Can someone out there please explain a simple system for hedging.Anyone out there use hedging instead of stops?
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Quoting vdelucaDislikedMerlin,
If hedging is of no use in the cash spot forex market, why do brokers like FX Solutions and CMS have it as a feature on their platforms?Ignored
Quoting vdelucaDislikedMerlin,
If hedging is of no use in the cash spot forex market, why do brokers like FX Solutions and CMS have it as a feature on their platforms?Ignored
Quoting merlinDislikedi was thinking about it, and the only way to hedge in the cash market is to buy either an option or a futures contract in conjuntion with your cash market trade. ie i could buy EUR/USD and also buy a Euro Futures put option. maybe brokers like CMS have the hedge feature for options traders, not the cash market traders.Ignored
Quoting vdelucaDislikedSo, what could this be useful for that a regular stop-and-reverse could not accomplishIgnored
Quoting pipsDislikedOK ... I have been thinking : say you go long on eurusd.youset a stop loss at x. however instead of a stop loss you have a sell order.The market continuse to go against you and your sell order is triggered .Now you have two open positions in the same pair. your 2nd position is protecting your first , it does not matter how far your first position tanks because the 2nd position makes up for it.Eventually it must turn around.Once the market goes above x you could exit the 2nd position.
Needs more thought about parameters etc .
Is this feesable ?Ignored
Quoting vdelucaDislikedNo, the "hedge" feature on FX Solutions and CMS allows you to have two opposite positions open in the same currency pair instrument at the same time, i.e. you can be both long and short EUR/USD, with separate stops and limits attached to each position. So, what could this be useful for that a regular stop-and-reverse could not accomplishIgnored
Quoting vdelucaDislikedMerlin,
If hedging is of no use in the cash spot forex market, why do brokers like FX Solutions and CMS have it as a feature on their platforms?Ignored
Quoting pipsDislikedI HATE LOSSES!Ignored
Quoting slick 60DislikedVD
Stop and reverse allows you to take losses up and down at random and may or may not be profitable. I do not use STOPS. While hedged your money is free to go ahead and trade and add to your equity. At obvious turns in market pull all the opposite side and let the market run back to you. Work it up or down in waves. For me it works because I work the markets. slick 60Ignored
Quoting vdelucaDislikedSlick, your post left me confused -- exactly how are you using the hedge function that is any different from a stop-and-reverse? When you "pull all the opposite side," is not this the same as reversing your position?
Example:
EURUSD is at 1.2100/1.2103. With the hedge, I would go long @1.2103 and short @1.2100. If the price declines to 1.2050, I close the long position and keep the short open; if price advances to 1.2150, close the short and keep the long open. At this time, I am down by the 3 pip spread.
Without using the hedge, I would place entry stop orders @1.2150 and 1.2050, with "if done" contingent stops at the same prices. The non-executed order together with the activated contingent order then performs the role of a stop-and-reverse. At the time of execution, again, I am down by only the 3 pip spread.
So, I ask again, what does the hedge allow you to accomplish that you could not do otherwise using conventional entry and stop loss orders?Ignored
Quoting slick 60DislikedWhat the heck, Merlin said I could say ASS!Ignored
Quoting slick 60DislikedVD
I do not go long and short the same pair at the same time as you illustrated above. I attempt to get on the right side of the market and do not use stops. I wish I could hit the turns a little better (working on it) but when the market goes against me I decide where to put the hedge on in place of a stop. 20-40 pips, where ever. Now I am holding a losing position and a winning position no matter which way the market moves. I will remove one side at the next turn taking profits (may just be a swing trade in a big up or down move) and let the losing position become less. If the move is short term I will hedge again and continue building equity and a larger balance. At some point I will totally work the losing position back to a winner or pull the plug when I have had enough. Depends on life getting in the road of trading if I decide to fold. That explains my post of 73 closed trades this month with only 5 losses. I decided to take the loss because I was going away, working my business or whatever.
I posted 93% wins which is correct (but figures can be misleading). Dollars for and against were
73 trades; 68 winners and 5 losers. Gains in dollars $1,888.29, losses $179.58.
That still has a 90% end for slick.
It is a lot of work and you have to be in front of the computer a lot and enjoy it. The thing is, I decided to take the loss not letting the bandits run my STOPS. Still cannot get used to giving the team that has the ball my playbook. They have to score! Just does not sit well with me.
Hope this helps.
slick
PS - please note this is on a small account and we are still in the deep learning mode and most of these trades are very conservative small lots. Soon will be kicking some big time A--! What the heck, Merlin said I could say ASS!Ignored