This is an interesting strategy. It involves having the positive interest side with a good interest paying broker and hedging negative interest side with a broker that does not pay or charge interest. This carry trade hedge strategy in theory has no risk as the positive side is fully hedged.
One of the problems is that it may not be easy to get an interest free broker. Very few brokers, if any, would give you an interest free account if you told them exactly why you wanted one as ultimately they would be paying the negative swap for you. However, if you were to do your normal trading as well, they would earn income from the spread so they would probably be a lot more tolerant of such behavior.
Both sides of would at some point need rebalancing. You could have enough on each side for a 1000 pip swing, using a stop and tp as necessary then transfer money between the two brokers as required.
The strategy is potentially very profitable considering the risk involved. This is a fairly popular strategy and if solid risk management is used in excess of 40% per year is achievable.
Advantages to the Carry Trade Hedge
* Low risk
* No knowledge of technical or fundamental analysis required
* Simple and easy to execute
* Low time requirements
* Potential for a good return that would potentially easily beat the stock market
Disadvantages to the Carry Trade Hedge:
* The need and expense of rebalancing* The risk the broker will close your interest free side
Conclusion
Nice low risk strategy. If you are prepared to take on the small risks involved it might be for you. It would be better if you could do normal trading on the interest free side, to keep them content. They are in business to make money too.
