Hedging strategies that make $10,000 a month

[ci_benny]

No 10% a month is good. I'm just saying that at that kind of interest, you'd beat every mutual fund manager that I know of.

[Vip-Fx]

Hello Members,

I found one post (from yahoo groups) very interesting:



I have not found a pure 3rd element.

I have FXDD, IBG & IBFX accounts, about to fund Alaron as well - total daily interest is at $277.83. My intent is to go up to $300/day for July. And $400/day for August. I have used only about 30% of usable margin.

I have a mix of 100% Hedges & GBP/CHF/JPY hedges.

I am starting to get the feel of how to "drive" this thing. It's quite a balancing act! This morning, my interest free is down to $2K. So I had to close profitable pairs, and re-open at the bottom. My interest free equity is currently at $4K. (It has swung from $12K to $2K, where I want to keep it is $4K-$6K.) I can fund the interest free account with more money, but what I want is the most bang for the buck.

One thing I found is that you can not leave this thing alone - most of the time it runs on auto-pilot with some monitoring. Also, it is weird that you see P/L moving from one account to another. It actually beats wiring money between accounts! Rebalancing takes some planning - sometimes you want to "move" P/L from one account to another to keep the balance.

I also make sure that I keep track of paired positions & GMT hedge positions - they become confusing after a while, especially now that I have about 22 pairs open. Plus I need to track separately the directional trades that I also do on both the interest-free & interest accounts. And I still trade my FXCM account as well.

Like what Harm says, there is no free lunch! It is a lot work & takes time to master.

BTW, 100% hedges takes at least 7 days to breakeven (because of the GBPJPY spread on both sides) - so budget that into your trades. If you get taken out early - you lose money.

One more thing, try to spread out your 100% hedges - some up top +P/L), some on the bottom (-P/L) - that way +/- positions tend to balance out, to avoid depleting your equity, plus allowing you to "move" money by closing profitable positions.

The key is 7-days, once you are passed it, I believe things should be more manageable - but tweaking & rebalancing can not be avoided - if you want efficient use of capital.

If you do not want to go into all this rebalancing trouble, just overfund your accounts.

That's my report for this week.

-Pedz

[Vip-Fx]

Hi everyone,

This ratio shows when the pairs are more or less relative correlated. A good time to enter in my opinion is when the pairs are relatively closely correlated so there is room for them to drift apart, that's when we earn money (except the swap of course). One pair is moving up or down more than the other pair. This is shown with circles at bottoms of the ratio indicator. The tricky part is how to spot these relative low points in the ratio. I have tried with the Bollinger band and two ema crossing and the best result I get with the ema. The most critical point in the GMT is when you just entered your position because then you have not got any swap that can "protect" your drawdown. But after 22 trading days the swap will be around ~16 x 30 = $480 and that will probably give you some protection for the next downswing. So if you enter when the 45ema of the ratio crosses below the 15ema then you will have a statistically good chance of earn money after one month. I have also tried to vary different hedge ratio this dynamic ratio works best. The dynamic ratio is the ratio of 10 period ATR. The ratio range from 1:1.5 to 1:2.6. I should also say that even if the 5 year test period was mostly uptrend this is designed to work the same in downtrend. I have also tried to find a god exit point and

this wzuld be when 5ema of the ratio crosses below the 45ema. All the


profit charts only show enter end exit profits. Not swap profit.

Dynamic ATR
This ratio is 10 period ATR of gbpjpy divided with 10 period ATR of chfjpy. This range from 1.5-2.6. Yes you are right. This does not say anything about the direction of the pairs. But if you start with a good ratio and enter when the gbpchf is in a swing low it doesn't matter which direction the market goes. I don't want to have to guess the direction. I just want to enter and ride.

Setup
Just add a green 45 period ema and a red 15 period ema to GBPCHF. The GBPCHF is the same as the GBP/JPY CHF/JPY ratio. When the green cross above the red the time is right to enter the hedge. Beware this method is not failsafe!

The test is on daily charts, I don't know how this works intraday.

You should not use these settings without doing some of your own testing first. These settings might stop working tomorrow. But I hope not

[banzai]

Quote:

Buy 100k GBP/JPY and sell 180K CHF/JPY at the same time.

Shouldn't we buy CHF/JPY instead? All I see is negative $$$ in the swap column.

[Vip-Fx]

Quote:

Originally Posted by banzai

Shouldn't we buy CHF/JPY instead? All I see is negative $$$ in the swap column.

Hello banzai,

Yes, you are right the swap payment for chfjpy is negative when we sell but when we buy gbpjpy we collect more in the swap payment. So our sawp payment for long gbpjpy is greater than the swap payment we pay for short chfjpy. This means that with this hedging strategy, we are collecting overall postive swap payments for the hedge.

[Vip-Fx]

Hi All,

Some results for this system:

[homigold]

Dear Administator,

i dont undrestand why we should buy 100k gbpjpy & sell 180k chfjpy?
If we buy 100k gbpjpy & sell 100k chfjpy ,our profit very incrised.
am i right?
thanks

[Vip-Fx]

Quote:

Originally Posted by homigold

Dear Administator,

i dont undrestand why we should buy 100k gbpjpy & sell 180k chfjpy?
If we buy 100k gbpjpy & sell 100k chfjpy ,our profit very incrised.
am i right?
thanks

Hello,

In this strategy most profit not from Buy and Sell Profit, it come form SWAP of GBPJPY, since FXDD pay 38-41$ per day for 100K we buy.
But how you can see from statement you can make money and on profit of Buy and Sell.

[kokas]

Ok this is just an idea but, what about to trade two pairs that correlate and have positive swaps...

like:

Long GBP/JPY and
Long GBP/CHF

I believe I read somewhere that this two have positive correlation and positive swap.

Forgive me if I'm wrong...

[jucaorma]

could you post last statements please?