Forex hedge for dummies

[bongrak]

There are so many trading systems available to Forex traders. Almost all of them use some kind of technical indicator. Almost all system is trying to speculate
where the market will move and thus trade in that direction in hope to make profit.

The system I am sharing is a little difference. The purpose is not to beat the market, but the strategy is to open positions in such a way that it balance or hedge each
other so that we can collect interest and swings profit.


The first one is the full hedge strategy that hedge the high interest paying pairs such as the gbp/jpy, nzd//jpy, aud/jpy, or gbp/chf to earn daily interest.
You need two accounts for this strategy.

The second strategy is the pseudo hedge strategy. This one uses the lowest interest paying pair to hedge the highest interest paying pair.
The two pairs must be closely correlated. This strategy can earn both interest and swing profit.

See the attached pdf article for more detail

[NewForex]

Thanx for this... very interesting strategy.....

[bongrak]

Thanks, the idea is very simple indeed. If you have any question, feel free to ask.

[willsucceed]

I love system number 1. This has come up before but for some reason it has never been popular. I always thought there were hidden drawbacks, i hope to see some exprienced traders comment on this.

Bonrak are your doing both and for how long? The only drawback i can see is changing interest rates by the broker. It has always been a mystery how some shops calculate interest (and why some don't) and the ones that do pay interest often change. That is the only issue i can think of at the moment.

How long would you hold on to the trade on system 1?

[bongrak]

The brokers receive their interest from the banks and pass it on to us. The interest rate in each country always changing and so does bank rate, no one can control that. But a few dollar fluctuation doesn't affect our earning that much.

The biggest obstacle to this system is to find a nice broker that allow us to trade this system without giving us any trouble. Some broker do not like carry traders because they don't earn money from spread because we hold our position longer than day traders. But base on my experience, I have found a few that don't mind for us to carry our position for extend period of time.

The best broker to use for this system is the one that pay us high interest rate and allow high leverage, so far I only found a few reliable brokers that allow up to 400:1 leverage. Note, when we trade, we do not use all the leverage allow, but we need high leverage so that we can use less margin and leave more fund for reserve. The more fund reserve we have, the longer we can hold our positions, the more profitable for us.

[micrapip]

Bongrak,

I know if one broker that allows 400:1 (FXSol) can you please list a few more?

[bongrak]

FXsol pay very low interest rate, thus not good to use for this strategy.

I know a few more that pay high rate and allow high leverage.

Email me and I will send your more info.

[chofman]

i think MG Forex allows 400:1 leverage. what is your opinion on them?

[bongrak]

I have no comment, I never use MG forex. I only US broker at this time.

[mucho69]

there has to be some sort of risk involved here