Three strategies that lower the risk and generating profit
1. 100% Hedge
This strategy is to hold the highest interest paying currency on
one account and hedge it with another account that do not charge
interest on Short positions. Is it possible? Yes, I have been doing it for a
long time and made many thousands already.
Advantages: Very low risk, making interest every day, this
strategy is simple and easy to learn.
Disadvantages: Need two accounts, one paying interest and
another one is interest free. Need large investment capital to make
good income. Need to watch both accounts to monitor any sign of out of
balance. Need to transfer money between accounts to rebalance.
2- GMT Package Hedge
This strategy we don’t need two accounts, and we don’t need
interest free account. In fact, we need to find a bank/broker that pays
the highest interest (difference bank/broker pay difference rate). And
make sure the gap between the interest we pay them and interest they
pay us is as small as possible, so that we can keep more of our net
interest.
GMT package hedging strategy, we buy the highest interesting
paying currency pair (GBP/JPY), and we hedge it with a lowest interest
paying pair (CHF/JPY) so that after they paid us and we paid them, we
still have a good chunk of net interest to keep.
Advantages: We don’t need two accounts to hedge. No need for
interest free account. Need smaller investment capital to collect more
interest than the 100% hedging method. No need to transfer fund to
rebalance the account. Best of all, we can liquidate the hedging pair for
profit when market swing positive to our side.
Disadvantages: A little higher risk than 100% hedge due to the
uncertainty of currency correlation. But if we keep enough margins to
hold the trade during negative swing, eventually, it will swing back to
positive side.
GMT Package Hedging strategy detail:
Buy 100k GBP/JPY and sell 180K CHF/JPY at the same time. Make
sure you keep enough margins for about 200 pips swing. I never have
more than 200 pip swing against me, but I reserve enough margins in
the account just in case.
You can do dollar averaging technique. Instead of buying all at the
same time, you can buy 1 lot each time. The ratio is 1 GBP/JPY and 1.8
CHF/JPY. Enter the hedging pair at the same time. The best time to
enter is during negative swing.
I also use one hedging pair on a different demo account as my
reference signal. I watch it for a period of time to get a feel of the
swing. Then when I see it swing to negative, I enter the trade, more
negative, I keep adding more, because eventually it will swing back to
positive side, then I can liquidate those hedging pairs for profit. If not,
just sit tight and collect interest.
by: Handri Kosada
1. 100% Hedge
This strategy is to hold the highest interest paying currency on
one account and hedge it with another account that do not charge
interest on Short positions. Is it possible? Yes, I have been doing it for a
long time and made many thousands already.
Advantages: Very low risk, making interest every day, this
strategy is simple and easy to learn.
Disadvantages: Need two accounts, one paying interest and
another one is interest free. Need large investment capital to make
good income. Need to watch both accounts to monitor any sign of out of
balance. Need to transfer money between accounts to rebalance.
2- GMT Package Hedge
This strategy we don’t need two accounts, and we don’t need
interest free account. In fact, we need to find a bank/broker that pays
the highest interest (difference bank/broker pay difference rate). And
make sure the gap between the interest we pay them and interest they
pay us is as small as possible, so that we can keep more of our net
interest.
GMT package hedging strategy, we buy the highest interesting
paying currency pair (GBP/JPY), and we hedge it with a lowest interest
paying pair (CHF/JPY) so that after they paid us and we paid them, we
still have a good chunk of net interest to keep.
Advantages: We don’t need two accounts to hedge. No need for
interest free account. Need smaller investment capital to collect more
interest than the 100% hedging method. No need to transfer fund to
rebalance the account. Best of all, we can liquidate the hedging pair for
profit when market swing positive to our side.
Disadvantages: A little higher risk than 100% hedge due to the
uncertainty of currency correlation. But if we keep enough margins to
hold the trade during negative swing, eventually, it will swing back to
positive side.
GMT Package Hedging strategy detail:
Buy 100k GBP/JPY and sell 180K CHF/JPY at the same time. Make
sure you keep enough margins for about 200 pips swing. I never have
more than 200 pip swing against me, but I reserve enough margins in
the account just in case.
You can do dollar averaging technique. Instead of buying all at the
same time, you can buy 1 lot each time. The ratio is 1 GBP/JPY and 1.8
CHF/JPY. Enter the hedging pair at the same time. The best time to
enter is during negative swing.
I also use one hedging pair on a different demo account as my
reference signal. I watch it for a period of time to get a feel of the
swing. Then when I see it swing to negative, I enter the trade, more
negative, I keep adding more, because eventually it will swing back to
positive side, then I can liquidate those hedging pairs for profit. If not,
just sit tight and collect interest.
by: Handri Kosada