QuoteDislikedThen we could create a grid, and trade this advantageously using only "averaging, maximum loss, money management, trade size".
QuoteDislikedUsing a money management formula and perhaps some form of martingale you could buy Usd every x pips and take profit every x pips and keep doing that pretty much forever.
The idea that a loss isn't a loss until it's taken is a fallacy, one propagated by people that lack a real edge, or by people that are merely selling systems rather than trading them.
The market can remain irrational longer than I can remain solvent. There is absolutely no advantage to averaging down as a trader. Whether you buy in too early, or buy in a little late, it averages to being the same. At least w/ the latter tho you end up with the trend to your back.
QuoteDislikedThe higher it goes the further it has to fall but profits have been banked to offset that, maybe set a buying ceiling according to equity.
There may be a fixed amount that a currency can drop, but there's an unlimited upside. If someone went short when the euro started it's great climb, they'd still be sitting there holding the bag... years later, just waiting to break even. I suspect the broker would call in the trade by then. At least if there's any margin in use. You could always just take physical delivery of the currency and put it in a vault some where, but that's not too profitable and very risky.
QuoteDislikedThere are probably a million different ways to do it, that's just a very basic idea, for example trades could be hedged using other pairs, maybe trade more exotic pairs which have less downside, somehow take advantage of interest rate differentials using different brokers, maybe use options or ? as well, etc etc.... but the point is it relies on nothing more than math and MM.
Swap arbitrage is a way to make money, but like all broker arbs they can get your account pulled and you'll never see a dime of it (against the TOS, you're hosed). The concept is to find a swap position that pays, then find a broker that doesn't charge swaps and take the opposite position. Move the money around as needed. But brokers aren't stupid, they search for these things and not only eliminate them... but eliminate the traders using them too.
There is no way to make currency option arb work against spot. Do the math, it can not be made to work. Exotic pairs won't solve the problem.
There are some legit arb techniques out there, but none that work at the retail trader level. There are vast banks of computers that automatically sense an arb opportunity and execute trades within milliseconds. By the time the data comes into a tier 2 or tier 3 broker those opps have already been filled. If you're trading an ECN then you can trade negative spreads, but the competition is fierce there as well. In all of these cases there's still very much an edge to be had... the edge is speed. Who's got the quickest execution, that's the edge.
There's no successful trading w/o an edge. That edge doesn't need to come from technical analysis, but it needs to come from some where.
