Cash & Carry (The "Perfect" Hedge) Open Thread Discussions

I don't understand. As an example:

Account 1 is in my name: Interest Free (I fill out the interest-free form)
Account 2 is in my whoever's name: Interest Paying. (Doesn't fill out the interest-free form)

My name is not on both of them. They are 2 totally separate accounts. One pays interest and the other doesn't.

This would obviously require some trust/contract between the 2 parties, but as far as FXCM is concerned, there is no relation between the 2 of them.

i've been thinking of making trades in either account when they are running close to margin call....

let's see how that's going to work out for me ...

ken

keris,


To get the interest at FXCM...they have a rollover scheme and they do not actually PAY it to the balance like Oanda does, instead they pay it to your price quote at 17:00 est....you need to liquidate to get it...this makes the hedge hard to calculate..

I just reread your post and maybe I'm misunderstanding. If I have an Interest Paying account at FXCM are you saying that I won't earn the positive interest when I'm long aud/jpy?

Ok, I just read your reply too. I get it now. Thanks.

keris,


you earn interest in the form of price improvement at FXCM...

khoong,


Excellent....we are all ears!

Do you trade Lots or Mini's?

Michael B.

Folks,

This has been a marvelous discussion tonight...

I hope my lectures introducing these discussions are not too long...I will try to shorten them into bites...not gigabites...

obviously your are reading them Great...Good trading to you.

It's funny how interesting it can become when there is money for you to make...

Michael B.

at the moment, i think its going to be micro lots to mini lot...
can't do that in fxcm unfortunately... which might not be so bad for now as it looks like yen is the flavour of the moment ... and I can use micro lots with Oanda.

im using only 10:1 leverage at the moment for the perfect hedge, and going to start trading as well on either side... high probability trades (jim's stuff) ...

is it better or worst to trade? I don't know.. I feel its better because while I'm doing nothing for the perfect hedge and having some margin at the side atm, I might as well practise trading on the other side as well.

didn't you mention scalping b4? Why not make trades anyway?

ken

khoong,


Yes my friend I am a trader at heart. The Cash & Carry family of systems are only for folks that work a full time job.

I seem to be the long term complement to this room.

James and Diallist have shorter term trading very well covered. I got to get into fiji's forum and get straight on his detailed ways to think. He is a genius.

I may at a later date start a new forum in here, but I have several baskets and methods to cover still in the Family of Cash & Carry.

I will continue to present unique and innovative material never seen before , whether it be Scalping, Short term, Longer term, Carry or Hedging strategies.

Don't you folks just love Forex?

Michael B.
P.S. as we speak I checked my long in the USD/SGD and USD/JPY...one of them may hit there target tonight...if not I collect interest and can grid them

Michael

Something else to consider as you are working on this trading method.

As the Oanda trades are at 100:1 (effectively, as regards margin calls) and the FXCM are at 200:1 it should mean that once interest accumulates in the Oanda account you can open another trade there with the corresponding trade at FXCM without having to transfer funds. In fact the interest will fund the same # of trades as you originally enter into with Oanda before the Margin call risk is equal on both platforms. Only then does it become necessary to start transferring. I believe that you may only transfer money into and out of your account if the name is the same. I see no need to open a second account in your name as if you intend to keep spare cash as a buffer it might as well be in the original account then there is no need to suffer a delay in transferring funds. Once the margin call levels are balanced out, any transfer of interest from Oanda to FXCM can be done in the ratio of 2:1 (2 stays in Oanda and 1 transferrrd to FXCM) for the purposes of opening new trades.

As you said in one of your earlier posts, this is all about money management and maximising the return with the least cost.

Regarding splitting the trades into 3 or 4 with separation this would reduce the spread cost (only 1/3 or 1/4 of the trades would be re-entered as they neared a margin call and might go a long way to keeping FXCM and OANDA happy if they see more activity on the account and they are constantly making their spread as you enter more trades with the accumulated interest).

Keep up the good work and if anyone can think of any drawbacks to what I have written above I would welcome the input.

Dave W

Not being overly familiar with the different pairs, etc., I wanted to make sure I was counting the PIPs correctly on AUD/JPY.

I've got an Oanda snapshot of a 12-day period in December 2005 where it appears that a 620 PIP loss occured.

Please let me know if I'm looking at this right, and if so, should we not plan for such a range of movement since it appears quite possible.

