Position averaging to earn interest
Hello,
I would like to post a thought I had about long term investing using position averaging using 2 negatively correlated pairs (EUR/USD & USD/CHF) and only trading long for both to gain from the interest paid daily. Could anyone comment on how the max drawdown can be identified? I will like to come up with an end of day close value and input it into a spreadsheet for analysis.
Here is example of how interest can be powerful over time.
Open .1 lot long for each pair every day until 60 lots total are opened for both pairs (30 lots EUR/USD & 30 lots USD/CHF).
$8 is collected for 1 lot EUR/USD & 1 lot USD/CHF (IBFX)
$8 x 30 lots = $240 a day
$240 X 7 days = $1680 week
$1680 x 52 = $87360 year
The margin requirement on 400:1 to have all 60 lots open is $15000.
I would like to see how much drawdown there would have been if all 60 lots where opened over a long period of time.
Does anyone know how to test this? Any comments would be welcomed.
Last edited by PIP CHASER; 08-22-2008 at 07:46 PM.
|