FPI - Fractional Product Inefficiency: The Impeccable Hedge

NeoTicker indicators

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trevman
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Postby trevman » Sun Oct 22, 2006 6:48 pm

david can you make this into auto trade? i dont think it would be that hard to edit a simple auto trader, i have an MA auto trader if you want it to see what you can do

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Postby trevman » Sun Oct 22, 2006 8:07 pm

michal.kreslik wrote:People are still asking me about the correct position size for FPI.

Let's make it perfectly clear now.

We decided to employ this FPI ring:
  • SellShort EUR/USD
  • Buy EUR/JPY
  • SellShort USD/JPY

You see, we have hedged the colored currencies one unit for one. The JPY is not hedged precisely one for one (14,937,000 for 14,934,113), but it can't be closer.

Michal

exposure is still exposure no matter how small. what happens if there is a sudden movement, or the market drifts before you can exit the FPI ring?

however FPI takes advantage of market imbalances as does http://en.wikipedia.org/wiki/Triangle_arbitrage and (if i'm right) then when the FPI ring equals 1 you CAN offset all postions against themselves which would mean if you can get them to do that with positive interest result it would produce profit continually no matter what the market does.

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Gert Frobe
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Postby Gert Frobe » Mon Oct 23, 2006 3:24 pm

David, thanks for the MT4 update.

trevman, i dont know if an EA can auto trade this. inless you you can have the EA trade on J hooks at the FPI. However i think that an EA could be built to set the trade (inter trade@ bid, bid, &ask) at almost the same time on the three trades via a one click trade box on the screen.

Michal, davidf and all who have put in added input into the FPI
thank you,

ben

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Postby Gert Frobe » Mon Oct 23, 2006 3:41 pm

by setting up the FPI ring on MT4 (w/a theveing fixed spread bastard broker or for short- TFSBB) it looks like it can be traded profitable. i think that the FPI ring can arb. the TFSBB's inefficiency of there trading desk as they move their fake spreads to the market changes.

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michal.kreslik
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Postby michal.kreslik » Mon Oct 23, 2006 7:49 pm

Concerning the interest rates on the open Impeccable Hedge positions, I've just found Oanda pays/charges interest as you go - continuously:

http://fxtrade.oanda.com/fxtrade/intere ... tion.shtml

So they don't employ the common practice of settling up the interest at 5 pm ET sharp as most FX brokers do.

Michal

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michal.kreslik
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Postby michal.kreslik » Mon Oct 23, 2006 9:41 pm

Concerning the floating (not rounded) lot sizes required for the Impeccable Hedge, at least
  • EFX group and
  • Oanda
support position sizes with precision down to 1 single unit.

So you can buy 1.2458 lots of EUR/USD.

Michal

johnel
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Postby johnel » Mon Oct 23, 2006 11:57 pm

michel congratulations for this excellent idea.
i am new in forex so forgive me if i make a mistake.ihave one question.
im using a forex treading software that takes a 2-3 pip commision on every transaction.this way the fpi "trick" will not work...
what can i do?
:roll:
thx for ur time...

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michal.kreslik
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Postby michal.kreslik » Tue Oct 24, 2006 12:15 am

Get a better broker :)

Michal

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trader_hal
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Quick FPI Trade Test

Postby trader_hal » Tue Oct 24, 2006 12:23 am

Seemed to have executed ok. It was all manual, but nearly not as tricky to execute as I thought. Order execution with MB is pretty good. Are the currency calculations ok? Has anyone else traded any real money? Please share your experience.


johnel
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Postby johnel » Tue Oct 24, 2006 1:15 am

:)which one do u propose?

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