Three Pairs Hedging | Page 11 | Forex Factory

Options

Go to
Permalinks
Print Thread

Related Instruments

EUR/USD, CHF/JPY, EUR/CHF, EUR/GBP, EUR/JPY, GBP/CHF, GBP/JPY, GBP/USD, USD/CHF, USD/JPY

Similar Threads

Hedging all possible currency pairs at once! 13 replies

Hedging synthetic pairs 25 replies

Hedging correlated pairs using pip difference 16 replies

Need help hedging Exotic Pairs 2 replies

Trending Pairs / Ranging Pairs 0 replies

Attachments: Three Pairs Hedging
Exit Attachments

Three Pairs Hedging

  • #201
  • Mar 1, 2011 12:23pm Mar 1, 2011 12:23pm
Quoting bordercat
Hey Lonestar

I have to agree with you as I am "stuck" in a basket e/u/j for over a week as the market moved. My dd has remain about the same about 60pips. What makes this confusing is I cant say what direction a particular pair(s) has to go for me to TP out.
If you say we are just playing a pair with only with high spread then what pair is that? Say on G/Chf/U or E/U/J
Hi bordercat,
here is a nice tick value indicator, just attach it to the charts of the pairs you want to use for trading and compare the tick value. On my broker the tick value for EURUSD = 1.0000 for USDJPY = 1.2218 and also for EURUSD = 1.2218. You see, the value of the EURUSD is about 22% lower than the other two pairs. So I would suggest to use other pairs with a lower tick value.

Attached File(s)
File Type: mq4 Tick-Value.mq4   1 KB | 1,334 downloads
  • #202
  • Edited 12:36pm Mar 1, 2011 12:25pm | Edited 12:36pm
Quoting Lonestar
You mention near zero exposure can turn a profit. Of course it can cause there's exposure. But there is no reason to use three pairs to get exposure in one pair all the while paying extra spreads costs. The issue is that people do not understand where the profit or loss is coming from. And I have no idea why you are mentioning triangular arbitrage when it has nothing to do with what this "strategy" is doing. What people are doing here with three pairs is not arb. They are just creating a single pair trade synthetically, using three pairs, that's...
I only mentioned NEAR zero exposure because of the lot size constraints with most retail br0kers. Ofcourse any exposure will have you playing with a direction. But what I meant was that your assumption of "the closer you get to 0 exposure the less likely you can profit because of spread" is incorrect.

Fair is fair lets keep the discussion about this system which is not arb'ing.

Lets put it this way... those who are trying to match up lot sizes perfectly are trying to arb and this potential is negated by the spread and execution with retail brokers.

Those are are trying to use static lot sizes should read LoneStar's very nice explanation about finding what your exposure to know how to profit from your basket that may be "stuck".

You might assume its not possible but it really is if you have the right setup. (TheRumpledOne has some interesting thread called FPI). It really isn't about spread at all but its all about execution but may or may not be of interest to you because you really do need to invest alot of money to have this set up. Remember nothing is impossible.

Jag
  • #203
  • Mar 1, 2011 5:57pm Mar 1, 2011 5:57pm
Quoting cash4u2
Hi bordercat,
here is a nice tick value indicator, just attach it to the charts of the pairs you want to use for trading and compare the tick value. On my broker the tick value for EURUSD = 1.0000 for USDJPY = 1.2218 and also for EURUSD = 1.2218. You see, the value of the EURUSD is about 22% lower than the other two pairs. So I would suggest to use other pairs with a lower tick value.

Attachment
So it is as simple as lot size (eu)0.8 and (uj)1.0 and (ej)1.0? BTW I assume your 3rd pair in your example is ej and not eu?

Thanks
b-cat
  • #204
  • Mar 1, 2011 6:51pm Mar 1, 2011 6:51pm
Hi I remember the original FPI thread, 3 years ago. its a huge thread, but the outcome was the same.. not profitable.

You dont know how to put the TP and SL, its just the same with all hedging systems, sometimes price will NEVER come back.

so where is the edge here? its 3 years old.. have You had great success with it?




Quoting sidhujag
I only mentioned NEAR zero exposure because of the lot size constraints with most retail br0kers. Ofcourse any exposure will have you playing with a direction. But what I meant was that your assumption of "the closer you get to...
Follow the Trend, thats all
  • #205
  • Mar 2, 2011 2:25am Mar 2, 2011 2:25am
Quoting bordercat
So it is as simple as lot size (eu)0.8 and (uj)1.0 and (ej)1.0? BTW I assume your 3rd pair in your example is ej and not eu?

Thanks
b-cat
yes, b-cat, that's right EURJPY not EURUSD ;-)
  • #206
  • Mar 2, 2011 11:16am Mar 2, 2011 11:16am
Quoting Kent
Back in the day a friend of mine and me became obsessed with the idea of triangular arbitrage. This was all done through one broking house and we used the fractional product inefficiency.

