Cash & Carry

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NZD/USD today pays $0.57256 in interest for holding 10,000 units for 24hrs.
USD/CHF today pays $0.58356 in interest for holding 10,000 units for 24hrs.

I guess NZD/USD isn't that high now on the interest yield list. :(

After reading the entire thread, I guess i got the gist of this system:

--Cash & Carry attempts to earn Interest daily by carrying pairs that returns positive interest.

--It also attempts to stay flat in P/L despite carrying 3+ currency pairs. This is done by averaging down losers so that the breakeven price stays close to the market price, hoping a retrace/rebounce will flatten positions in currency.

The bottleneck of this system is flattening the pairs. If you're Long in AUD/JPY, NZD/USD and GBP/CHF, and all of them go on a prolonged down trend, it could potentially kill the system.

This is basically a "martingale" type system. Relying on the assumption that price can't go on forever in one direction without any retraces. This has some truth in it as even during the late 2004 Euro climb it has retraced 80 pips in a day from opening to closing on the daily chart.

Grrrr...the hard part about this is that it takes weeks/months to do a decent trial run of the system.
 
Remiraz,

Take another look at your calculations and consider margin.

I use reverse martingale also, according to what the system is telling me.

As far as "averaging in" dont forget there are losses taken "together" with winners. There is also a profit taking mode that could "pyramid in" too...The four reasons to trade with this system is to average in, take profit, establish/adjust proportion and to compond from the daily interest injections.

One more thing...Have all four of these pair ever moved togehter historicaly for a significant time? Any time period...check it.

Michael B.


Quote from Remiraz:

NZD/USD today pays $0.57256 in interest for holding 10,000 units for 24hrs.
USD/CHF today pays $0.58356 in interest for holding 10,000 units for 24hrs.

I guess NZD/USD isn't that high now on the interest yield list. :(

After reading the entire thread, I guess i got the gist of this system:

--Cash & Carry attempts to earn Interest daily by carrying pairs that returns positive interest.

--It also attempts to stay flat in P/L despite carrying 3+ currency pairs. This is done by averaging down losers so that the breakeven price stays close to the market price, hoping a retrace/rebounce will flatten positions in currency.

The bottleneck of this system is flattening the pairs. If you're Long in AUD/JPY, NZD/USD and GBP/CHF, and all of them go on a prolonged down trend, it could potentially kill the system.

This is basically a "martingale" type system. Relying on the assumption that price can't go on forever in one direction without any retraces. This has some truth in it as even during the late 2004 Euro climb it has retraced 80 pips in a day from opening to closing on the daily chart.

Grrrr...the hard part about this is that it takes weeks/months to do a decent trial run of the system.
More...
 
In my mind it's very interesting system foe those who prefer long term investments rather than speculating. ElectricSavant, enlight me on something.
Is it a correct statement in Forex that if you pick up a positive interest pair and it moves against your position then the interest yield goes up? Thanks.
 
The margin changes so therefore this is correct.

However the rate is set by the dealer/marketmaker.


Quote from gkishot:

In mind it's very interesting system as a long term investment rather that speculation. ElectricSavant, enlight me on something.
Is it a correct statement in Forex that if you pick up a positive interest pair and it moves against your position then the interest yield goes up?
More...
 
Here is a spreadsheet...

If the price goes down, the margin goes down, therefore requiring less dollars and increasing yield. But the dealer/marketmaker may not float it dynamically and it is up to them to reset these published numbers on the spreadsheet


Quote from gkishot:

What does it mean? That it may stay the same or even go down?
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I don't understand why on these forums if a concept isn't super short term it deserves no respect. Electric's results speak for itself.
 
Sorry ElectricSavant, I don't see there any dependecy of the currency yield on its price. Can you please explain a little bit more.

I got the answer. Thank you.
 
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