Please let me know, and thanks for bearing with me on this!

http://www.picturevista.com/fxpics/A...12_05_drop.jpg

I want you folks to draw a green horizontal line on your chart representing your average price long... (The Oanda Side).

and....

Then a red horizontal line for your average price short (The FXCM Side).



I want you to concentrate on widening the gap between these lines in an inverse way.



Listen carefully, If you average DOWN on one side only, you will accomplish placing time on your side and creating a situation to where price will trade between it. And as time goes by you will increase the gap between the lines making volatility your friend. Read between the Lines!

Average down = get in every 1-2 hundred pips in a grid like fashion as the long goes against you on the Oanda side. Do nothing on the FXCM side as your position is increasing in Profit. Your pulling that green line below the "now stationary red line".

Then as always the price reverses and then it will be FXCM's turn to get an average down..(Average down on a short is actually entering at a higher price than the red line) Your pulling that red line above the "now stationary green line".

In time, you will get the green line below the red line and then widen them farther and farther apart, placing time and volatility on your side, while you are fortifing your pocket with interest earned. An inverse widening! Thus your ability to trade between them will collect that wonderful interest without the worry of UPL.

Start with one Mini on each side at the same time. Use 200 PIP grids to directionally average down with.

Think about it.


Michael B.

P.S. when you get Sooo...sooO wide that the interest is just rolling in without any risk at all ...guess what?....you can take half of the interest injected into your Oanda account out once a month, and find your way to the Bahama's!

For those of you that can see this...can you agree I just paid for a lifetime of PF for you with this?

Your Welcome.


Michael B.

P.S. Now if we could just find a Dealer/Marketmaker with one unit incremental trade tickets and an interest free program. Marketive is ideal for those of you not in the USA. But I got an email from them telling me that they will cap your account if they discover you doing this...so do not tell them!

Now for you Gridders out there....take it easy.....were taking this step by step...I got to get all of us on the same page and we will move forward....so take it easy...let's get this concept down, before the real exciting stuff...ok?


Michael B.

Michael.

Tell me if I understand this correctly regarding the concept of averaging down. If the Oanda long goes against you by 200 pips you enter another long, if the price still goes against you by another 200 you enter another long. At this stage you are 600 pips adrift and increasing. Admittedly the FXCM would be racking in the profit but the margin requirement and drawdown on the Oanda side is getting to be unmanageable unless you cash in on some of the FXCM profits which would defeat the "Perfect Hedge" concept. I admit to being a little bemused. It would help if you could illustrate this concept with some numbers.

I promise you I amthinking about it but unfortunately the bells haven't started to go off yet.

Dave W

" I want you folks to draw a green horizontal line on your chart representing your average price long... (The Oanda Side).

and....

Then a red horizontal line for your average price short (The FXCM Side).

Would be grateful if you could explain this Michael as I thought the price on Oanda and FXCM are the same so I suppose my question is "average of what ?"

Dave W

Start small and "phase in" so that you will have the margin available...

Since you have the difference between the lines that represent the spread in the beginning the green line will be above the red line and they will be so close to each other it will be hard to see the gap between them.

As you enter and turn the hedge into a lopsided teeeter-totter and remove it's perfectness, these lines will inverse (green pulled below red, or red pulled above green and spread apart as long as you are averaging down...

I just threw out 200 pip grid spacing for illustration...

The grid spacing can be much more sophisticated, "such as distance to margin call" divisors...

Geometric progreesions are at play here, and require a spreadsheet...

Michael B.

hi guys - now in w 4 minis. the spread in fxcm is 9, and oanda 4, so by the time you are in you start with -$50. Takes 12 days to earn the interest to make up for spread. you have immediate difference with red and green lines because of this. As prices move apart you will be up in one, down in the other - thats when to "add to" according to Michael's strategy. That will widen the distance between the 2 lines. this will result in less possibility of margin call. If you survive 12 days, you should be "in the money" ! I have found the pair to be settling down ! Whew !

john,

Thanks for sharing. Please, Please keep us posted....you information is vital to the success of the group.

Thanks again,

Michael B

While I was waiting for Funding (01/17/06) I started the opening up of a subaccount at www.myfxcm.com


It was real easy and I just followed the links....

I do not know if I will need it, but I opened it up just in case! I should be getting an email shortly from FXCM.

LATE EDIT: I must wait until 01/17/06.

Michael B.

P.S. For those of you that would like to call me on the telephone, please respect my time and only call in the evenings or weekends. Thank You.

P.P.S. and if you have ideas of your own, please use this Private Forum and post them. Don't be shy.