The FPI is an indicator of whether a currency is over or undervalued in an impeccable hedge. For example:
Long: EUR/USD
Long: AUD/USD
Short: EUR/AUD

The simple idea of the system was to buy long when the currency was undervalued in contrast to the FPI and sell when the pair was over valued. We knew that the FPI would always never deviate too far from 1, because...

Pauley is right this not a new idea....
  • #207
  • Mar 2, 2011 11:42am Mar 2, 2011 11:42am
Quoting bordercat
Pauley is right this not a new idea....
Long: EUR/USD
Long: AUD/USD
Short: EUR/AUD

It is obvious, that the above one will never work!

It has to be:

Long: EUR/USD
Short: AUD/USD
Short: EUR/AUD

or

Short: EUR/USD
Long: AUD/USD
Long: EUR/AUD
  • #208
  • Mar 2, 2011 12:02pm Mar 2, 2011 12:02pm
Quoting cash4u2
Long: EUR/USD
Long: AUD/USD
Short: EUR/AUD

It is obvious, that the above one will never work!

It has to be:

Long: EUR/USD
Short: AUD/USD
Short: EUR/AUD

or

Short: EUR/USD
Long: AUD/USD
Long: EUR/AUD

good catch....I never noticed that they were short usd twice. maybe as kent said I go down to the ferrari dealership today and put my deposit down..
So far after the tick-value ind on my charts. my lot size is much closer and I have renewed hope. Also if you get your BBS or SSB correct you can also get to you goal with the swaps if you get "stuck" also
  • #209
  • Edited 2:40pm Mar 2, 2011 2:27pm | Edited 2:40pm
Quoting pauly
Hi I remember the original FPI thread, 3 years ago. its a huge thread, but the outcome was the same.. not profitable.

You dont know how to put the TP and SL, its just the same with all hedging systems, sometimes price will NEVER come back.

so where is the edge here? its 3 years old.. have You had great success with it?
Hey man,

What do you mean price will NEVER come back? There is NO SL and NO TP (you take profit when inefficiency comes in your favor) Do you understand the system? Once you're hedge is set price will ALWAYS be coming back and you are at 0 risk your margin used should be 0... you just have to make sure you choose times/rings that have overall positive expectancy by looking at spread/rollover/recent high to low pip span of fractional price inefficiency.

I did not want to even bother with bucket shop Mt4 shops.. there is an EA and indicator available. I contacted a few banks and few brokers allowing me to trade through currenex, lava etc but the initial investment is too much. I can learn the API and program the strategy myself but the cost to get it up and running is too high even as even with demoing(playing with real money just less of it) you need a high upfront investment in margin.

Unless I have investors backing me or somehow or get myself to trade up to $500k somehow its not happening. Even then the strategy isn't proven until I actually do it and is testable on a stable platform. I don't consider Metatrader a stable platform.

Therein lies the edge... if execution is great and you find a ring that has a good spread offset by a positive swap etc etc then you have a no risk situation in terms of pips... your risk comes from the quality of execution and choosing when to trade (don't trade 100 lots between end of NY and start of NZ/AUS sessions for example, or when your ring has moved 90% of daily range already).

Any scalping system has to overcome two obstacles:
-coming up with an edge for a strategy (FPI already has this covered it is no risk)
-execution (difference between demo vs live)

The second one is probably the bigger hurdle.

Jag
  • #210
  • Edited 3:09pm Mar 2, 2011 2:56pm | Edited 3:09pm
Hi,

i cant find the thread after a quick search, there are too many FPI threads nowadays.

I did understand this perfectly, i was reading a lot of stuff about it.

the indicator goes from +1 to -1 or something. very easy, looks like a goldmine.

But in the end the conclusion in this thread was, that it doesnt work.. I cant remember exactly all the cons.. I just marked it as a " forget about it" system.

Maybe you find a way to handle it.

Good Luck





Quoting sidhujag
Hey man,

What do you mean price will NEVER come back? There is NO SL and NO TP (you take profit when inefficiency comes in your favor) Do you understand the system? Once you're hedge is set price will ALWAYS be coming back and you are at...
Follow the Trend, thats all
  • #211
  • Mar 2, 2011 5:23pm Mar 2, 2011 5:23pm
hi cash,
there is something called SPREAD, usually 2-3 spread for each pair.
how can you make sure that when you closing the trade, the balance of the 3 pairs are positive?
  • #212
  • Mar 2, 2011 5:45pm Mar 2, 2011 5:45pm
what if you don't even see a positive balance, how u gonna close them?

has been 2 days already. since SPREAD exists.
Attached Image (click to enlarge)
Click to Enlarge Name: 3hedge.JPG Size: 36 KB
  • #213
  • Mar 2, 2011 6:37pm Mar 2, 2011 6:37pm
Quoting pauly
Hi,

i cant find the thread after a quick search, there are too many FPI threads nowadays.

