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Author Topic: Swap Master - Market Neutral Arbitrage Trading  (Read 67328 times)

Offline Forex21

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Swap Master - Market Neutral Arbitrage Trading
« on: November 12, 2019, 10:44:09 AM »
I would like to introduce a new trading concept and software we have been working on the last two years. As the name indicates, it is a swap trading system.

The idea of taking advantage of positive swap rates is of course not new. What is new is that Swap Master is taking advantage of positive swap rates while keeping all trading positions hedged against each other. This means that it does not matter if the price goes up or down. All what matters is that there is a reasonable difference in swap rates.




The Concept behind Swap Master

There exist significant differences between interest rates and large differences in swap rates between forex brokers. The Swap Master software connects broker accounts with high swap rates and low swap rates to one central unit and then trades them against each other.

What makes the concept and the software unique is the fact that all trading positions are boxed. And with boxed, I mean that they are fully hedged. Always!
This cuts the risk connected with directional trading to ZERO. (1)

The Software

To take advantage of different swap rates, the software connects two or more trading accounts to one central control unit. The control unit manages all trades and monitors all connected trading accounts. Secondary units are used to exchange data with the central unit and to collect data for portfolio research.

While the software is technically very advanced, it is not difficult to use. Both units (Master and Slave) come with graphical user interface, one click buttons for all important functions, detailed documentation and we provide of course full support.






Profit Potential

Between 4 and 12 percent p. month. While daily gains do not depend on market conditions, they do depend on the complexity of the portfolio, the swap rates, the research quality and of course the position size. Because of it's consistency, gains add up very quickly. Especially when you reinvest them on a quarterly or monthly base.

Strength and Weaknesses

+ All trades are permanently hedged. There is no directional trading risk.

+ Projected returns are very reliable because brokers change their swap rates rarely.

+ Once a portfolio is setup, everything is done by the software.

+ We developed a vast amount security functions to ensure all trades are always under full control of the software.

+ Market volatility is declining. This translates to very few re balancing cycles per year. (1-2 for simple portfolios)

- It is not a system for magic bean believers and needs to be used as intended, If overpowered on underfunded accounts or used for not hedged portfolios it will not end well for the user.

- Sadly, it is not suitable for US traders because the number of brokers what accept US clients is very limited.

More Information

A more detailed description including forward trading results and more screenshots is available on here: Forex21 - Swap Master

All qualified questions are welcome.

---
(1) No Directional Trading Risk does not mean that there is no risk at all and you should bet the farm. The possibility that your broker goes bankrupt and as result you lose a part of your portfolio deposit still exist. However, in comparison with classical trading systems the risk is very little.
« Last Edit: November 12, 2019, 10:48:59 AM by Forex21 »

Offline petersurrey

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #1 on: November 12, 2019, 12:13:43 PM »
Interesting concept - the obvious question being what is stopping me from finding the best swaps myself using several well-known forex portals? My understanding is that swaps are rollover interest applied at 17.00 EST correct - is that always the case or do different brokers apply different rules ( some average out over several days??) -  how long do trades need to be open to receive interest payments? The obvious risk being one account will be in a losing position which is not hedged at the same broker and therefore at risk if not managed very carefully.

Offline Forex21

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #2 on: November 12, 2019, 01:12:01 PM »
Hello Peter.

Quote
The obvious question being what is stopping me from finding the best swaps myself using several well-known forex portals?

Finding the swap differences is not a problem and you are right, you can dig out the information from various portals and verify the information by installing different terminals and checking the contract specifications. It's a bit time consuming but a great way to do research because it provides a deep understanding how different brokers construct their swap rates.

Absolute nothing stops you from doing this and I think it is an excellent research exercise.

Quote
My understanding is that swaps are rollover interest applied at 17.00 EST correct

Yes. (But some brokers handle it a bit different)

Quote
how long do trades need to be open to receive interest payments?

You have to keep the position overnight.

Quote
The obvious risk being one account will be in a losing position which is not hedged at the same broker and therefore at risk if not managed very carefully.

Yes, you are right. That is why we developed the software. Knowing that Swap differences exists is one thing. Being able to trade them in a safe way, with no directional trading risk is another. If you just enter the positions and wait, you will find yourself sooner or later in very bad spot.

My point is that you can trade swaps only safely when you have a central control unit what constantly controls all accounts and trades. And that is what Swap Master is doing. It connects accounts to one central unit and controls and manages even the most little detail of every trade/terminal.
« Last Edit: November 12, 2019, 01:22:11 PM by Forex21 »

Offline petersurrey

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #3 on: November 12, 2019, 01:40:57 PM »
Thanks  - OK that is clearer -  so what is to stop a trader opening a trade @ 21.99 and closing it @ 22.01 or after the rollover (some brokers this can be as late as 22.30?) and how does broker T&C's effect this activity - I suppose they still get their spread commission...?

