I am experimenting with 100% hedging system ran on two brokers accounts. One broker pays/charges swap and the other does not (or very small). It is not a new discovery and there are basically two problems:
- swap trades requires to have big account, at least $10K+
- find reliable broker with low or no swap
I can find good brokers that pay swap, like FXDD, InterbankFX or Alpari. I found one that does not charge big swaps or no swaps at all. It is ODL Securities. They look like a big reliable and reputable company, but I have no experiences with them so I just experiment with their demo account. It's been a couple of days since I have no swap on all my open positions. I wonder if that works like that when I have live account.
Now, the strategy: most of people take the pair with biggiest swap and open only that one. My strategy is to open 15 - 20 pairs, so they hedge themselves a bit (one goes up, one goes down...). If I would open only 15 lots GBPJPY and it fluctuates 500 pips in a few days that would blow up one of my accounts, but having opened 15 pairs can let me keep my swap trades opened for weeks, possibly, which is what we want in order to collect swap.
So, I open at e.g. Alpari 18 pairs (1 lot each), each pair in the direction of positive swap. At the same time I also open the same pairs and lots at ODL Securities, but in oposite direction than at Alpari. This way my trades are 100% hedged.
Alpari: EURUSD - sell, ODL: EURUSD - buy
Alpari: USDJPY - buy, ODL: USDJPY - sell
I then let it open for as long as possible. When one of my account's margin is close to 100% I should close all the trades. Then withdraw the money from winning account and fund losing account. The difference of winning vs. losing is my profit. The profit is positive swap + sometimes there are pricing discrepancies between broker quotes that work in my favour.
Now, how big profit I can get? Depends how much I can fund my account, but in percents it is around 8% per month (only swap), which is not that bad, especially when considering there is no risk, since it is 100% hedge. The only risk is the broker company where you have your money.
I opened 18 positons at Alpari and ODL securities on June 16 and today's balances are like this:
ODL Securities: -$8,128 (free margin 396% yet)
TOTAL: +$2984 (it is only 6 days opened, daily swap is +$140)
I have standard demo accounts there with $100K, but $50K would be enough for these numbers. So, if I had $5K live accounts, I would be nearly $300 in profit just in 6 days.
It is obvious the profit is not just swap (currently swap profit is $566), it looks like price feeds are different and they play in my favour.
I would like to ask the audience what you think about this system and if you have any experiences with ODL Securities. I would be able to have 2 $5K accounts, but I am careful where I put my money.
I also have a EA that opens and closes all the positions. Pairs can be edited in external text file so opening and closing is just a matter of one click, actually.
this is my first post in this forum
well this is a very good idea
i think 18 pairs is too much you need to find currency pair with a good correlation like eur/usd and usdchf and a low volatility forget pairs like gpb/jpy pay good but to volatile.
the main thing is look for the safety of your account i will risk like 10% max on 1:100 ratio when you are hedging you don't want to be greedy
i have a few question
where the money from the swap payment come from ( broker or some one else) ?
what is the giggest risk with this system ?
when the broker will put and end to this kind of trading ?
why do some broker decide not to pay the interest rate on the swap ?
i just start using 3 way hedge with eur/usd ; usd/chf; aud/jpy in demo
with 100k ratio 1:100 risk 10% as soon i will get 3% profit i will close all position.
you are missing a point a bit. This is not a correlation hedging system, this is 100% hedge. In this system your risk is 0 (zero) as long as you work with honest brokers.
Let me explain you again on two pairs only (no correlation required). What I do I open on Alpari
1 lot EURUSD short
1 lot GBPJPY long
On ODL Securities I open:
1 lot EURUSD long
1 lot GBPJPY short.
So, if EURUSD goes up then I lose on Alpari but I win on ODL. The result is $0 (if for simplicty I exclude spread). Whereever the price goes, my positions sum in $0 P/L.
Where is the profit? Alpari pays swap interest per position opened. ODL does not charge or charges very little.
Brokers do not mind keeping positions opened as long as your margin is more than 100%. That is the point when we close all postions. For every day that we have positions opened we earn interest. That is the whole point.
The swap is paid by brokers. Different brokers have different swap policy. Some of them have fixed daily rates (like Alpari or IBFX), some of them close all postions on day close and re-open on day open. They pay/charge only difference of the rollover swap rates (like ODL). I found out that swaps are smaller or none with the latter system.
I hope it makes more sense now.
I saw this system posted by bongrak over tha GMT forum. It is the PERFECT money making system because there is pretty much no way to lose, but in order to make anything substantial, you need a big account (two actually) which disqualifies me. Thanks for sharing your experiences with it.
Does ODL support the MT4 platform? If so, all positions could be closed out together using an EA, that way, no monitoring would even be needed.
yes, they do support MT4. I still think you need to give a signal to close all positions manually because you need to close them all on both accounts, not only at ODL. I use a script that opens or closes all my positions with a mouse click. No problem.
I do not find this as a problem, because this is not fast trading. Missing a day does not really matter as long as you are not close to margin call on one of your accounts.
Oh, there are ways around that. Full automation would be NO problem.
I believe you but with this type of trading, which takes weeks I think it is not a big issue.
But it would be certainly nice to have a fully automated system that watches both accounts and when one of them is close to margin call it gives a signal for closing all the positions at both borkers.
Then some paperwork is needed to withdraw money from one account and fund the other...
Just put a StopLoss and TakeProfit on both accounts to close all (if one by SL, the other one by TP); then transfer the money from the winning to the losing one and start an new cycle again.
ODL doescharge/pay swaps on the MT4 platform. Their demo accounts don't show this, but their live accounts do. You can call them and verify whether or not they charge/pay swap, and how much their swap is.
I never said they don't. I said they have different swap policy. They do not have fixed rates. I do not need to call them to know that.
I used to see some small swaps on my demo. But the last couple of days I have $0 on each position in swap column.
Anyway, I do not say I have to use ODL, I picked it just for testing...
there are brokers that provide two options for the account, one account with no swap and one account with swap, then it would be easier to move money between accounts.