Question about lots!

Beginner Questions
1

Hi all,

I want to hedge with the ZARJPY and EURZAR currency pairs, I want this to be a 100% hedge (or very near at least) as I plan to profit off the swap which are good for these pairs.

The pairs seem to constantly have a correlation of -90% or below, so I’m convinced this method of hedging can work (sell on both pairs).

I have one problem, how do I determine what sizes each lot should be for each pair, as the pip value and the volatility is different.

How would I calculate the lot sizes so that if one pair moves up by £100, the other moves down by the -£100.

And yes I’m aware that spreads are large but this doesn’t bother me as the profit from swaps should outdo this loss in a few days.

Thanks for any replies

2

If you hedge, how will you benefit from the swap?

3

The pairs are negatively correlated, so one moves up, the other goes down.

Instead of doing the traditional hedge of 1 buy/1 sell, you sell on both, so one pair will be loosing and one will be winning.

You then can benefit from swap as both pairs pay swap on a short position, and we don’t get charged any swap by going long.

4

Right, so not a hedge in the general meaning. Got it

5

Yep its not really a hedge strictly speaking, so would u have any idea on how to sort the lots out?

6

I think there’s a lot size calculator here somewhere ( site was redesigned a few years ago)
Not used it myself, I think its in the Tools section

7

yes there is but all the calculators I’ve found only take into account 1 currency pair

8

Maybe @Clint can help here