Forex forwards experts ?

tar · Aug 20, 2008

Hi experts

, its known that there is gap between forward prices and spot price ( ex. pound/yen spot =204.84 but DEC contract price =201.80 ) , my question is do prices close the gap before the expiry date ?

tar · Aug 20, 2008

GammaJammer said:
The gap is there because of interest rate differentials between the two currencies. So short answer to your question is yes this gap will close, but I have a feeling you are really asking if there's a quick, easy profit to be had there, and all you have to do is buy one and sell the other, in which case the answer is no - no such thing as a free lunch. Funding costs for holding your position would pretty much exactly square you up and you wouldnt make any money.

Sorry

GJ

thanks , but i was thinking to take advantge from the rolling charges not the price movement . i think maybe we can bet in diffrent stakes so we can solve the gap problem . need some calculation, difficult though .

tar · Aug 20, 2008

ok , maybe if we buy dec and sell sep bets , part of the gap between both rates will be closed and no charge here (except the spread ! ) cuz we use 2 forward bets .

Pound/yen dec 201.86 but sep 204.26 the gap is 240 pip and spread cost ( 12+12 = 24 ) , if 50-60 pip closed then a 30 pip profit , or if we take it earlier better cuz we will pay the spread once only anyway !!! i dont know

shadowninja · Aug 20, 2008

If you take the attitude that the spread betting companies are (1) not stupid (2) only in it to take your money, then you can guarantee that even if there is a way round it, they'll suss it out very quickly.

tar · Aug 20, 2008

shadowninja said:
If you take the attitude that the spread betting companies are (1) not stupid (2) only in it to take your money, then you can guarantee that even if there is a way round it, they'll suss it out very quickly.

yah , Simon ( CS ) said its ok to make such garanteed profits

Hoggums · Aug 20, 2008

tar said:
ok , maybe if we buy dec and sell sep bets , part of the gap between both rates will be closed and no charge here (except the spread ! ) cuz we use 2 forward bets .

Pound/yen dec 201.86 but sep 204.26 the gap is 240 pip and spread cost ( 12+12 = 24 ) , if 50-60 pip closed then a 30 pip profit , or if we take it earlier better cuz we will pay the spread once only anyway !!! i dont know

Wouldn't work, the Dec and Sep futures will close the gap by the same amount every day.

This is what the "carry" trade was all about last year. Everyone piled into AUD/JPY because the interest differential payments you received were so great. It is a nice way to make money as long as the underlying moves in the right direction!

tar · Aug 20, 2008

Hoggums said:
Wouldn't work, the Dec and Sep futures will close the gap by the same amount every day.

This is what the "carry" trade was all about last year. Everyone piled into AUD/JPY because the interest differential payments you received were so great. It is a nice way to make money as long as the underlying moves in the right direction!

u r right , wouldnt work ,, mmm , ok then we need 2 forex accounts islamic ( no interest ) and normal account but the problem with the costing fees for moving money from broker to another to close losses , s**t it is difficult to make an edge against market makers and SB firms .

Forex forwards experts ?

tar

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