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Thread: Hedging strategy

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    Default Hedging strategy

    Hello. Did anyone try the hedging strategy? You should trade with for example USD/JPY and GBP/JPY where jpy is hedged. Go one trade LONG and another SHORT. One will be losing but the other one winning and because USD and GBP differently influence JPY, you can always make profit! What do you think of this?

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    Quote Originally Posted by borovic View Post
    Hello. Did anyone try the hedging strategy? You should trade with for example USD/JPY and GBP/JPY where jpy is hedged. Go one trade LONG and another SHORT. One will be losing but the other one winning and because USD and GBP differently influence JPY, you can always make profit! What do you think of this?
    I'll demo it for like a week and get back to. Why not? But what abount GBP influence. The GBP/JPY range is almost 300 pips/day but USD/JPY is like 60 or 70. You could face a huge drawdown.

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    It was only an example, you could maybe try GBP/EUR and EUR/USD? We`ll be expecting the results of your tests.

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    Quote Originally Posted by borovic View Post
    It was only an example, you could maybe try GBP/EUR and EUR/USD? We`ll be expecting the results of your tests.
    This could be a very profitable and safe strategy from all of the market movement and allows you to make daily swaps without having 2 broker accounts of risk a major drawdown. Anyone can start with this and gradually increase their position.

    Basically you will set the following order and they have to be in the same ratio and placed within seconds of each other for maximize stability. It should be usually done at 4:55 PM EST just before the swap being calculated:

    1 LOT BUY (+)GBP/JPY(-)
    1 LOT SELL (-)CHF/JPY(+)
    1 LOT SELL (-)GBP/USD(+)
    1 LOT SELL (-)USD/CHF(+)

    Now this is sort like a combination hedge but using 4 pairs. If you separate each pair, you will see that you are SELLING and BUYNG All 4 currencies at the same time, see the (+) and (-) that I placed Next each currency? You will see that I am buying GBP, Selling GBP, Buying CHF, Selling CHF, etc... This will net you about $11.00 USD in swap per day if using ****. The margin requirement for a 200:1 account is about $2500, so u need to have a $3500 account to do this. You must get a 200:1 or 400:1 leverage, so make sure you ask for it.

    Now $11.00 per day is about $330 per month, which is like 10% return on your $3500.00. Combining with Compounding you positions, you are looking at 200% return in a year. (every $350 gain, start with a new set of hedge using 0.1 Lot sizes)

    Once you reach about 20 standard lots, you are making $220 per day, and that should be a pretty comfortable income, not even counting the positive gains on the GBP/JPY pair.

    You might ask about the drawdown on this, I have seem a maximum of 15% drawdown. The market might be a little more unforgiving at first, but once you start to spread out your position, like entering a new mini-lot set everyday for 10 days straight, you are actually minimizing your exposure. Always use discretion to do this and once you are in profit with your GBP/JPY pair for about 100 PIPS, put your stop/loss at 1 PIP profit, only use stop with GBP/JPY pair, and if you are not at your computer all the time, setup the EMAIL function in MT4 and send yourself a text message telling you that you got stopped out on the GBP/JPY. If the market moves against you with the GBP/JPY, you will get stopped out at 1 PIP, but your CHF/JPY, USD/CHF, and GBP/USD short orders will be profitable.

    Another thing to watch out for when doing this trade is to do it on Wednesday, which is triple interest day. So it will pretty much cover your spread and give you a positive swap the very first day. And it might take up to 4 days to see your account being positive, but again, your initial entry is the most important entry.
    Of course FXEGYPT doesn't support swap but this is just for info.

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    Nice strategy, maybe someone could even programme and EA to do all this? Thanks for the info.

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    Quote Originally Posted by borovic View Post
    Nice strategy, maybe someone could even programme and EA to do all this? Thanks for the info.
    No problem. You're most welcome.

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    dear aminhakim,
    is this hedging method similar to the forex arbitrage that i've heard about?
    thanks.
    Quote Originally Posted by aminhakim
    1 LOT BUY (+)GBP/JPY(-)
    1 LOT SELL (-)CHF/JPY(+)
    1 LOT SELL (-)GBP/USD(+)
    1 LOT SELL (-)USD/CHF(+)
    does this mean we don't have any positions? and we are gaining from the net interest? i'm sorry for the questions, i'm just trying to get a clearer picture on this one..
    Thanks.

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    Quote Originally Posted by yohanip View Post
    dear aminhakim,
    is this hedging method similar to the forex arbitrage that i've heard about?
    thanks.

    does this mean we don't have any positions? and we are gaining from the net interest? i'm sorry for the questions, i'm just trying to get a clearer picture on this one..
    Thanks.
    Yes that's exactly what it means.

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    Which broker is the safest one to d hedging ?

    Nic

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    i think hedging is not recommended...
    just try to discipline yourself...
    try to analyze the charts... and learn how to use the indicators...
    and don't trade while data is out

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    what if all J's pairs are moving the same direction? thx.

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    Default hedging strategies

    if you want to read about hedging strategies i propose to check the site of kreslim where you will found a strategy called the perfect hedge and the discuss about that. only google fpi + forex and you will find it. it very useful information and discuss
    Salut

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    Quote Originally Posted by borovic View Post
    Hello. Did anyone try the hedging strategy? You should trade with for example USD/JPY and GBP/JPY where jpy is hedged. Go one trade LONG and another SHORT. One will be losing but the other one winning and because USD and GBP differently influence JPY, you can always make profit! What do you think of this?
    hello
    I usd hedging strategy but for ucdchf and gbpusd , Gbpjpy is a risky pair for trading and hedging, do you have any result from it
    however these are not professional hedging trading
    if anybody use professional heding please post and explain

    thanks

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    I know a hedging strategy that can make you 50-60% with zero risk, but if brokers find out what you are doing they close your account.

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    Quote Originally Posted by activetc View Post
    I know a hedging strategy that can make you 50-60% with zero risk, but if brokers find out what you are doing they close your account.
    some broker didnt close your account I use it when

    I need with some broker

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