Hedge Calculator - page 4

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scottyb159
66
scottyb159  

interesting because I amn running demo on forexfor smarties and the lotss are alomst 50% diiferent:

2.08 lots for eur to 1.40 lots uhf. I am using 10k acct with 5% margin, however, I would not think that the ratio should be different? I would thin the nmargin difference would just equate to a difference in how much purchased. In other words, I would think the key is figuring out what percentage more of the one pair the systems loo to purchase adn apply to any margin level. This would take into account the difference in pip value. Anyone?

scottyb159
66
scottyb159  

Sam,

Can you put numbers in to show your example, Im doing something wrong. How would your formula work with usd gbp? I assume it would be even further off? Its odd that freedom rocks and smarties are so different.

scottyb159
66
scottyb159  

I just ran forexassistant with 5k account and 5%:

4.13 eur

4.42 chf

Fairly close to yours above

When I ran with 10k and 10%:

16.54 eur

17.67 chf

This equates to chf being 1.07 times the number of eur lots for both scenarios. Freedom rocks and true north are about 1.04. WHile smarties is 1.47. WHile you are at 1.1. Anyone have some input on this?

scottyb159
66
scottyb159  

OK, here some more thoughts..... If you look at the value of pips and you see that chf is 8.10 per full lot as compared to 10 for eur, you will see that there is a 1.235 ratio. If we multiply that ratio by the weekly corrency correlation we have a 1.06 factor, which is very close to true north and freedom rock the above. Not sure if this will work on other pairs or on this pair in a few weeks??? By the way, I am not saying this method is worth anything, I am just trying to understand how these numbers are being derived

toddanderson
495
toddanderson  

Can someone make an Excel

Can someone make an Excel sheet to do this and post it

If I know excel I would

atonix
27
atonix  

3 days is hardly enough time to prove anything. I can be up 17% at the roulette tables in 3 days most of the time. Let's actually look at what we want. We're not looking for the latest trading gimmick, we want a steady (and safe) carry trade that pays good swap. We want to be steady.

These guys claimed 17% gain. Look at their statement, they made $51.10 in swap, out of $26,466 in profits. That's one fifth of one percent of profits come from the true purpose. That is not a safe hedge at all.

Looks like they are overleveraged and can't even decide what they are trying to do. If they had a good hedge, it should be hedged, not this volitile. Since it's a simple ratio (or even a complicated one), there's no estimated value at all in their positions besides swap. They're taking a 99.8% swing here.

It could be that this is what you want. Go for it and gamble. If you want an actual investment, this isn't what you want.

sam1
154
sam1  
scottyb159:
OK, here some more thoughts..... If you look at the value of pips and you see that chf is 8.10 per full lot as compared to 10 for eur, you will see that there is a 1.235 ratio. If we multiply that ratio by the weekly corrency correlation we have a 1.06 factor, which is very close to true north and freedom rock the above. Not sure if this will work on other pairs or on this pair in a few weeks??? By the way, I am not saying this method is worth anything, I am just trying to understand how these numbers are being derived

scotty, can you share us the formula on how you arrive on that conclusion?

On your test with FFS anf forex-assistant, did you use the same ask price as mine?

atonix:
These guys claimed 17% gain. Look at their statement, they made $51.10 in swap, out of $26,466 in profits. That's one fifth of one percent of profits come from the true purpose. That is not a safe hedge at all.

Looks like they are overleveraged and can't even decide what they are trying to do. If they had a good hedge, it should be hedged, not this volitile. Since it's a simple ratio (or even a complicated one), there's no estimated value at all in their positions besides swap. They're taking a 99.8% swing here.

atonix, I think you missed the main points on how the profit from the strategy we're discussing. freedomrocks and true north have said that we can earn from swap and gain profits when there's discrepancy of price between pairs.

The $51.1 is from swap earned and the $26,466.41 is from price discrepancy. I don't see any problem with that.

The correlation ratio is like a rubber band. It expand and will contract aswell. That's how we able to profit during discrepancy.

In fairness for true north, as I'm the one who introduced it here. Both companys never claimed that it is a 100% perfect hedge, as it never will be, like what I've said on my earlier post. Even if their correlation ratio turns 1:1, it won't stay that long and will eventually breakout.

