FPI - Fractional Product Inefficiency: The Impeccable Hedge

NeoTicker indicators

Moderator: moderators

User avatar
michal.kreslik
rank: 1000+ posts
rank: 1000+ posts
Posts: 1032
Joined: Sat May 13, 2006 2:40 am
Reputation: 0
Location: Monte Carlo, Monaco
Real name: Michal Kreslik
Gender: Male
Contact:

Postby michal.kreslik » Wed Dec 06, 2006 10:10 pm

holyguy7 wrote:Accually, it is very simple. I have the EA set to 7 pips profit. So once the ring hits a profit of 7 pips (beyond the spread), it closes the ring.


If you let the trade to be exposed to the price direction risk, then it's not FPI.

FPI is not exposing the investor to any price-direction related risk.

This is not to say that generating profit with strict FPI is the only way to use this concept, but one should assess whether the FPI should be used in his trading system at all if one negates its biggest advantage - no price direction risk.

It's like entering a regular price-direction risk trade with a futile hedge and then closing one of the hedged positions. This way, one is charged with more trading costs, but it yields no advantage (maybe besides the psychological advantage for some).

Michal

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

SetFreeByTruth
rank: <50 posts
rank: <50 posts
Posts: 4
Joined: Thu Nov 16, 2006 6:57 pm
Reputation: 0
Gender: None specified

Postby SetFreeByTruth » Mon Dec 11, 2006 2:16 pm

Hey guys. I wrote the EA holyguy7 is referring to. A few comments:

@ Nicholishen:
Good catch. No, there is no speculation - the entire ring is supposed to close together. I'll have to look at holyguy7's logs to see what happened.

@ FX5:
We are forward-testing, not back-testing. If any EA would NOT work with back-testing, this would be it.

@ Michal:
First, many thanks for laying out the principles of FPI so clearly. Fascinating!

The EA implements strict FPI as I understand it from this thread. To make configuration easy for the user, I allow them to set a pip goal (per ring), but internally this is translated to FPI. For example, in your first post in this thread, you mention how a swing from negative FPI to positive might yield a profit of 5-6 pips. In our EA, the higher you set the pip goal, the more both the entry and exit FPI must deviate from center. But the rings are perfect hedged using the formulas laid out in this thread. Total ring spread is added to the pip goal to arrive at the FPI figures.

Regarding swap: based on my experience and calculations, the position sizes are crucial when determining whether or not a ring will generate positive swap. Swap payments are based on the size of your position, so I don't know how it could be otherwise.

The point here is that a ring can have two negative-swap pairs and one positive swap pair, and still generate positive swap overall because of the position sizes. But the opposite is also true with other rings: your swap profit will disappear if the negative-swap pairs overtake the positive pairs.

When I first wrote the EA I didn't take this into consideration, and perfectly-hedged rings that I thought would generate positive swap (based on the rates retrieved programmatically from the broker), did not. After I made the adjustment to consider position sizes, everything now comes out exactly as it should. (Not all brokers have positive swap rings.)

You state a couple of times in recent posts that position sizes don't matter when determining swap, and you obviously understand the issues, so please explain what you mean so that I can continue to learn.

Thanks again, Michal. If you limit the rings to those which generate good swap, this may be the safest Forex trading method I've ever seen.

User avatar
TheEconomist
rank: <50 posts
rank: <50 posts
Posts: 22
Joined: Thu Nov 02, 2006 7:13 pm
Reputation: 0
Gender: None specified

Postby TheEconomist » Mon Dec 11, 2006 4:55 pm

@holyguy7 & SetFreeByTruth

You did the same mistake as me... Implemented strict BSS and SBB rings without looking to see if every currency is bought once and sold once... (i just calculated the products and seemed correct, saw the mistakes some days after). As for the swap positive rings, there are no such rings...perhaps a few, generating something under regular bank interest , and I made scripts that check all the arrangements...

