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Safe Hedging System - Daily Swap

  • #81
  • Apr 23, 2007 1:29pm Apr 23, 2007 1:29pm
I am paper trading EUR/USD and USD/CHF. It is working well.

This is exactly like trading EUR/CHF, have a look at the chart to see, you get the same swap from this pair as well.

I think if you look closer you will find that is not exactly correct.
First, the EUR/USD and USD/CHF trade above, is a spread trade looking to capitalize on the swap points.
The EUR/CHF trade would be a naked position , albeit perhaps looking to capitalize on the swap points.
Separately, the way the Euro moves against the Swissy can be significantly different from it's movement against the Buck.
Entering a E/C trade based on E/U & U/C signals or visa versa, can be an expensive mistake.
  • #82
  • Edited 8:22pm Apr 23, 2007 7:21pm | Edited 8:22pm
Quoting neo1001
Hello Guys:

I wanted to share this strategy that I have been trading on my live account for about couple months. It has been very profitable and safe from all of the market movement and allows you to make daily swaps without having 2 broker accounts of risk a major drawdown. Anyone can start with this and gradually increase their position.

Basically you will set the following order and they have to be in the same ratio and placed within seconds of each other for maximize stability. I usually do this at 4:55 PM EST just before the swap being calculated:

1 LOT BUY (+)GBP/JPY(-)
1 LOT SELL (-)CHF/JPY(+)
1 LOT SELL (-)GBP/USD(+)
1 LOT SELL (-)USD/CHF(+)

Now this is sort like a combination hedge but using 4 pairs. If you separate each pair, you will see that you are SELLING and BUYNG All 4 currencies at the same time, see the (+) and (-) that I placed Next each currency? You will see that I am buying GBP, Selling GBP, Buying CHF, Selling CHF, etc... This will net you about $11.00 USD in swap per day if using FXDD. The margin requirement for a 200:1 account is about $2500, so u need to have a $3500 account to do this. You must get a 200:1 or 400:1 leverage, so make sure you ask for it.

Now $11.00 per day is about $330 per month, which is like 10% return on your $3500.00. Combining with Compounding you positions, you are looking at 200% return in a year. (every $350 gain, start with a new set of hedge using 0.1 Lot sizes)

Once you reach about 20 standard lots, you are making $220 per day, and that should be a pretty comfortable income, not even counting the positive gains on the GBP/JPY pair.

Some of you might ask about the drawdown on this, I have seem a maximum of 15% drawdown. The market might be a little more unforgiving at first, but once you start to spread out your position, like entering a new mini-lot set everyday for 10 days straight, you are actually minimizing your exposure. Always use discretion to do this and once you are in profit with your GBP/JPY pair for about 100 PIPS, put your stop/loss at 1 PIP profit, only use stop with GBP/JPY pair, and if you are not at your computer all the time, setup the EMAIL function in MT4 and send yourself a text message telling you that you got stopped out on the GBP/JPY. If the market moves against you with the GBP/JPY, you will get stopped out at 1 PIP, but your CHF/JPY, USD/CHF, and GBP/USD short orders will be profitable.

Another thing to watch out for when doing this trade is to do it on Wednesday, which is triple interest day. So it will pretty much cover your spread and give you a positive swap the very first day. And it might take up to 4 days to see your account being positive, but again, your initial entry is the most important entry.
Hi Neo,

I hope that you are aware that your portfolio is not fully balanced.
In above combination you actually:

Buy 100,000 GBP & Sell 100,000 GBP
Sell 100,000 CHF & Buy 120,900 CHF
Sell 23,700,000 JPY & Buy 9,800.000 JPY
Buy 200,000 USD & Sell 100,000 USD

(This is as per today's rate; 7 PM EST)

If you want to have properly balanced combination in respect to amount of currencies, you have to trade with different lot sizes.
Then you can't make money on interest.

There's no guarantee that your portfolio will always get back to positive once it is in minus. Your account can burn out.
You simple trade in one direction and market can turn against you.
Your portfolio depends mostly on movement of JPY and USD. They are the most unbalanced.
I think your portfolio will have similar behavior as BUY 1 lot USDJPY.

My two cents.

Take care,

Jas
  • #83
  • Apr 24, 2007 2:00am Apr 24, 2007 2:00am
In short, the day when carry trades flat out, this method should be avoid.
JPY, CHF carry is the key of the method.

Just my glance, correct me if I am wrong.

