In my previous post I mentioned that I would like to try launching a real money version of the USD/TRY/CAD hedged carry trade described therein. Yesterday morning I did so, and despite this project's presently very small size, the results are rather nice.
When initiating the two positions that compose a carry trade of this design, I decided to look for each side of it to be positioned for their respective profit potentials - in the case of the USD/TRY short position, I wanted to buy in while the price action was up, and for the USD/CAD long position I wanted to buy in while the price action was down. Previously when experimenting with this idea in game accounts I looked for both currency pairs to display identical candles, meaning one of the two would actually be priced unfavorably at that moment for its direction (long or short). This led to the good results I described in the previous post, but I think attempting to set up these hedged carries in the way I've done this real one is better.
Why? Because as I type this, I am looking over at my real money USD/TRY/CAD hedged carry, and the total value of the account is up 10.65%. Meanwhile, the values of the two game accounts are a -5.7% and -5.99%. Not bad considering how much hypothetical interest they generate every day, but they're not doing as well as my real money account.
I had to wait for a full 24 hour period to pass with these positions open before I could know what the interest rate would work out to (my broker calculates interest by the second, so on the day that you buy in the interest you receive is not a full day's worth). Now that two trading days have passed and today at 1:30pm Pacific (-8 GMT) a full 24 hour period went by, the interest rate has turned out to be 74.80% when calculated against the unleveraged balance of the account.
I've decided to continue building on this position with my intention being to buy in with $100 "blocks" of capital and take for myself $5 per month per $100 block, essentially a 60% return per year per block. This does not count the additional interest I would be leaving behind, of course, but to keep myself from reaching that far into the cookie jar I'm going to focus on "my 60% interest return" - the remainder I will leave in the account to gradually reduce the percentage of used-to-unused margin (and from time to time, if the numbers and chart patterns look nice like they do now, I may tap this balance to create new $100 capital blocks).
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