Elite Trader's Gambler's Anonymous ETGA

Status
Not open for further replies.
Hi Electric,

I think I've followed what you are describing in 'cash & carry', but to make sure, I'll answer Kevin's question. Pls correct me if I'm off base on anything.

I do have a question for you which I hope you can help me understand. I'll phrase that at the end of my post.

Kevin, basically C&C is Electric's method of profiting from the beneficial interest carry that some spot currency pairs produce. With his broker, OandA, that interest is calculated almost continuously, so the benefit accrues by being in the market. Typically, a few pairs will provide an unleveraged return in the 2% or 3% range per annum. Using 50:1 leverage, or 25:1 on some less common pairs, provides the 100% or 150% annual returns.

He has chosen three somewhat unrelated pairs to use as a hedge against each other. He looks to make a small profit or a wash on the overall dollar balanced position, with the overall intention of keeping the positions on as much as possible to earn the interest.

Electric, I'm still not clear how you are viewing the downside risk of those three pairs. Do you have a stoploss on your combined position? I know that you will average into the parts if necessary, but do you have an "ouch" point where you cover? I'm trying to understand b/c it seems to me that a 1% loser at 50:1 leverage could negate six months of interest earned.

I'm intrigued by your approach, as I've looked at doing this with high dividend yield securities, using market timing and indicators to help mitigate a downside move. I'm very interested to hear how you are approaching this.

Thanks!
 
Wow! Electric's fast too!

I just finished my post, and I see there are three new one's. Perhaps the above post of mine is redundant. I'll read now and see.


Clearly, I'm a 'slow' poster. :D
 
DaveN.

I envy you, I would love to be a moderator here.

You seem to get to the essence of the "gamble" in this system and I commend you for your question and thoughtful post. You have done the time and listened to all my crap...Thanks for reading. There is a method to the "teaching" that I am doing here and thanks for tolerating, Wifey.

Yes, I need more capital and yes I am human. I am giving some knowledge to newbies and trying to teach a "way to think", to some seasoned traders, and now I am motivated towards getting more capital. I however must observe the constraints of posting as a guest on the public forum you folks moderate so well. Thanks for providing a summary of the system. I am not a salesman, just a trader, that why I resigned as a CTA from the last system I traded for a Japanese developer who is near and dear in my heart. DaveN you captured a synopsis of what I trade and thanks for the help.

I introduced a ratio of cash to trading (Gambling Meter) in answer to your question. I will increase that ratio if needed. The troubling risk that there is a margin call and ALL capital lost will be dialed down as we use TIME in our favor. I believe trading does not use time in a traders favor and what I am attempting to prove is that if you can ever-so-slightly turn time in your favor that is where the edge can be found.

So far the drawdown of 17.1% seems to be acceptable for accredited investors and institutions. Lets watch and see the current "gambling meter" setting and how far it lets the DD go! This is a great opportunity for the readers here....

Michael B.

P.S. As long as you have enough cash to survive the daily injection of Interest can last as long as you wish. So shouldn't the effort be placed in survival without being defensive? I say the Gambling Meter can achive this, coupled with chasing the price around, as I have illustrated....

P.S.S. No stop losses mental or mechanical. However I take losses in trades as profitable ones bubble to the top. It's according to what mode, I am in. I transitioned to "bubbling" mode now....:) as profit taking is over for some time, I believe.

A trader needs to be as a chameleon, He needs to recognize his environment and adapt. He can reuse what he knows, but he must know when to change.
 
As we speak GBP/CHF shot up like lightening...I took a trade to offset a losing EUR/HUF trade...This is weekend trading with astronomical spreads! I will not put the trades back on until tonight. The profit will go in today's spreadsheet as soon as they post the interest at 17:00/17:30 est.

This was unexpected and just goes to show you, that a trader must be able to be ready for the unexpected and react. However, there are preemptive strikes to insure success.

This unexpected move was in our favor but it can also happen to be out of favor equally...are you ready trader?

If I can take off some AUD/JPY, I will if the opportunity presents itself. I would like to reduce base 13 exposure down a little to perhaps base 10, if I can. We our close to a projected 25% APR after Labor, so this is "Not Gambling" trading now.

Don't worry folks if you do not understand...you will....just listen to the plain speak....you will get it..don't complicate it.

Michael B.
 
Electric!

Stop this trading....I am in the middle of showing that interest is not included in that Realized P/L column in the platform...

How do I show that now! Knock it off!

Wifey
 
When the spreadsheet is updated, the 1y range is checked in the three pair. This is what you are updating daily. Its a rolling one year so the high and lows can change often.

The pairs are laid out in the spreadsheet in this order
  • AUD/JPY
  • EUR/HUF
  • GBP/CHF
After you update the high and low you get a calculation called increment in column R of AUD/JPY. You have not filled in the number of units in the AUD/JPY yet. When you do fill it in, this is the BASE. Its becomes part of the calculation of the proportions of the other pairs as they relate to the volatility and pip movements of the AUD/JPY.

There are three things that can change these proportions, causing the trader to balance the holdings even though there is not a signal to average down or to take profit. These usually are little trades just a few hundred pips, but then again its according to the capital he is trading.
  • At midnight EST the 1 year chart rolls forward a bar perhaps giving a different high or low in one of the pairs therefore causing a balancing to be necessary in the other pairs. If one of the three pairs increase then the other pair(s) need to be brought into into balance.
  • The trader may want to dial down exposure and when he gets the opportunity to take some partial profit he does, but then does not replace the trade to regain the exposure. (I am in the process of doing this now, if the opportunity presents itself, I would like to get to 10,000 units of AUD/JPY which is called base 10 in my world).
  • There is a third reason, but this would be for the developer of the system (me) and not necessarily the trader (me right now too). Ranges can change and become wider over the longer term requiring a formula change in the increment calculation.

Michael B.
 
Realized p/l is now showing in the platform as -772.25

Yesterday it was -777.15

-777.15
-772.25
______
+$4.90 change in unrealized. (look at the activity tab and notice the interest is excluded even the partial interest in Electrics trade today. See the balance is up $9.03 minus todays adjustment).

So this will prove that every trade Electric has made in Retail Spot Forex with Oanda has excluded interest. Therefore the realized P/L shows negative and a lot of his profit is derived from Interest Earned and not trading profits.
 

Attachments

For those of you interested. I requested that Oanda be added to the Broker Rating list in ET. I provided my Rating.

Any users of Oanda should encourage Oanda to become a sponsor here.

I hope someone from their company sees my rating and is encouraged to contact the administrator of ET (highly unlikely as advertising is not a part of their business model, but wouldn't it be neat if they were like IB here and actually had someone answering officially from their company in these threads)

Michael B.
 
Status
Not open for further replies.
Back
Top