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I wanna mention a trading strategy that combine considering swap fixed income and currency pair Hedge.
As we know, AUD has higher interest rate compared to USD, JPY, or EUR. and CAD has a middle interest rate. If we hold a position for a long time, swap as kinda fixed income is very considerable.
Therefore, I wanna test a strategy that include:
we can trade AUD/CAD as center, in which means sell CAD, meanwhile buy CAD as Hedge. It seems to be buy and sell CAD in the same time, but when think about swap income, this strategy is kinda powerful.
according to recent swap point that is showed in table 1, we can calculate the yearly income without considering the FX rate changing:
People might be strange that what do u mean by "Without considering the FX rate changing", aren't we trading the FX rate changing, which means high risk and high return? well, it depends. 2.0lots equal 200,000USD. if your broker provide you 100times leverage, you can only pay 2,000USD as margin.
From this table, we can see, 20,000~8000USD is very profitable in this strategy. the profit/cost ratio will be around 10%~30%. The characteristics is that,(1) you have already hedged the CAD, so the rate changing is not that big (2)you can change the leverage freely (3) while hedge the risk, u can have high return by swap
My conclusion will be that, FX is high risk, but whether we can find a mildest way to become better?