I must be missing something. So on the usual Wednesday NY 5pm swap rollover, if I go and purchase a pair where I get the best swap payment just before rollover time and close it just after, do I get almost risk free swap payment? Or do the spreads widen, or maybe the pair goes up or down automatically, right after 5pm to make that a losing proposition? As stated, I must be missing something!
Is it for every Wednesday NY 5pm swap rollover? Or any other day also it happens or you have checked it?
Yes you will be credited with triple swaps. But you risk to receive a loss from currency speculations. Tested this trade with Hotforex but unfortunately a move in unfavourable direction next day erased all gains. Started to play with swap arbitrage then.
It's just like buying a stock before it issues a dividend, the price falls the exact amount of the rollover amount or dividend when it goes ex. No free lunches there.
Well it's not the same situation like with stocks. If a currency pair would surely rise or drop before triple swap you could make respective bets and earn profit, no?
It's exactly the same situation. Remember, if you buy or sell just before the swap you're subject to both the swap and the currency move. The currency pair surely rises or falls the exact amount of the swap so if you buy it just before the two net out to zero. Actually a little less than zero because the bucket shops provide poorer swap rates than the wholesale rates, plus you'll lose the spread on the buy/sell transaction.
I have experimented with this while using Forexchief broker. yes the swaps are good, but this right here is not sustainable. I am planning the hedge position to profit from swaps, but I need a damn good capital for that.
How do you intend to do that? Because normally a +ve swap position is hedged by a -ve swap position and your net swap will be -ve