User avatar
Nicholishen
rank: 50+ posts
rank: 50+ posts
Posts: 52
Joined: Thu Oct 26, 2006 8:44 am
Reputation: 0
Real name: Nick
Gender: Male

Postby Nicholishen » Mon Dec 11, 2006 11:53 pm

Unfortunately, this thread has once again become counter productive with the whole ring SWAP issue, again. I think that it is abundantly clear that positive interest rings “may” exist. If in fact they do, the people out there who’ve done their homework who aren’t going to give this information away for free and it’s with good reason. Traders out there who would know where and how to implement a strategy such as this, know that these opportunities ARE limited, and considering the lengths one must go through facilitate this strategy and not get blacklisted, takes extreme creativity. If in fact this where even a viable strategy, the more people using this method = the faster a dealer will mitigate their loss. IE. YOU ARE BLACKLISTED. This is not beneficial trading to ANY broker AND you WILL get blacklisted. It’s not a question of if but when.

Bruce
rank: <50 posts
rank: <50 posts
Posts: 11
Joined: Thu Nov 02, 2006 1:20 am
Reputation: 0
Gender: None specified

Postby Bruce » Tue Dec 12, 2006 3:00 am

Nicholishen wrote: If in fact they do, the people out there who’ve done their homework who aren’t going to give this information away for free and it’s with good reason. Traders out there who would know where and how to implement a strategy such as this, know that these opportunities ARE limited, and considering the lengths one must go through facilitate this strategy and not get blacklisted, takes extreme creativity. If in fact this where even a viable strategy, the more people using this method = the faster a dealer will mitigate their loss. IE. YOU ARE BLACKLISTED. This is not beneficial trading to ANY broker AND you WILL get blacklisted. It’s not a question of if but when.


Nicholishen,

I am not quite sure what you are concerned about. I understand the Forex market deals in trillions of dollars, so the market liquidity is there. And the brokers want their clients to transact many trades so that they can collect their part in the spread.

Why would they blacklist someone trading the FPI? You are entering three currency pairs and later you are exiting the positions... The broker gets his spread, you get your FPI profit... So I don't get the great concern that you have. Can you explain it more clearly?

Also I thought that the idea of Forex forums was for traders to help traders be more profitable....

Successful trading,

Bruce

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

trader-fx
rank: <50 posts
rank: <50 posts
Posts: 1
Joined: Tue Dec 12, 2006 3:10 am
Reputation: 0
Gender: None specified

Postby trader-fx » Tue Dec 12, 2006 3:17 am

Nicholishen its guy who only take from forums and never pay back. :!:

He only try to show that he is too good to pay back, and show results from demo tests.

But I'm sure some day he will pay back. Depend how? :?:

Nicholishen wrote:Unfortunately, this thread has once again become counter productive with the whole ring SWAP issue, again. I think that it is abundantly clear that positive interest rings “may” exist. If in fact they do, the people out there who’ve done their homework who aren’t going to give this information away for free and it’s with good reason. Traders out there who would know where and how to implement a strategy such as this, know that these opportunities ARE limited, and considering the lengths one must go through facilitate this strategy and not get blacklisted, takes extreme creativity. If in fact this where even a viable strategy, the more people using this method = the faster a dealer will mitigate their loss. IE. YOU ARE BLACKLISTED. This is not beneficial trading to ANY broker AND you WILL get blacklisted. It’s not a question of if but when.

User avatar
Nicholishen
rank: 50+ posts
rank: 50+ posts
Posts: 52
Joined: Thu Oct 26, 2006 8:44 am
Reputation: 0
Real name: Nick
Gender: Male

Postby Nicholishen » Tue Dec 12, 2006 4:57 pm

Bruce wrote:
Nicholishen wrote: If in fact they do, the people out there who’ve done their homework who aren’t going to give this information away for free and it’s with good reason. Traders out there who would know where and how to implement a strategy such as this, know that these opportunities ARE limited, and considering the lengths one must go through facilitate this strategy and not get blacklisted, takes extreme creativity. If in fact this where even a viable strategy, the more people using this method = the faster a dealer will mitigate their loss. IE. YOU ARE BLACKLISTED. This is not beneficial trading to ANY broker AND you WILL get blacklisted. It’s not a question of if but when.