Just think about this. If it is 100% perfect hedge, then we will just be earning from swap. Do you think its worth it to trade such kind of strategy if we are only earning from the swap?

I did a computation from the statement they given. This what I found out. They are using 400:1 leverage with standard account. 400 leverage is overleveraged and very risky if you trade the directional approach, but we are hedged, the risk reduces. 400 leverage can earn you more swap.

After I pay for the hedge calculator. They advised it to me to use that leverage and use mini account if my starting capital is less than 15-10k.

My personal trade results last week shows almost the same returns as theirs.

So please don't be prejudgemental. Lets just try to come up with a better solution instead of degrading someone else strategy and uplifting own style of trading.

scottyb159
66
scottyb159  

Atonix,

I agree that we should look to make it as solid a hedge as possible to earn a swap with low risk, that is really what we are after, not really earning on the pips, that should be seen as a total bonus. Sam, yes I used your numbers. But again what I was after was trying to se if I could understand the ratio. Can you post the gbp jpy from true north and let me see if my method comes close. My real problem at this point is figuring out why forex for smarties is so different.

atonix
27
atonix  

First, please don't misinterpret my thoughts concerning this as attacking your methods or whatnot. I understand a good deal about this method, so was under the understanding that my feedback may help.

sam1:
atonix, I think you missed the main points on how the profit from the strategy we're discussing. freedomrocks and true north have said that we can earn from swap and gain profits when there's discrepancy of price between pairs. The $51.1 is from swap earned and the $26,466.41 is from price discrepancy. I don't see any problem with that.

Could you cite a system that takes advantage of a "discrepancy of price between pairs"? Unfortunately, these markets are fairly efficient (with only 1-3 pip swings in pair triads), so there is no discrepancy between prices. Show me mathematically a spread over 10-15 pips of market inefficiency (discrepancy) between pairs, please. Look at the 3 day chart that True North used for that statement for the pairs they traded. They hit a great, uncorrelated, trend. Not only is that not part of their system (it could easily go the other way), there's no way an Excel spreadsheet calculates any trend.

sam1:
The correlation ratio is like a rubber band. It expand and will contract aswell. That's how we able to profit during discrepancy.

It could be that you're meaning that the correlation always returns to a set level (rubber band-like) when you say "price discrepancy" (which is something completely different). If this is what you mean, correlations do not have elastic qualities. If an average 5-day correlation is 95%, and it shoots to 50% one day, you cannot state that the difference is shooting back. 95% is purely historical, but assuming it will continue, it will most likely continue right there.

sam1:
Just think about this. If it is 100% perfect hedge, then we will just be earning from swap. Do you think its worth it to trade such kind of strategy if we are only earning from the swap?

Yep. Very much so. $10,000 at 40% interest (which is easily doable under what I trade) over 20 years (a very short retirement goal) is $8.4 million. Most (if not all) of these systems claim to be long term. Fits about right.

Also, if you were able to take advantage of an elastic effect between pair correlation (which, in 4 pages of this thread, you have yet to mention until now), you'd be making a lot of trades. I *know* FreedomRocks makes very few from experience. Seems like you may be trying to do something very different?

sam1:
So please don't be prejudgemental. Lets just try to come up with a better solution instead of degrading someone else strategy and uplifting own style of trading.

My intent is not to be judgmental. If I see something that will not work long term or something that's misleading, I'll say something about it. I repeat, 3 days isn't enough to prove anything. Please feel free to show more (such as months, years, etc).

I am very open to being completely wrong about the whole thing, but have yet to see any bona fide facts pointing towards that. I don't think my system is particularly better, it's just free and only trades during positive price movements. Think FreedomRocks that's free with much less drawdowns. I've never used True North's (which you said is similar), obviously.

I think I'll pull away from this discussion and system on these forums. It makes no sense to argue over something like this, and I'm really not motivated to explain more about the mathematical basis between correlations, price, and low volatility pairs.

WNW
636
WNW  

atonix,

I've been reading this thread with great interest, as I'm doing a demo of FFS

and the support at their forum for understanding the basics of this strategy is minimal.

You are of course free to do as you please, but I (and I'm sure many others) value this discussion and are learning quite a bit from it.

I don't interpret the replies to your posts as antagonistic, but just earnest discussion.

Personally I would be quite disappointed if you left this thread, I would hope you would reconsider.

Thanks,

WNW

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