Offline Forex21

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #4 on: November 12, 2019, 02:08:58 PM »
Thanks  - OK that is clearer -  so what is to stop a trader opening a trade @ 21.99 and closing it @ 22.01 or after the rollover (some brokers this can be as late as 22.30?) and how does broker T&C's effect this activity - I suppose they still get their spread commission...?

If you do not hedge your trade(s) it might work on some days, on other perhaps not. If you hedge them properly the amount you will pay for spread and commission will eat your profits.

Let's assume the following:
1) You trade a portfolio with 10k.
2) Your portfolio runs on two brokers and consists of three trades.
3) Your portfolio earns 25$ a day. That converts to 7.5% at the end of the month and 138% at the end of one year.

When you open the trades you will have to pay spread and commission. If your spread costs are 30$ and your commission costs are 21$ (7$ per lot and trade) you will loose money if you open and close the trades a few minutes later.


Offline nck

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #5 on: November 12, 2019, 02:15:56 PM »
looking good bro ,will keep an eye on it

Offline FLechdrop

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #6 on: November 12, 2019, 03:13:38 PM »
Yes, you are right. That is why we developed the software. Knowing that Swap differences exists is one thing. Being able to trade them in a safe way, with no directional trading risk is another. If you just enter the positions and wait, you will find yourself sooner or later in very bad spot.

Trying to get my head around this strategy. What do you have in mind that would cause you to find yourself in a bad spot?

Other question: what is the recommended account size for what kind of position size? I imagine as the one account is hedged by another account, either one of them has to be able to take a fair amount of DD.

Offline felipebr

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #7 on: November 12, 2019, 03:36:39 PM »
Good evening guys! Live accounts please?

Offline petersurrey

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #8 on: November 12, 2019, 03:49:54 PM »
This strategy assumes that both positions ( long and short) will close out at exactly B/E pips after commissions slippage and spreads; which regular arbitragers will know is impossible even with the best execution software; and even allowing for a 0.5 pip difference will sway results in both directions with no guarantee's  - live account please? :)

Offline felipebr

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #9 on: November 12, 2019, 04:07:12 PM »
This strategy assumes that both positions ( long and short) will close out at exactly B/E pips after commissions slippage and spreads; which regular arbitragers will know is impossible even with the best execution software; and even allowing for a 0.5 pip difference will sway results in both directions with no guarantee's  - live account please? :)

I am afraid you did not fully understand the concept.

Sure, there will be sometimes slippage and some trades will be not executed at the same time but that does not matter at all because your trades will be usually open for many weeks or months.

Okay, what about live accounts to show please?

Offline Forex21

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #10 on: November 12, 2019, 04:12:14 PM »
Good evening guys! Live accounts please?

Hi. You can find forward results on our homepage. Here is the link: https://forex21.com/swapmaster/
I will be also posting daily updates here: https://forum.forex21.com/

Offline Forex21

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #11 on: November 12, 2019, 04:14:43 PM »
This strategy assumes that both positions ( long and short) will close out at exactly B/E pips after commissions slippage and spreads; which regular arbitragers will know is impossible even with the best execution software; and even allowing for a 0.5 pip difference will sway results in both directions with no guarantee's  - live account please? :)

I am afraid you did not understand the concept fully. This is not an arbitrage system based on latency what tries to shave of some points from lagging price feeds. Trades stay open for many weeks, months and a bit of slippage here and there simple does not matter at all.
« Last Edit: November 12, 2019, 04:42:09 PM by Forex21 »

Offline felipebr

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #12 on: November 12, 2019, 04:17:56 PM »
Can you link your live accounts with myfxbook please?

Offline reinerh

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #13 on: November 12, 2019, 04:18:52 PM »
This strategy assumes that both positions ( long and short) will close out at exactly B/E pips after commissions slippage and spreads; which regular arbitragers will know is impossible even with the best execution software; and even allowing for a 0.5 pip difference will sway results in both directions with no guarantee's  - live account please? :)

i second that, want to see a myfxbook link to live accounts.

also, screenshot below makes no sense to me at all. since a eu buy position does not pay positive swap on any of my brokers, only on sells.

so what kinda broker is that ??

https://gyazo.com/feba2a41690bbdb73dde21f59f17caf9

Offline FLechdrop

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Re: Swap Master - Market Neutral Arbitrage Trading
« Reply #14 on: November 12, 2019, 07:00:37 PM »
Yes, you are right. That is why we developed the software. Knowing that Swap differences exists is one thing. Being able to trade them in a safe way, with no directional trading risk is another. If you just enter the positions and wait, you will find yourself sooner or later in very bad spot.

Trying to get my head around this strategy. What do you have in mind that would cause you to find yourself in a bad spot?

Other question: what is the recommended account size for what kind of position size? I imagine as the one account is hedged by another account, either one of them has to be able to take a fair amount of DD.

Did you see my questions, too?

Another one: do you use fixed lot size trades, or is there a percentage option which somehow takes into account both accounts? (Pardon the pun.) If not the latter, then how do you aim for a fixed percentage return over time?
« Last Edit: November 12, 2019, 08:09:06 PM by FLechdrop »

 

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