Discussion of article "Swaps (Part I): Locking and Synthetic Positions"
Nowadays it is rare to find a broker that has positive swaps on major currency pairs and their crosses. Only exotics have such swaps. And it is not a fact that there will be a synthetic instrument with a negative swap modulo be less than the positive one on the original pair. Besides, the more currencies in a synthetic instrument, the bigger will be the total spread at its opening, and if you also take into account slippage at opening... you can only wait a year for the payback of all these things.
You are absolutely right, about locking by synthetics within one account, it is unlikely now. But let's say that I often go through their swap tables and they have data from I don't even know how many years ago and it feels like they are 5 years old)). Take even the same Robof...... In other words, I start to look at the specification on my account there is nothing in common with these tables )), and there just at them everything is green. I think that there are still brokers who have not moved it all to the red zone. Of course, they are most likely kitchen brokers, but it does not matter, you can earn another penny. But about a year ago I was analysing 5-6 different brokers just when the prototype of this method was being made, and there were such pairs that two brokers gave plus.... That's a hundred per cent. It's just lazy to do it with your hands, but you can do it with an owl. Even if it does not work within one account, you can always strengthen the classical scheme using these considerations. As a result, I want to just get such an owl, but it is certainly a matter of not one article and not one week ). One thing is certain - synthetics can reduce the negative swap or increase the positive swap, and this is enough. We will get additional options for locking, if not profit enhancement, then additional options for locking
Eugene, as always, the fundamentality of your developments is striking and admirable. But let's look at the reality. In order to earn on a positive swap, an open position should be held for a month or more. During this time, the quote of a currency pair can go into such a minus that a margin call can occur. And the higher the leverage used, the faster the margin call will occur. If you use leverage within the range from 1:1 to 1:10, the deposit will withstand a deep drawdown. And after several months or even years of an open position, the price can come out of the drawdown into a small plus. I will not say for sure, but according to my observations, the lower the leverage, the lower the swap value.
Thank you very much for your support ). And about the rest, yes you are right, but there are ways to fight with margin calls, you can calculate the volume that margin calls will occur so rarely that it can not move profitability in the direction of the drain, it all counts, yes it is complex maths but without it no way, will have to connect the theory of probability to the full, but still the task is at least interesting. I have at least 2 more articles in this thread and I will try to cover it. I just have to do other things right now, I hope to get back to this topic soon. Don't wait any time soon, the material is very complex.
New article Swaps (Part I): Locking and Synthetic Positions has been published:
Author: Evgeniy Ilin
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New article Swaps (Part I): Locking and Synthetic Positions has been published:
In this article I will try to expand the classic concept of swap trading methods. I will explain why I have come to the conclusion that this concept deserves special attention and is absolutely recommended for study.
I will not explain the idea of swaps and their theory. I am only interested in the practical application of swaps. The most important question is whether it is possible to generate profit via swaps. From a trader's point of view, a swap is a profit or a loss. Furthermore, a lot of traders simply ignore it as they stick to intraday trading. Others try not to pay attention to it, thinking that it is so insignificant that it can hardly affect trading. In fact, almost half of the spread can be hidden in the swap. This spread is taken not at the time of buying or selling, but when the day changes on the server.
The swap is charged relative to the open position volume. This happens at the following moments:
Usually, the swap value is indicated in the trading instrument specification in points or as a percentage. There can be other calculation method, but I have managed to understand only two of them, which is quite enough. There is very little structured information about swaps. However, if you study the question, you may even find some efficient swap-based strategies. They generate minimal profit percent, but they have a great advantage — the profit is absolutely guaranteed. The main difficulty of this approach is the fact that the most popular brokers have very few instruments with a positive swap, so it is really hard to earn money from this idea. Even the possible potential profit is extremely low. Nevertheless, this is better than completely losing the deposit. And if you are using any other trading system, you will most likely lose it.
Author: Evgeniy Ilin