Hedging strategy with 2 brokers using rollover-free account
Submitted by Rich on September 5, 2008 - 05:54.
Idea: to benefit on interest with positive rollover pairs, such as GBP/JPY, USD/CHF and others.
Strategy requires having 2 accounts with different brokers - one with each broker.
The first broker should pay interest for carrying the trade, while the second should not charge or pay any interest for carrying trades.
I don't know if such type of brokers who don't charge/pay rollover interest exist today. If anyone knows, please advise.
the rules are simple: open Long position, for GBP/JPY, for example with a broker who pays interest, and immediately open Sell position with a broker who doesn't charge interest. Buy and Sell positions cancel each other.
Hold positions for as long as you like (for month or years) while earning interest everyday on rollover with the first broker.
Additionally monitor the account which is on the losing side to make sure there are enough funds to sustain losses, otherwise add funds.
The list of positive interest pairs (changes over the time as governments cut or increase rates; also various Forex brokers have their own rollover policies, where they may not pay positive interest on certain pairs. Check with your broker).
Positive interest is paid when Buying:
USD/JPY
EUR/JPY
GBP/JPY
GBP/CHF
AUD/JPY
NZD/JPY
NZD/USD
USD/CHF
USD/INR
USD/CNY
Positive interest is paid when Selling:
EUR/GBP
EUR/AUD
EUR/TRY
USD/TRY
USD/XAG
USD/ZAR
EUR/HUF
So, again, my problem is, I don't know where to look for such brokers that don't apply rollover charges.
Good luck!
Rich
Enjoy the strategy!
Special thanks to Rich for sharing it!
Thomas
(moderator)
Hello Rich Thanks for your Share this Hedging Methode.
But Unfortunately a dishonest person Called Harry Suwandha from LUMEN CAPITAL - Indonesia was adopt your inovation & give a new name called IMMORTAL FOREX TRADING SYSTEM & he charge with expensive price for every person want to learn from him your strategies.
This person has found the solution first you must invest in regular Broker, & for another Broker you must find Broker has overed ISLAMIC Account (Base Syariah System-No SWAP, because in Islam Intrest, Swap is HARAM ! Its meaning Sin).
e.q. You Open 1st in the FXDD (Regular) another in Crown Forex (w/ option Islamic Account), usually Swiss Broker overed Islamic Account.
But Unfortunately, Broker is not Dum... i heard somebroker like FXCM has now those tricks so he(FXCM) make an invicibel aggrement to give information about his client who used 2 accounts like i mentioned above, so if they (those Broker) now us has used this method, our account has be balcklist.
That is information can i shared i hope can be useful for us & please let it be for the dishonest person from Lumen Capital (Herry Suwandha) who has stole your ideas to be commercial.
CChhheerrrsss .... :-)
That's an awesome trading method!
thanks :)
Lovely.
Called "safe haven" among traders who use carry trade strategies along with hedging.
Arza
I read that pair can change their properties and from being positive scorrers (positive rollover) can turn into negative (negative rollover).
how do you know which pair to trade when?
Alise
Thanks guys,
Very simple, Alise. If the currency you bought has higher interest than the currency you sold, you earn the rollover difference. And vice versa.
Below is the table with live interest rates:
thank you for details.
How successful were you with it?
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