What I would like to do here is start a thread on currency basket trading and carry trading where anyone can freely discuss any topic or method related to this strategy. Many of us, including myself, were recently introduced to the strategy on another thread in this forum but for those who don't want to be limited to one particular strand of basket trading I thought this might be a good idea.
To introduce people to the strategy who may be interested here is a link to an Oanda forum which describes one type of currency basket which is also the one I am demo trading currently (my first),with great success, so far...
http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=16;t=003786;p=1#000006
I am trading the same 10 pairs as dgcfx and so far so good. There is still much learning to be done in order to develop more confidence in this method but I have to say the demo I opened using this basket is doing awesome, up 6% NAV since starting 2 months ago.
There are many good posts on Oanda on the topic and between all of us contributing (those interested) we can master this method. There is no secret black box or proprietary information required to trade baskets, all the info needed is freely available. I am no expert on the subject but I have learned alot about it recently and at least seem to be doing something right with the demo, the %DD is very manageable and its earning daily interest. In my opinion the most important things one needs to understand to be successful at it are the interest rates each pair in the baskets pays or charges, and the correlations between the pairs, e.g. either indirectly or directly correlated, and of course your exposure. This particular basket is EUR neutral and near USD neutral. A good site for pair correlation is:
http://www.mataf.net/en/analysis-correlation.htm
The basket from Oanda is performing well at the moment, but I believe its important to understand why and how it was setup to know what to do when/if it doesn't perform as well.
I would encourage Beachie and sjburdi and anyone else who followed the other thread on basket trading to continue the discussion here, I know alot of time and energy was spent on understanding and modifying different baskets so it would be great to see that continue.
Regards,
Sam
To introduce people to the strategy who may be interested here is a link to an Oanda forum which describes one type of currency basket which is also the one I am demo trading currently (my first),with great success, so far...
http://www2.oanda.com/cgi-bin/msgboard/ultimatebb.cgi?ubb=get_topic;f=16;t=003786;p=1#000006
I am trading the same 10 pairs as dgcfx and so far so good. There is still much learning to be done in order to develop more confidence in this method but I have to say the demo I opened using this basket is doing awesome, up 6% NAV since starting 2 months ago.
There are many good posts on Oanda on the topic and between all of us contributing (those interested) we can master this method. There is no secret black box or proprietary information required to trade baskets, all the info needed is freely available. I am no expert on the subject but I have learned alot about it recently and at least seem to be doing something right with the demo, the %DD is very manageable and its earning daily interest. In my opinion the most important things one needs to understand to be successful at it are the interest rates each pair in the baskets pays or charges, and the correlations between the pairs, e.g. either indirectly or directly correlated, and of course your exposure. This particular basket is EUR neutral and near USD neutral. A good site for pair correlation is:
http://www.mataf.net/en/analysis-correlation.htm
The basket from Oanda is performing well at the moment, but I believe its important to understand why and how it was setup to know what to do when/if it doesn't perform as well.
I would encourage Beachie and sjburdi and anyone else who followed the other thread on basket trading to continue the discussion here, I know alot of time and energy was spent on understanding and modifying different baskets so it would be great to see that continue.
Regards,
Sam