Can someone explain to me what these guys are trying to do please

I must add something though.
after re-reading your post, I came across something I don’t fully agree with.
when a trade is losing, it’s not necessarily a winning trade for the other position… many things can cause (whipsaws, SL:TP ratio, steady price, reversals) BOTH trades to lose…
the fact that 90% of traders lose doesn’t say that if you took their oppositte
position you would have won.
thier TPs, for example, might have just been too high, or SLs too low…

I agree that our tiny lots wouldn’t mind much for the broker, but 10 lots trade for 1 year of interest loses, whereas it’s the only position opened in that account, might be noticed and marked “suspicious”.
this, of course, is just a speculation…

well, im a little worried about the fact that the no swap broker can close your account down if they suspect that you may be hedging and costing them money.

well couldnt you wait till the maket that you are buying to collect interest is in a down trend and then buy at that point so that the interest paying account goes down while you collect interest. and then you can do the opposite in the no swap account and have the balance increase? will the no swap broker have a hissy fit over doing this? is what im saying even making sense?

Oanda does not allow hedging. Who else doesn’t?

oanda allows for carry trading though. what we are talking about are using two different accounts with 2 different brokers.

what im asking is can you open a position that will make interest even though the market is going the other way and hedge the loss in a swap free account. that way the swap free brokers are not getting upset then close down the account.

would the interest paying broker cup a fit if you try to hedge the market this way? if you are making interest but loosing money?

I don’t think it should matter to the swap broker. he’ll lose his money whether it’s an up or a down trend, unless pipbull’s right and then he’ll try to make his money by taking the other side of your trade.

I see a different way, though. Just don’t rely totally on this hedging strategy, use it as a way to improve statistics, and make other trades as well on you non swap account, that benefit your broker (like long USDJPY for example).
this way you cover his expenses by trades you wanted to make anyway and everyone’s happy.
problem is, again, capital…
you’ll need a massive one if you want the swap thing to pay off.

regardless to all the hedging thing, I’d like to verify what pipbull said with the experts. guys - if any of you can confirm (or deny) what he said, about brokers making money from spotting weak traders and trading against them - please share. this is not something you mentioned in the school section…

thanks!

i just read a article that talked about using another broker that just doesnt pay or charge interest or has a lower differencial to hedge the same pairs.
http://forexfacts.port5.com/index2.htm

May I have my input on the matter?

To benefit from Interest Payment you have to do the following:

1.
Open an account with a broker that pays/receives interest on Carry trades.

2.
Open another account with a broker that does not pay/receive interest on Carry trades.

3.
Long a high-yielding currency versus low-yielding currency in the first broker, let’s assume we went long GBPJPY!

4.
Short the pair you’ve just longed in the second broker (which won’t charge or pay any interest) so we went long short GBPJPY

Now we have equal positions on 2 different brokers, but we are receiving interest payment on our long GBPJPY and that’s increasing our earnings.

You only need a good starting capital, and protection against margin call.
This is very profitable If you do not want to trade the market.

Parsush,

I’m glad you brought up this point again. Based on some reading i’ve done, i’d like to present an alternate scenario for discussion. I still maintain that brokers can and do take the other side of our trades but they do not necessarily do it by literally picking and choosing the weak traders. Again, unless i am mistaken, i beleive what happens is brokers play a balancing act. For every buyer there must be a seller so if at the end of the day or whenever, they see that there were 1000 units going long but only 800 units going short, they will sell another 200 units short to make up the balance. Since most activity is from speculators, odds are that they will end up on the other side of our trades. The result is the same but the dynamic is perhaps a little different than what i first suggested. In any case, experts please feel free to chime in :slight_smile:

You said it right…we need to protect our accounts from margin calls. If you keep an eye on your account and if you are approaching a potential margin call, then just close both positions from both accounts and take the profit from one and replace it in the other. Then re-open both positions again. Would this be acceptable or would brokers flag this kind of stuff? But again, my skeptical insticnts kick in. Doing this would really make this a risk free way to collect interest indefinitly. Too easy?

As you say;

Too easy, and too good to be true? But it’s really true.
It’s risk free business in the risky FX world for people with initial big capital.

I am sure your broker does not reserve the right to prevent you from longing GBPJPY or any interest-payment pair.

The whole world is long GBPJPY and that’s why they sent the pair thousands of pips up.

They collect interest from Carry trading, why should not you? I do not think your broker will flag this, and If they do, they are scams!

I believe many of the Short Yen and Carry Trade fans have funds protection by opening opposite position with no interest.

Just try to make closing / and re-opening positions less frequent. To do so, start with a big initial capital, and give GBPJPY or your pair the room to trend 500pips or 1000pips until you close positions before margin calls. Easier? Cashout earnings, deposit…repeat! :slight_smile:

I guess now the trick is to find a good no interest dealer. Do you know of any?

Marketiva is a stable broker for my experience. Check them!

Why not just trade two different contracts of a FUTURES currency…buy one and sell the other…that called spread trading, and doesn’t require two accounts…

Yes, they DO…especially if you’re using a dealing desk broker…who IS the market maker, the ONLY one you have access to…and there are VERY few “non-dealing” desk brokers out there…I.E., a broker that will give you the best bid/offer from MANY different bank sources…if he is a dealing desk broker AND your market maker, then HE takes the other side of your trade…and it is “sometimes” (read ALOT) in his best interest to not lose his money to you…

For those that need to be educated on dealing vs. non-dealing desk FOREX brokers…very informative site…

http://nondealingdesk.blogspot.com/

and the forum to disuss being scammed by a dealing desk broker…

Sorry for jumping in late. Wow! I didn’t even know babypips had a forum. This is great - babypips is one of my favorite forex sites.

I worked with another trader developing a system based on these hedge principles. On the one hand, yes, this can be done. It results in virtually no risk to the trader. However, there’s a lot more to think about here than just finding a no interest broker. One, analysis has to be done to find the most profitable currency pair. That doesn’t mean it’s the pair that yields the highest interest, either. Other factors to account for include spread and average weekly range. The latter is important because it determines how large of a carry trade you can set based on your leverage. You don’t want to be margined out frequently as it adds costs. Other things to consider are transfer fees to and from your brokers. As one account grows, you’ll want to transfer funds from broker to broker.

Anyway, once you do all this figuring, you’ll realize that you can earn about 2-5% per month with no risk to your money. It’s a great system.

Regards,

stockwet

Because the price of the futures contracts have the interest carry built in to them. That’s why they don’t match up with the current spot rate and why that difference narrows as the contract approaches delivery.

I learned a bit more about the interest carry trade after making the previous post…but thanks for pointing that out…:eek:

what are these guys trying to do?

they are trying desperately to find a profitable way to trade, without actually finding a profitable way to trade.

just a heads up, if their multiple broker trading system were truly profitable they would not be talking about it…

instead, they would be lounging on some beach somewhere and sipping margaritas…

i sometimes wonder if those that are attempting to find a solution to this problem of whatever this problem is actually want to find a solution.

btw, banks have been engaging in the business of ripping you off for quite a while… isnt it amazing when some newbie thinks that he is just going to waltz in and turn the tables on the banks? like that is going to happen.

good afternoon.

In case you don’t know KISS means Keep It Stupidly Simple.

Regards.