I did understand this perfectly, i was reading a lot of stuff about it.

the indicator goes from +1 to -1 or something. very easy, looks like a goldmine.

But in the end the conclusion in this thread was, that it doesnt work.. I cant remember exactly all the cons.. I just marked it as a " forget about it" system.

Maybe you find a way to handle it.

Good Luck
hehe yea that's what I thought when the bank said you can't demo to see if your strategy works and that we can't gaurantee fills of multiple instruments and the fact that you need atleast $500k.

But the cons are ONLY to do with execution nothing else.. if you get your triangle placed at the right spot and you don't have slippage on your close you will profit... alot of ifs revolving around execution nothing else.

Jag
  • #214
  • Mar 3, 2011 12:36am Mar 3, 2011 12:36am
Quoting imnicetoyou
hi cash,
how can you make sure that when you closing the trade, the balance of the 3 pairs are positive?
hi imnicetoyou, is this a really question? If yes, I do close the trades when the sum of these three pairs shows a profit. Not every single pair has to be in profit!
Any way, I do not understand, why some people select pairs with high spreads. On my broker EURCAD has 9 pip spread.
I use EURUSD (1 pip) USDCHF(2 pips) and EURCHF (2 pips) with my broker, this is a spread of 5 pips, if I would use your selection, all in all, I would have 12 pips spread.
  • #215
  • Mar 3, 2011 10:42am Mar 3, 2011 10:42am
Is there anybody who is able to code a complete new EA for the three pairs hedging?
This EA makes it possible to trade BBS and SSB on the same pairs.

That is what the EA should be able to do:
When the EA starts the very first time, it is allowed to open both directions, BBS and SSB, at once.
As soon as one option closes with a preset TP, it should not open the same trade again, until the still open trades have reached 50% of the TP we use.

Just to explain it better:
Let's say, we have a TP of 20 pips. In this case BBS has already closed with TP 20 and SSB is still open. Now the EA should wait until SSB has reached at least 50% of the TP before it opens BBS again. And vice versa. But you have to make sure, that the spread sum of the three pairs, must not be higher than the 50% of the TP. Otherwise you have to use a higher TP.

This makes it possible to use both BBS and SSB at the same time, without blowing the account.

The EA should also be able to use auto lotsize, where it is possible to select percentage of balance, equity or free margin.

This will be a great EA, as it will work like a bell, swinging from left to the right and always stays in profit, even when BBS and SSB will be opened at the same time.

An internal magic number would be great.
  • #216
  • Mar 3, 2011 11:29am Mar 3, 2011 11:29am
hello everybody
i banked another $148 with two trade yesterday and i have open position right now,see how it goes,great great strategy!!!!!.
regards
  • #217
  • Mar 3, 2011 1:11pm Mar 3, 2011 1:11pm
Quoting cash4u2
hi imnicetoyou, is this a really question? If yes, I do close the trades when the sum of these three pairs shows a profit. Not every single pair has to be in profit!
Any way, I do not understand, why some people select pairs with high spreads. On my broker EURCAD has 9 pip spread.
I use EURUSD (1 pip) USDCHF(2 pips) and EURCHF (2 pips) with my broker, this is a spread of 5 pips, if I would use your selection, all in all, I would have 12 pips spread.
I was asking about the total balance of the 3 pairs. spread for EURUSD (3 pip) USDCHF(3 pips) and EURCHF (5 pips) with FOREX.com.
I still don't see a positive balance. how long does this usually take? and do you monitor them for a certain of time?
Attached Image (click to enlarge)
Click to Enlarge Name: 3hedge2.JPG Size: 34 KB
  • #218
  • Mar 3, 2011 1:24pm Mar 3, 2011 1:24pm
Quoting imnicetoyou
I was asking about the total balance of the 3 pairs. spread for EURUSD (3 pip) USDCHF(3 pips) and EURCHF (5 pips) with FOREX.com.
I still don't see a positive balance. how long does this usually take? and do you monitor them for a certain of time?
Sometimes trades are closing during an hour, sometimes it takes a couple of days. My longest so far was three days, before it closed with profit.
I always leave them open until they hit the profit target, I use no SL.
  • #219
  • Mar 3, 2011 1:43pm Mar 3, 2011 1:43pm
the rules are very simple just BBS OR SSB the pairs that listed on first post bay cash,please if this strategy is not suite for you just leave it and try the best thing you prefer,but still i have to tell everybody that this system is profitable
at short & long term.thanks cash.
  • #220
  • Mar 3, 2011 1:46pm Mar 3, 2011 1:46pm
Quoting persia
the rules are very simple just BBS OR SSB the pairs that listed on first post bay cash,please if this strategy is not suite for you just leave it and try the best thing you prefer,but still i have to tell everybody that this system is profitable
at short & long term.thanks cash.
You're welcome, persia ;-)
1 trader viewing now