Hedging Strategy guarantee to make money weeks after weeks

[patrick_fx]

Originally Posted by branac

Thank you for the reply patrick, but what I don't understand is: those accounts are with two different brokers. So if you don't have money on the one which is going against you, you will get a marging call or something.
So, I guess you transfer earned money from one account to another?
branac

If you plan to use two brokers (traditional broker and interest free broker), then transferring money from a profitable broker to a near margin call broker is somewhat risky. If the money doesn't arrive in time, your account will be liquidated. I always leave some room; never used up all/most available margin. IMHO, how much margin should you leave is really depend on three things: your comfort level, the pairs you trade, and your trading style (long term traders would need more cushion than short term traders).

Someone already suggested to use brokers who allow hedging. If what I understood was corrrect, then that would be even better than using two different brokers. You could better utilize your available margin with one broker that allows hedging.


Hope it helps,
Patrick

[bhale]

fx solutions actually has a button labeled Hedge to put on a hedge, but it just enters and order to go the other way on the same pair, but I'm looking at the rates right now, and these are dollar figures. If I bought and sold GBPJPY, I'd be -1.40, USDJPY - .65. The only way I see any positive interest is to buy USDCHF and EURUSD at the same time. Since these are negative correlated pairs you get the same thing as buying/seliing EURUSD, and you get a positive 1.01 interest. This is using same broker.

[crucian]

There is also another way to do this using the same broker.

Find 2 currency pairs that go in opposite direction and on which you will be getting interest (you have to go long on both of them, but one will be making money, and one will be loosing money) That way, your balace won't change but you will get the interest money. I do this all the time and use a canadian broker that has 2 pip spread on all currency pairs: f o r e x s e r v i c e s c a n a d a . c o m

[Nonpiker]

Originally Posted by patrick_fx

If you plan to use two brokers (traditional broker and interest free broker), then transferring money from a profitable broker to a near margin call broker is somewhat risky. If the money doesn't arrive in time, your account will be liquidated. I always leave some room; never used up all/most available margin. IMHO, how much margin should you leave is really depend on three things: your comfort level, the pairs you trade, and your trading style (long term traders would need more cushion than short term traders).

Someone already suggested to use brokers who allow hedging. If what I understood was corrrect, then that would be even better than using two different brokers. You could better utilize your available margin with one broker that allows hedging.


Hope it helps,
Patrick

If you use one broker who is only going to pay you on one side and not make you pay on the other? No one is going to give away funds for free. While in theory it sounds like free money but it is not that easy. NZDJPY is a higher yielder if your broker does not have flat margin requirements. GPBJPY should earn you around 17 pips a week and NZDJPY should be like just shy of 10. So crossing the spread once takes away one weeks earnings and if you have to move funds due to a liquidation you will be severly cutting into your earnings. Also brokers are not naive to the strategy and may start charging you fees if you stay short high yielders over time.

[hitman2000]

Originally Posted by crucian

There is also another way to do this using the same broker.

Find 2 currency pairs that go in opposite direction and on which you will be getting interest (you have to go long on both of them, but one will be making money, and one will be loosing money) That way, your balace won't change but you will get the interest money. I do this all the time and use a canadian broker that has 2 pip spread on all currency pairs: f o r e x s e r v i c e s c a n a d a . c o m

Can you tell us wich currency pairs are you using ? I was trying this strategy on EURUSD with USDCHF but if I`ll go long on them I will earn interest on EUR & lose on CHF. I am using O&A. Thank you for your reply

[apfx]

I'm not sure if you pay or get the interest rate differential trading FX futures,
but if not...
using Spot FX (paying interest) and hedge with FX futures would be the game to play.

[mmont]

For the interest account:
Sell 4 lots of eurusd
buy 1 lot of gbpusd,
and collect around $32 per day.



for the interest free account:
sell 4 lots of eurusd
buy 1 lot of gbpusd,
buy 4 lots of eurusd,
sell 1 lot gbpusd
and we don't pay nor receive any interest.


on the interest free broker, once the sell 4 lots of eurusd and buy 1 lot of gbpusd is in profit
zone, we close out the trade. Do this daily on the interest free
broker account to make them happy. They make money off the spreads.
This is why we trade daily. We make more money and they make more
money. Everyone is happy :-)

I think your missing something here on a couple of points.

1. Most important: Your interest bearing acct. would be a naked position.
Since the object is to make money on the interest w/o risk this is not what you want.

2. Least important:The broker you want to keep happy is the one paying interest, not visa versa.

3. Important:Closing and opening one side of your hedge position will cost you the spread each time, al-be-it delayed, until final close out.

Am I missing something? It would'nt be the first time.

[crucian]

buy the following pairs: usd/jpy, usd/chf, gbp/jpy, chf/jpy at 16:55 (or around that time), wait until 17:01 and first get rid of positions that are loosing money, positions that are making money can be kept longer. You will get interested on buy for all 4 of them, and there will be days when you will loose on all 4 positions, but there is definitelly more days when you will make money on all 4 position. Since I have 2 pip spread for all pairs, it really doesn't affect me as if i had 8 pips on one, or 3 pips spread on the other. Two pips in my direction and I am already at break even