Cheers.
凹凸 only
  • #84
  • Apr 24, 2007 2:20am Apr 24, 2007 2:20am
Samuri, u beated me to it...hahaha
thats what i tot...may this method came a little too late?
  • #85
  • Apr 26, 2007 1:49am Apr 26, 2007 1:49am
Thanx, neo1001 for your system! I'm testing it with success on FXDD. What did you do with first positions of the set when GBP/JPY dropped by 1600 pips? Do you still hold them? What would you do if for example GBP/JPY dropps again for 1000 pips? Or it can hardly happen because of fundamental factors ?
Regards
  • #86
  • Apr 27, 2007 6:49am Apr 27, 2007 6:49am
Find herewith trades taken for EUR/USD and USD/CHF (open trades as well as close trades). I am adding one trade (both pair every day). Collecting swap as well as closing the trade when I see price difference of 20+ on any pair. I open the new trade to replace with closed trade.

Neo, I am not trying to be smart or hijack your thread. Just posting my trades based on similar method.

Moneyquest


Quoting mmont
I am paper trading EUR/USD and USD/CHF. It is working well.

This is exactly like trading EUR/CHF, have a look at the chart to see, you get the same swap from this pair as well.

I think if you look closer you will find that is not exactly correct.
First, the EUR/USD and USD/CHF trade above, is a spread trade looking to capitalize on the swap points.
The EUR/CHF trade would be a naked position , albeit perhaps looking to capitalize on the swap points.
Separately, the way the Euro moves against the Swissy can be significantly different from it's movement against the Buck.
Entering a E/C trade based on E/U & U/C signals or visa versa, can be an expensive mistake.
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  • #87
  • Apr 27, 2007 8:14am Apr 27, 2007 8:14am
Quoting Samuri
In short, the day when carry trades flat out, this method should be avoid.
JPY, CHF carry is the key of the method.

Just my glance, correct me if I am wrong.

Cheers.
Well, let translate that:

In Short, when the day whole Japanese Economy goes KABOOM! or UK got Taken Over Completed by Communists, then this method should be avoid.

Current interest rate differential between Yen and GBP is so huge, any drastic change will bring chaos in the world economy, affecting Japan's export, upsetting Europe, United States, China, and all of the big players in the mix. I don't think carry trade is going any time soon, do you?

Obviously when the method is going to go, there were be signs and ways to protect ourselves. That is why we gotta keep our eyes and ears open.

Just my 2 cents.


neo
  • #88
  • Apr 27, 2007 8:17am Apr 27, 2007 8:17am
Quoting jasdel
Hi Neo,

I hope that you are aware that your portfolio is not fully balanced.
In above combination you actually:

Buy 100,000 GBP & Sell 100,000 GBP
Sell 100,000 CHF & Buy 120,900 CHF
Sell 23,700,000 JPY & Buy 9,800.000 JPY
Buy 200,000 USD & Sell 100,000 USD

(This is as per today's rate; 7 PM EST)

If you want to have properly balanced combination in respect to amount of currencies, you have to trade with different lot sizes.
Then you can't make money on interest.

There's no guarantee that your portfolio will always get back to positive once it is in minus. Your account can burn out.
You simple trade in one direction and market can turn against you.
Your portfolio depends mostly on movement of JPY and USD. They are the most unbalanced.
I think your portfolio will have similar behavior as BUY 1 lot USDJPY.

My two cents.

Take care,

Jas
Thank you for your input Jas.
However, it does not have the SAME behaviour as buying 1 Lot of USDJPY.
I am not going to repeat some of the same information posted before, but just to say that there are always risks involved when you trade FX. But the bottom line is to minimize risk and maximize gain. If you follow my method, you have a good chance of achieving the above goal.

neo
  • #89
  • Apr 27, 2007 8:23am Apr 27, 2007 8:23am
Quoting Trader83
Thanx, neo1001 for your system! I'm testing it with success on FXDD. What did you do with first positions of the set when GBP/JPY dropped by 1600 pips? Do you still hold them? What would you do if for example GBP/JPY dropps again for 1000 pips? Or it can hardly happen because of fundamental factors ?
Regards

I would be stopped out at 1 PIP profit, then immediately I would be closing my set (chfjpy, usdchf, gbpusd) when they are positive or close to positive. I would wait and time my entry for the next day or the day after it.

If I see market sentiment geared to more selling (remember I get in on the trade just few minutes before market close to gain on swap or set limit orders when market is ranging) I would stay out of the market. You can see this by comparing the JPY against all other currencies. If you see that EVERYONE is buying JPY, then my suggestion is to wait and see.

