Hedging strategy with 2 brokers using rollover-free account

[User]

Forum transfer: Submitted by Rich on September 5, 2008 - 12:54.

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

[User]

Forum transfer: Submitted by manus168 on October 10, 2008 - 14:48.

Hello Rich Thanks for your Share this Hedging Methode.

But Unfortunately a dishonest person Called Harry Suwandha from LUMEN CAPITAL - Indonesia as 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 ....

[User]

Forum transfer: Submitted by User on October 17, 2008 - 18:30.

That's an awesome trading method!
thanks

[User]

Forum transfer: Submitted by Arza on November 2, 2008 - 18:31.

Called "safe haven" among traders who use carry trade strategies along with hedging.

Arza

[User]

Forum transfer: Submitted by Alise on November 15, 2008 - 18:33.

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

[User]

Forum transfer: Submitted by Rich on November 21, 2008 - 18:37.

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.

[User]

Forum transfer: Submitted by User on November 27, 2008 - 18:41.

thank you for details.
How successful were you with it?

[User]

Forum transfer: Submitted by User on December 2, 2008 - 18:25.

Sure, Rich.

We have it!

Forex brokers with Rollover-free (swap-free) accounts
Thank you for the strategy!!!

[User]

Forum transfer: Submitted by HARURN on December 4, 2008 - 12:02.

Hope it reminds you. I certainly love this idea. It simply a magnificent
modification of carry trade. I don't know whether you have figured it out
or not, but we can use the new form of account called "The Sharia Account".

This type of account doesn't charge interest of any kind. Instead, it has
larger bid-ask spread, about 1 pip larger, than the regular account.

So, here's my question.
1) How could we eliminate the difference between this bid ask spread ?
2) Since there's a difference between the bid-ask spread of the 2 brokers,
is there any difference in the pips value ? If there is, could you tell me
how to overcome this problem?
3) Since we have to use two different brokers, is there any possibility
that the market movements will be differ, even for one single pip ?

[User]

Forum transfer: Submitted by Rich on December 13, 2008 - 12:18.

Hi,

The difference of 1 pip is a very small difference anyway.
I wouldn't bother about it. With carry trade we'll be looking to stay in one trade for a long term, so, 1 pip is nothing to worry about.
The pip value won't differ, even though spreads could be different.

Even if you use 3 brokers, you will still get the same results and the same prices. It is impossible to have an uptrend with one broker and a downtrend with another - brokers all have the same market data feeded to them. There could be few pips difference here and there during the day due to difference of brokers trading platform settings and their own way and speed of to delivering prices to their client, but still by the end of the day you'll have it all matching.

What you need to monitor though is the money on both of your accounts. While the first one, where you took the right side of the trade, will grow, the other one (with another broker) will lose money. It is your responsibility to transfer money in between the accounts, so that both trades run smoothly.

Rich