This Forum section is about a Holy Grail system. Most of the systems do win money, but somehow most of the people lose, something like 95%. So I wanted to present really a Holy Grail that never loses money.
It’s rather an investment form than trading system.
One option is based on a traditional way of making money on Swap.
F.e. you invest $100.000 buying 1 lot of AUDJPY and hold for a long time. The chance that this pair drops by 10.000 pips in none since the price is now about 97.00, so it can drop only by 9700 pips at the most, so you never lose money but make constantly profits anyway. Even if you invest $50.000 or $20.000, still the chances of such a big drop are very low.
So if you invest say $20.000 and buy 1 lot of AUDJPY and the swap is about $16 a day, so you make about $500 a month, $6.000 a year which is hefty 30% return. Not bad. After reinvesting the profits every 3, 4 months and buying then 0.1 lots your profits increase geometrically.
To be completely sure you never lose you would have to invest those $100.000, but then the return would be only 10%. Still not bad.
However, forex traders expect much more, right? And they don’t have so much capital, usually $200. Well, I spend so much on groceries a week, so I wouldn’t call it an investment. I would suggest much more than that to start with.
So there is an alternative, also based on swap earning. I use this second method. You can make 50% to 200% p.a. and still never lose money.
I will describe the other system next time.
I found out this system myself when I experimented with other systems and brokers. However, someone else used it a few years ago and made over 3 mln on it. I didn’t read about this after I reinvented this swap method.
I read on this forum that the greatest forex guru could make something like 37% return p.a. I am not a guru, but this beats him.
And the good thing is you don’t have to trade in the normal way and watch your PC constantly. It’s a very good method for newbies who want to make money and still not lose the capital.
Nice try, but here’s where your grail starts getting really rusty.
Firstly, while you are correct that at 97 AUD/JPY you could technically never lose all your money if you used $100k to back stop a 1 lot position, your return on that money, based on your figurings would only be 6% annually. That’s horrible compared to what you could get in other vehicles on a risk adjusted basis.
Right, you could put up less money. At $20k your return would be 30%. Sounds good, but if AUD/JPY were to drop to 20 points your initial deposit would be wiped out in the margin call.
And here’s the real killer. AUD/JPY is as high as it is in large part due to the interest rate spread. When that spread eventually starts to narrow, which it most definitely will at some point, you will get less and less on your spread and AUD/JPY will fall. Double whammy!!
I’ve never considered a system based on interest rate spread, but wouldn’t the best possible way be to have an automated trading system that automatically buys a few seconds before the swap is added to your account… and then sell immediately after? This would eliminate the risk of the pair dropping by more than a few pips. Of course I don’t know if this would be profitable after taking the bid/ask spread into account as well.
If you do this with a currency that has quite a wide interest spread, say, like GBPvJPY, it might work.
you are right, 20k might be too low, but that’s exactly what I wrote. To be sure, you must invest 100k. But in reality 50k whould do as well, so the return would be more than 20% p.a. since you reinvest the earned money buying 0.1 lots each time you earned enough money for the new buy.
The swap rate may drop some day, but right now it is as it is and this system is for the present situation. The swap rate might rise as well, you never know. Until a week ago at my broker AUDJPY swap was $16, now it’s been $17 for a few days. So who says it must go down. Also EURJPY swap rate went up.
There might be some other investments methods where you can get more than this from you 100k or 50k. So why not try them instead of losing money on forex when they say as many as 95% lose. Why don’t they invest elswhere?
To Yarkofin:
the higher the spread the more you lose. If you buy GBPJPY which has a spread of 6 pips, but swap about $25, so buying before and selling immediately after you get your swap brings you a loss of $35 immediately.
This tactic would work only on Wednesday when you have tripple swap. In such a case I would suggest buying EURJPY which has a spread of 2 pips and $15 swap, so multiplied by 3 gives you 45$ swap minus $20 on spread, so you make $25. Of course the pair can go down or up by 1 or more pips but the chances are 50-50, so if you always do it on Wednesday you may win.
However, this whole thing with buying and selling is too complicated and you would really need an EA to do it instead of manual trading.
Well, I just showed the first alternative to this Swap Holy Grail, which brings some sure money, but as I wrote I use another one, which gives you between 50% to 200%. And actually that is the main strategy which is worth explaining and what I am going to do next time.
Trading forex is most certainly NOT investing. That’s one issue.
And keep in mind that of the high percentage who lose, some fraction have been pursuing carry based strategies. There are loads of them out there. They often do quite well for periods of time, but then get really hammered during periods of volatility.
I do agree with you, though. There are loads of forex traders who would probably be better off putting their money to work somewhere else. They’ve been sucked in to the market by the lure of easy money.
I’ve thought of carry trades but I want a very good solid basis of trading in general before I look seriously into carry trades and the reasoning has been touched on.
Somthing I live by: Nothing stays the same, so you have two choices: Make it better, or let it get worse.
Basically as applied to this, the market wont stand still (except on fridays after 5, to sundays before 5 (EST) if you really want to count that ) If you know how to trade, know atleast some technical, and some fundemental so your grounded in both studies – your chances of knowing when to enter for the benifit of getting a carry trade are higher. Likewise for knowing when to exit.
Just my thoughts and opnions, but hey, if it works for you it works for you! I can tell you ild be such a nervous nilly right now about it working for me that, well it would be a self fulfilling prophecy. Not that I can’t do it at all, just that I dont know enough for me to be confident to learn about it seriously, so I’ve touched on the issue as it comes up in my multitude of reading and learning but thats about it.
Hi TennTrader,
37% per year really isn’t that hard. I know many skeptics that come from the mutual fund world would believe it is. Most mutual fund investors would be kissing their fund manager’s behind for a return like this. Instead they all jump up and down just to beat the S&P. Even if the S&P is negative for the year, they think they have accomplished something great just to beat it.
I just got my first account double and have done it in just under two months.
On the other hand, to many people come to trading and think they are going to turn a small starting capital into a large fortune overnight. That isn’t going to happen either.
Thanks for the message but you may want to re-read it. The poster replied that the greatest forex guru can make 37% pa. My post was to assure him that whomever shared this information was gravely mistaken. Another words, the best forex trader never tells what % they make.
I am a professional forex trader with over 10 years full time experience. I am not going to share what % I make but it is over 37% a month and not pa.
For those that believe that no one can do better than 37% should read about Warren Buffets forex trading experiences.
Hint to all newbies, find a successful mentor and learn everything from him. If you want to be a successful forex trader, learn how that forex trader trades. [/B]
Oh, sorry… I thought you were trying to say that 37% per year was way to high to achieve when you were actually saying that it is easily achievable. So disregard my last comment.
By the way. Over 37% a month. Is this consitent month after month? If so, I envy you. I have been able to do this the past two months, but I don’t think I will be able to always keep that performance without some type of draw downs.
This advice is right up there with telling people there’s a secret to successful trading (read The Secret to Trading Success).
The chances of finding a mentor willing to teach you what they do is pretty slim. The chances of that person teaching you something you can use for long-term trading success is even slimmer. Bottom line is just because Trader X makes 100% a year (or whatever you define as successful) doesn’t mean you could do the same using his methods. It only works when what that trader does fits in with your own trading personality. You can’t force things.
) If you know how to trade, know atleast some technical, and some fundemental so your grounded in both studies – your chances of knowing when to enter for the benifit of getting a carry trade are higher. Likewise for knowing when to exit.