And the answer to the last part of your question is yes, because of fundamentals and the basic fact of interest differences, it could hardly happen.

neo
  • #90
  • Apr 29, 2007 10:11pm Apr 29, 2007 10:11pm
Hi,

I am new to this forum, but I have been trying this strategy for the last three weeks on a demo account with Metatrader; I get the same swap rates for trading minis (10K) that I do for trading standard lots (100K), which works out to about $11 bucks per set. Does anyone know whether this is the case with a live account? It seems too good to be true.
  • #91
  • Apr 29, 2007 11:25pm Apr 29, 2007 11:25pm
i demo this method and my account was up about 20% in 2 days.now i already open my 3rd mini set.but my first 2 set GBP/JPY was opened at almost same price.and both set's SL=+1pip now and both set and about 130pips above my SL.so if the price hit my first 2 set's SL,should i close all my set?

what happen if interest rate change between these pairs?
  • #92
  • Apr 30, 2007 12:14am Apr 30, 2007 12:14am
Well i think this works good lol

The fprices beside the pair is price as of closes on April 18, 07 and the second price is current price i noted...(1.13 am East time) and u would have made good profits + swap... on 1 main lot traded

chf/jpy - 98.45 SOLD --99.17 = -720
usd/chf - 1.2046 SOLD -- 1.2048 = -20
gbp/usd - 2.0064 SOLD -- 1.9945 = 1190
gbp/jpy- 237.95 BUY -- 238.41 = 460

im currently just entered the market and trying this .. i will post results after...
  • #93
  • Apr 30, 2007 9:03am Apr 30, 2007 9:03am
Ok - I opened a position on April 19 and my results (granted I haven't followed the system perfectly - not adding the .1 lots, or taking profit) are pretty good. Hopefully folks can use this as a reference.

1 lot
Swap: $90.13
GBPJPY: $1162 +139
CHFJPY: - $702 - 84
USDCHF: - $141 - 17
GBPUSD: $630 + 63
Positions: $949
Total: + $1039 since 4/19 at Noon - 4/30 10AM EST
  • #94
  • Apr 30, 2007 10:44am Apr 30, 2007 10:44am
Your group here are you buying or selling ?

Quoting Minnelli
Ok - I opened a position on April 19 and my results (granted I haven't followed the system perfectly - not adding the .1 lots, or taking profit) are pretty good. Hopefully folks can use this as a reference.

1 lot
Swap: $90.13
GBPJPY: $1162 +139
CHFJPY: - $702 - 84
USDCHF: - $141 - 17
GBPUSD: $630 + 63
Positions: $949
Total: + $1039 since 4/19 at Noon - 4/30 10AM EST
  • #95
  • May 1, 2007 3:33am May 1, 2007 3:33am
Neo

Can you tell me what your risk tolerance has been over the last few months. I realise that you enter the market in 10 steps but what is you full margin used on the 10th day. 70%??

Also i had a look at Alpari's swap rates and they pay both ways on some currencies anyone got any info on that. If its true then you could put a buy and sell on the same currency and earn Swap with no risk. ????
  • #96
  • May 1, 2007 8:44am May 1, 2007 8:44am
what are the ways to enter these correlation trades
when the correlated pair are out of correlation than enter ?
are you just entering at the market open ?
  • #97
  • May 1, 2007 3:21pm May 1, 2007 3:21pm
Quoting mgtoeasy
Neo

Can you tell me what your risk tolerance has been over the last few months. I realise that you enter the market in 10 steps but what is you full margin used on the 10th day. 70%??

Also i had a look at Alpari's swap rates and they pay both ways on some currencies anyone got any info on that. If its true then you could put a buy and sell on the same currency and earn Swap with no risk. ????

Risk tolerance is about 15% of the account. In which case I would be looking for area to exit trade. It hasn't happen to me yet, because I do time my entry correctly.

My Margin for my initial entry is 50% after 10th day. So I would see 200% margin. (i.e. $25,000 in margin and $25,000 in reserve).
Then I would start to look for ways to add more position, everytime I am able to lock in my GBP/JPY trade with 1 PIP I would then be willing to enter more position.

neo
  • #98
  • May 1, 2007 3:23pm May 1, 2007 3:23pm
Quoting toddanderson
what are the ways to enter these correlation trades
when the correlated pair are out of correlation than enter ?
are you just entering at the market open ?

Enter when GBP/JPY dips. You can look at past resistance/support level and decide the best time for entry. Use 4Hr or even Daily charts to make your decision.

Neo
  • #99
  • May 1, 2007 11:09pm May 1, 2007 11:09pm
Guys,
With all due respect... what your doing doesn´t 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. Doesn´t matter what interest your getting per day.... and it doesn´t 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. THAT´s IT! You will create the same results, same drawdown, same expectancy. Your fooling yourself if you think having four pairs that aren´t balanced out will essentially hedge a position for you with positive interest.

Good Trades,
Yukoner
  • #100
  • May 1, 2007 11:11pm May 1, 2007 11:11pm
Quoting douce
Hi,

I am new to this forum, but I have been trying this strategy for the last three weeks on a demo account with Metatrader; I get the same swap rates for trading minis (10K) that I do for trading standard lots (100K), which works out to about $11 bucks per set. Does anyone know whether this is the case with a live account? It seems too good to be true.
.

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.
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