Currency Basket Hedge with Positive Rollover

HI all --

I was thinking last night that it is possible to take a hedge with positive rollover now... nothing new, but might be nice to place a basket and let it accumulate.

Buying the following basket (rollover based on IBFX swops)

AUDUSD (+1.0 pips rollover) [+10 USD]
AUDJPY (+0.9 pips) [+11.65 USD]
USDJPY (-0.3 pips) [-3.89 USD]

Net: +1.6 pips / day [+17.76 USD]

{pip values calculated using http://www.goforex.net/pip-calculator.htm }

I had a couple of questions I wonder if someone could help answer.

1. If you're entering 1 lot of AUDUSD and 1 lot AUDJPY what many lots of USDJPY do you need to balance the trade (I know it wont be precisely balanced)

2. Is there a way to figure out the how much margin you might reasonably need to cover the volatility on the hedge (as you will never be able to hedge it perfectly).

Thanks!

are u not essentially going long on the aud/jpy with this basket?

This is not a "hedge". Look at your exposure. You are just trading 2 lots of AUDJPY long.

ROFL

I think you should be concentrating more on the basics of trend following and risk management........................

Carry trade is dead...

I took the inspiration from here http://www.fxfisherman.com/forums/fo...ency-ring.html

Thanks for your feedback. I'll shelve this. Lol.

The hedge would be if you were long AUDUSD and USDJPY, but short AUDJPY. You'd be negating the positive rollover, but you'd have your hedge.