Here is system #2
Assuming you are in the USA and have an
USD account, just trade these
three pairs in the "interest earning" direction indicated:
Long: AUD/JPY (APR=126.62%)*
Long GBP/CHF (APR=109.12%)*
Short EUR/HUF (APR= 94.50%)*
* I update the Interest earning Ranks of the 30 Oanda pairs monthly...
Plan on making a miniumum of 30% per year (because you need to hold some cash in a subaccount that only earns 1.9% per year). You need two accounts at Oanda.
After you fund your real money account simply call Oanda at (212)858-7690 and ask them to open up a sub account for you. Many times they will do this for you over the phone and they will want you to give it a name.
Set your
leverage to 50:1
Split your money in half...put half in your Primary trading account and the other half in your Sub Account. I have named my sub account.... Cash (if you have an USD account you will earn 1.9% per year). The reason for this is because you need to be able to transfer cash quickly in the event of an emergency. By establishing a sub account before you start to trade this system will enable you to simply click your transfers through the platform when needed. Account/transfer Funds/user name, password/fill in the from and the amount and to which account.
Set your trade ticket to
3.30%
You will be using the
positions tab and
trade tab in the Oanda platform, extensively with this system.
To start the ball rolling:
1) Enter in your three trades in the "interest earning" direction with the trade ticket size above.
2) Wait 24 hours or when you wake up in the morning assuming you live in the USA
3) If any of the three postions have gone against you then average down with one more entry and draw a green horizontal line on the chart for your average price (taken from the
positions tab). Make it a red line for the EUR/HUF so you know it is a short.
4) Wait 24hrs and open up your
trade tab. Click the column "Profit (USD)" to sort in descending order. Then if the values in the top equal or exceed the negative value at the bottom, then close them both. You don't really care which instruments. You simply want to cancel out your losing trades with the winning trades.
5) Don't forget to move your horizontal green and red lines on your three charts after doing step 4 and go to tools/save current layout.
6) Wait 24 hrs. and repeat steps 1-5
Okay now this is a very flexable system so you can alter these steps above concerning how often you look at your charts. But everything else is calibrated and fixed, so try not to deviate too much from the systems rules. If you have new ideas, then shoot me an email, perhaps I have researched them and can save you time.
This methodology of longer term carry trades is not liquid. It may take you 6 months to get money out. So commit money for growth only.
You will soon notice you will be chasing around the price with your horizontal lines...you really should not care about the high unrealized drawdown this system can carry at times. You just want to make your interest, which Oanda pays daily including weekends.
Always endeavor to keep your horizontal lines as close as possible to the current price. Do not try to predict where the price is going, just simply follow the rules above.
The optimum point of this system is to try and get all of your 50:1 leverage committed, and this is where your sub-account shall be appreciated. If you max out your entries, you may need to move some cash into your accont from your subaccount which takes about 30 seconds. You do not want a margin call and you want to be able to continue to add to your account. These three postions do not move together and it would be very rare for ALL of them to go against you at the same time for an extended time.
I used this websites free tools to research the volatility and correlation of the chosen pairs:
www.mataf.net
I have attached this spreadsheet that you might find helpful (it has both of my systems on it)
