Perfect Hedge NOT

**arbus** · 03-10-2011 01:11

Has the thread for the perfect hedge request been deleted?

This is a bit of an offshoot of that idea..

The idea is to open
EUR USD - BUY
USD CHF - Buy
EUR CHF - Sell

If you wait for it to go into a large profit (hopefully).
Then close the losing trade(s). (You will still be in profit)
Keep the winning trade(s) open and set a stoploss so it will never lose you any money.
The idea is to keep a large trade open as long as possible and make money on the Swap index.

The best outcome would be for the market to move far away from your SL and just keep the trade open forever.

If it closes just open the hedge up again and repeat...

I have kept one trade open (1 lot) since 28.2.11 (12 days) and made $23

There are probably better pairs you could use? Is there a list of Swap Index ratios?

It would probably be simple to make an EA for this?

Any thoughts?

**arbus** · 03-11-2011 11:15

If you didnt want to just make money on the spread.
Close losing trades(or winning trade if you think the market will reverse) when your account is in profit.
Set stoploss so you will never lose money.
Takeprofit as you wish..

The advantage is that you can trade much bigger amounts with small risk..

**arbus** · 03-12-2011 02:28

Ok here is an EA

This is probably the dumbest ea ever invented as it is not designed to make any money, through winning trades

It hedges 4 currencies in the hope that it will break even. Of course it will not break even, so you will have to watch it and make sure it dosent lose too much money.

It should open the 4 trades.
then it closes losing trades just before midnight, or whenever your swap interest is calculated.
It opens the trade again after midnight and continues.

logic is that
1 the hedge should stay in balance. (ea dosent calculate this)
2 your trades should only be in profit when swap interest is calculated. (or near profit. you can set the profit level)
THat's it...

while the hedge should stay in balance, your account balance will drop, but your equity should be in balance.
You make interest on large open trades, the closed trades while they dont look nice dont cost you anything. You should never get a large margin call, but you may run out of capital to reopen a trade. Even if this happens you should still have equity in open trades.

Of course you will lose money on the spread each time a trade is closed and opened.

you can backtest for each currency in hedge only. eu, uj, uc gu.

AR

**arbus** · 03-12-2011 05:04

Another version.

hedging the same currency.

run it on the same currency as in the properties.

You can backtest it, but you dont get the swap values. which is where you make your money.

you will lose money to start with as it opens lots of trades. But as time goes on it will settle into its high and low trading range and stop opening orders. Thats where you make your big bucks...

The longer it runs the more profitable it should be...

I put the currency in ea on audjpy as i think it will give a higher swap value, but it also has a higher spread.

AR

**arbus** · 03-13-2011 06:53

Added day of week sell option.

You receive 3 times as much interest on a Wednesday night so it is more economical to close your trade just before midnight on a Wednesday.

I have been trying to work out if it is at all profitable.
A 1 year backtest with 0.01 lots returns a profit of -$37.50
After 1 year the daily swap interest on the open trades is $7.00 per day!
$7.00 per day compounding.. In about 1 week you should get back your costs.

**arbus** · 03-13-2011 10:14

Ok.

I see now it will probably not be that simple. above calculations are wrong. You would have to close every trade that is going to lose when swap values are calculated.
here is another version if you want to see what happens when you close every trade..

**arbus** · 03-13-2011 15:39

new new version.

We open a hedge of 4 currencies.

when there is a profit of X dollars. we close the trades that have a negative swap value.
we reopen the trades when the profit has dropped to Y dollars.

The EA should protect your equity.

Always keep the trades with positive swap value open.

cant backtest because profit is calculated on open trades.
trades will only close when there is a profit.

I also added the option at the start to wait for the pairs you are going to hedge to go to a certain negative position(in pips). Gives a better chance of the hedge to rebound.. This may be useful to start a hedge and close when it goes the opposite way and reopen, etc.

The default pairs are probably not the best to hedge, but they have some of the best swap ratios.
eg keep a short trade of 1 lot of GBPAUD open for 12 months, score $5000.00

So the aim is to try to get a large trade into profit with the right pair and keep it there..

Some pairs such as USDCHF you will only lose on.

**Averys Smith** · 03-13-2011 16:10

Best Forex trading.
03/12/2011 07:51 58110916 U0625066 (Forex7.Org) + $1.20

03/12/2011 11:32 57616014 U0625066 (Forex7.Org) + $4.50

03/12/2011 13:09 57312947 U0625066 (Forex7.Org) + $1.20

03/12/2011 18:56 58771948 U0625066 (Forex7.Org) + $0.80

03/12/2011 14:55 58713005 U0625066 (Forex7.Org) + $2.00

**arbus** · 03-13-2011 16:37

Averys, is it from hedge?

I dont really think you need an ea to make money this way.
try this.
Buy EURAUD 1 year swap profit on 1 lot $3760
Sell AUDUSD $3222
Buy GBPAUD $5013
Sell AUDCHF $3213
Change pairs in above ea to these.
total $ 15208

not bad interest! And it compounds every day. Of course interest rates will change. & this wont be a perfect hedge.

**ElectricSavant** · 03-13-2011 16:53

arbus,

I do not know where you get such incredible swap rates....but take one digit off of them and cut them in half...

Also where do you find AUD/CHF?

ES

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