Hedge / Swap interest

Has anyone tried this before ?, see attachment.

I have been testing this for a week (early days) but it does seem to work so far.

This is no different than taking straight long position on GBP/CHF.Now go and take a look at the chart of that pair and tel me if you would do that. I wouldn't! Seems like down trend to me,but this only works in uptrend as long as the swaps are ok.

Thats why we dont trade the GBPCHF, we just use it for entry signal on GBPJPY and CHFJPY.

I will post my results at the end of this week.

Yes,i know you don't trade it directly,but going long GBP/JPY and CHF/JPY is exactly the same as just buying GBP/CHF. If the GBP/CHF goes down,than your hedge is in negative. This stategy worked when carry trade was still around,you could do this if you can pick the relative bottom on GBP/CHF. Looking at the chart, I don't know where the bottom will be,do you? Does anybody?. If it is now,you'll be fine,If the pair continues south,you'll get burned.
I know you can average down the position and collecting swaps,but you still can not do this forever, and you need to be sure the pair is trending up.Many people blow their accounts when carry trade unwinded.
I am not saying it can't be done,just pointing out some traps.
Good luck!

ok, understood.

One additional thing i built in was to only enter a trade between 9.00am - 4.00pm GMT.

hi,

those two pairs are not correlated enough to make it a safe hedge.

check out http://www.mataf.net/en/tools/correlation-table

seems like EUR/USD, and USD/CHF would be a better hedge.

analyze on the EUR/CHF, and take two buys or two sells.

EXit both when you are in profit, forget about the swap.

good luck

This document was most likely written when there was an interest rate differential. With most global rates at or near zero there is no retail swap rate and as a result this won't work. Even if there is a small swap rate your broker usually keeps some of it for himself.

You would have to hold this position for more than a week just to pay for the spread of trading 3 contracts.

This strategy worked a year ago. It's dead now.

Correlation doesn't mean much in these days anyway.