In spite of that I find it very interesting because it is almost risk free (if I consider my broker reliable and honest).
My addition to this strategy was that I open 19 (or so) different currency pairs (each in direction of positive swap on one account and opposite on "no swap" account). This is to make more time for the strategy to last, which is crucial thing, since we need to keep it open for as long as possible (to collect everyday swap). 19 different pairs go in their directions, each of them, hence you get a mix of positive and negative positions on your account. Your total unrealized P/L might get more balanced to keep your positions open (you avoid getting to margin call too quickly).
The 25% profit was calculated on the pair that gives the highest interest rate.
If one will work with a lot of other pairs you will look to an anual profit on +/- 1/3 of this (10%.)
Is it worth all the hassel for 10% anual profit?
If you have severall 100.000$ to work with no problem but then again I would never recommend to deposit such large soms of money to a forex broker.
And if you work with small amounts of money it is not worth the effort...
I am testing it on demos. I am not telling anyone to do it. This is just experiment. I do not like when somebody saying that something does not work or does work without a proof. I am performing experiment to get a proof. A proof it works or it does not.
Now, the current results, positions opened on June 14:
Alpari: +$12,263 (swap +$1,410)
ODL: -$6,483 (swap -$42)
It is obvious the price quotes from both brokers differ which plays positive role at this moment. Actually, I made +$1,380 on swap only in 12 days. Considering I have 2 x $50K accounts = $100K, then it is 1.38% in 12 days. It makes around 4.2% per month (~$4,200). (my demo accounts are $100K but margin is a way enough to have it opened with $50K only).
I do not think it is bad at all. I might try it next month live with 2 x $5K accounts, which I can afford. This should make me ~$420 a month of net profit.
PS: The best model of cat is cat.
This is a good thread about ODL Securities:
250 pips slippage on Currenex - ODL Securities @ Forex Factory
ODL Security swaps:
ODL securities -long post @ Forex Factory
Thanks! Interesting reading. Looks like ODL sucks. I also sent them two emails to two addresses but got no reply. It's been a month or so.
However, when I fisrtly opened my demo I received a phone call from the US on my mobile phone - in Europe! That was impressing but the more I know about ODL the more I am convinced not to go with them.
I opened new positions with Gain Capital Group demo (I have only good experineces with them), where I still have live account, so I might use it for live test later on.
Actually its a good practice to record what is happening on your screen during the trade. I use WebEx Recorder, which is free and create small vide files.
Kinds of arbitrage
An arbitrage that I know is the triangle. Ex: price EurUsd x price UsdChf = price EurChf
Samebody know another kind of arbitrage ?
How is this working out so far?
Also dont EURUSD and USDCHF work in correlation, so cant you use one broker and BUY or SELL both and make profit from the interest on both sides? or even just use two different brokers that both pay interest?
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.
You have forgotten the spreads that are much more than swaps. If brokers does not charge Commisions you must pay 4Pips(2pips by open order and 2 pips by close order) by each trade on each broker that means 4+4=8 Pips. So if the any account margin is near 100% before covering the above spread pips you are in losing side.for that porpuse you need to wait more than 1 week for only 2-3 pips winning!
I guess this is carry trade approach, it will actually give us sure profits but you are correct you need to have bigger account to benefit from swap but be careful also to use this kind of approach because there are brokers that dont allow this kind of activities, this is technically possible other broker see it as some form of cheating. Also it is very rare to find a broker that dont charge swap or how about the spread and commission on the other broker, all statistics should be carefully considered to make sure that you end up profitable.