the 12th at 190.182 (540 pips from average)
* $1254.99 Interest from swap
* Current price is 193.538 (210 pips from average)
* Drawdown 7.36%

Massive spike on friday from 185.900 to 193.500 (760 pip spike) This just saved this strategy. Max drawdown I experienced was 34%.

If I had started at 214 when the unwind started I would have experienced a higher drawdown.

I would not play this strategy on multiple categories.

Hopefully I can sell out soon with a profit.
  • #627
  • Sep 14, 2008 1:21pm Sep 14, 2008 1:21pm
The name of the game is lot size. You are proving a valid point here. I'm paying attention to your efforts. Thanks.
  • #628
  • Sep 15, 2008 2:28pm Sep 15, 2008 2:28pm
15 September

What a difference a day makes. Seen a drop form 193.50 to as low as 187.50.

* 34 positions open
* Average 195.276
* Bought today at 189.404 (580 pips from average)
* $1336.45 Interest from swap
* Drawdown 22.71%

GBP steady against USD. Lehman news strenghened the YEN.
  • #629
  • Sep 16, 2008 4:43am Sep 16, 2008 4:43am
16 September

* 36 positions open
* Average 194.911
* Bought today at 187.205 (770 pips from average)
* $1418.48 Interest from swap
* Drawdown 31.50%

GBP steady against USD. YEN still strengthening.
  • #630
  • Sep 17, 2008 5:31am Sep 17, 2008 5:31am
17 September

* 38 positions open
* Average 194.607
* Bought today at 188.350 (730 pips from average)
* $1505.13 Interest from swap
* Drawdown 26.15%

GBP lost against USD (AIG bailout). YEN slightly weakening.

Yen ranging form 184.50 to 191.50 in a day (that is 700 pips) this pair is volatile.
  • #631
  • Sep 17, 2008 2:43pm Sep 17, 2008 2:43pm
sold: thank you for your demonstration; keep it up

now if I were to trade this strategy I would go for:
1. the broker with the highest leverage 400:1
2. the broker with the highest interest payout

then I would look at highest fall in the past in this pair and calculate the number of open orders for that time and the margin involved.

next I would look at the highest pip loss concerning those open orders.

accumulated interest during that time at todays discounted interest

total outlay (margin + losses - interest) x 2
x2 = to be still in the game if the drop is 2x worst scenario in the past.

this last figure is not more than 50-75% of leveraged account.
starting capital $ 10,000 - leveraged account is 400 x $ 10,000 = $ 4,000,000.

after all these figures I will know how high my order size is going to be.

if there`s nothing wrong with my story, I will dive deeper into this.

any threads which go deeper into this money management thing with very high leverage?

thank you for any help
  • #632
  • Sep 18, 2008 3:28am Sep 18, 2008 3:28am
Quoting yonnie
sold: thank you for your demonstration; keep it up

now if I were to trade this strategy I would go for:
1. the broker with the highest leverage 400:1
2. the broker with the highest interest payout

then I would look at highest fall in the past in this pair and calculate the number of open orders for that time and the margin involved.

next I would look at the highest pip loss concerning those open orders.

accumulated interest during that time at todays discounted interest

total outlay (margin + losses - interest) x 2
x2 = to be still in the game if the drop is 2x worst scenario in the past.

this last figure is not more than 50-75% of leveraged account.
starting capital $ 10,000 - leveraged account is 400 x $ 10,000 = $ 4,000,000.

after all these figures I will know how high my order size is going to be.

if there`s nothing wrong with my story, I will dive deeper into this.

any threads which go deeper into this money management thing with very high leverage?

thank you for any help
Yes higher leverage will mean higher interest payments. But with this strategy it is also the road to self distruction as you will go through your margin a lot quicker. I am doing this strategy on a 1:50 leverage and experienced 36% drawdown. On a 1:400 my test account would have been toast.