Nicholishen,

I am not quite sure what you are concerned about. I understand the Forex market deals in trillions of dollars, so the market liquidity is there. And the brokers want their clients to transact many trades so that they can collect their part in the spread.

Why would they blacklist someone trading the FPI? You are entering three currency pairs and later you are exiting the positions... The broker gets his spread, you get your FPI profit... So I don't get the great concern that you have. Can you explain it more clearly?

Also I thought that the idea of Forex forums was for traders to help traders be more profitable....

Successful trading,

Bruce


@Bruce

There is no concern. First, if you've been following this thread you'll notice the cyclical patern of posts about the positive interest. I was stating that it's not going anywhere. I'm sure you've heard the expression "time is money"... I am trying to save your time by informing you that this strategy (maintaining a hedge and profiting from Swap) is not welcome at any broker. I never said fpi couldn't be traded. Trade it if you want...
Last edited by Nicholishen on Tue Dec 12, 2006 5:25 pm, edited 1 time in total.

User avatar
Nicholishen
rank: 50+ posts
rank: 50+ posts
Posts: 52
Joined: Thu Oct 26, 2006 8:44 am
Reputation: 0
Real name: Nick
Gender: Male

Postby Nicholishen » Tue Dec 12, 2006 5:20 pm

trader-fx wrote:Nicholishen its guy who only take from forums and never pay back. :!:

He only try to show that he is too good to pay back, and show results from demo tests.

But I'm sure some day he will pay back. Depend how? :?:

Nicholishen wrote:Unfortunately, this thread has once again become counter productive with the whole ring SWAP issue, again. I think that it is abundantly clear that positive interest rings “may” exist. If in fact they do, the people out there who’ve done their homework who aren’t going to give this information away for free and it’s with good reason. Traders out there who would know where and how to implement a strategy such as this, know that these opportunities ARE limited, and considering the lengths one must go through facilitate this strategy and not get blacklisted, takes extreme creativity. If in fact this where even a viable strategy, the more people using this method = the faster a dealer will mitigate their loss. IE. YOU ARE BLACKLISTED. This is not beneficial trading to ANY broker AND you WILL get blacklisted. It’s not a question of if but when.


Your post is the definition of irony. If you think you have ANYTHING to contribute, why don't PM me and see what's going on behind the curtain. My guess is that YOU are a leech and probably have had some limited success of drawing out info or EAs (from the people actually putting in the time) with your little cry-baby posts.

SO, what do you have???

Bruce
rank: <50 posts
rank: <50 posts
Posts: 11
Joined: Thu Nov 02, 2006 1:20 am
Reputation: 0
Gender: None specified

Postby Bruce » Tue Dec 12, 2006 5:28 pm

Nicholishen,

Right. Trading for SWAPS is another thing.

Thanks for making that clearer about the FPI.

Successful trading,

Bruce

SetFreeByTruth
rank: <50 posts
rank: <50 posts
Posts: 4
Joined: Thu Nov 16, 2006 6:57 pm
Reputation: 0
Gender: None specified

Postby SetFreeByTruth » Tue Dec 12, 2006 6:13 pm

For the record:

There is at least one broker that has several significant positive swap rings. I'm not sure why a discussion on swap is considered to be not going anywhere. I think swap is crucial to trading FPI as the it can work against your position if it's open too long, meaning your position may never close for profit. Not all brokers have positive rings.

It took work to find these rings but it wasn't backbreaking.

When trading FPI, opening only rings that provide positive swap is to your advantage.

I spoke to an "official" at the broker in question and he stated that there are others with their brokerage that open rings only to gain swap (i.e., leave them open for months), and said he has no problem with this at all. It's possible he's lying but I just thought I'd pass this on.

As a disclaimer, I should say that I've only forward-tested on demo accounts. Perhaps the brokers are dishonest and there are no positive rings on live accounts, but I can only speak from my experience (which is limited).

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.


Return to “NeoTicker indicators”