If you try to calculate the margin requirements on past trades you will find out that you will trade very small lots and the interest will than erode. So it is small lots and high levergae or bigger lots and less leverage.
  • #633
  • Sep 18, 2008 4:11am Sep 18, 2008 4:11am
18 September

* 40 positions open
* Average 194.410
* Bought today at 190.549 (390 pips from average)
* $1597.57 Interest from swap
* Drawdown 19.5%

GBP gained against USD (AIG bailout).

HBOS LOYDS TSB deal bringing some stability to GBP
  • #634
  • Sep 18, 2008 4:13am Sep 18, 2008 4:13am
Quoting soldintime
Yes higher leverage will mean higher interest payments. But with this strategy it is also the road to self distruction as you will go through your margin a lot quicker. I am doing this strategy on a 1:50 leverage and experienced 36% drawdown. On a 1:400 my test account would have been toast.
I'm always amazed how people mix up leverage with margin requirements...

You don't use a leverage of 50:1. If you do that your account would be vaporized within days...

But you use an account leverage of 50:1 which defines your margin requirements. If you have a broker which offers 400:1 this is better for that kind of system because you need less margin for the same position sizes. Therefor the margin call comes later...

If you open a position with 0.1 lot, it's always the same, no matter if your broker offers 10:1, 50:1 or 500:1. The pip values (in dollar) are the same, only the margin requirements are different...

Guys, these are very, very basic things...
  • #635
  • Sep 18, 2008 5:34am Sep 18, 2008 5:34am
Xaron, thanks for the head-up.

I thought the same as you do, but being quite new to forex I was not 100% sure.

My opinion was that with 400:1 leverage you can put a lot more orders in than with 50:1, provided the order size is the same.
You will have a lot more funds exposed to the interest difference and when the unwinding happens, you can average down with a lot more orders before a margin call.

Risks are not greater with the higher leverage: if carefully managed the higher leverage will be an advantage.
  • #636
  • Sep 18, 2008 5:53am Sep 18, 2008 5:53am
All true, yonnie.
  • #637
  • Sep 18, 2008 12:24pm Sep 18, 2008 12:24pm
Yes I can see your points here. However do not use the increased leverage to play larger lots. In case of this strategy which started at 1% trading lots (2 trades of 0.5%) for a 1:50 account leverge (all you can get at oanda). If you go for 400:1 leverage the % size should be adjusted downwards to 0.0125%

If you keep it at 1% you will experience a quicker margin call.

Might give give it a try.

Need demo account with good swap rates and low pips and high leverage. Any ideas?
  • #638
  • Edited 2:23pm Sep 18, 2008 2:08pm | Edited 2:23pm
sold,

yes, the unit size would need to be the same in both scenario`s.

FxPro.com has 500:1, but if their interest rates are any good I dont know.

I suspect that with my "strategy" you probably can only expose 5% of the margin at the most on a regular basis earning interest, because you would need so much in reserve for when a severe unwinding comes.

I think it would be better to learn how to handle a hedge or get out at the first sign of troubles.

Just my thoughts
  • #639
  • Sep 18, 2008 3:22pm Sep 18, 2008 3:22pm
Done some research.

It is about the right mix of:
* leverage
* roll over interest
* pips
* minumum amount of margin required per trade.

Just looked at FXCM which has 1:200 leverage. On a 100K account the minumum margin required per trade is $500 which would mean a 0.5% trade.

This is equal to a 2% on 1:50 leverage. I would be in worse DD than I am currently with OANDA.

So where to find a high leveraging account with lower margin requirements per trade.
  • #640
  • Sep 18, 2008 5:23pm Sep 18, 2008 5:23pm
I think the problem with carry trade and grid systems is that on the way up you`re in with a few positions to take advantage of a favourable tail wind.
You cant have a large position at that moment, because you need a lot of margin in reserve for when the down times come.

In a downtrend you`re in with a ever growing postion exposed to a detoriating market.
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