Hello,
I was wondering if hedging trades is legal in the forex market? From what I've read this is regulated in the U.S..?
I was wondering if hedging trades is legal in the forex market? From what I've read this is regulated in the U.S..?
"Dll calls must be allowed!" 3 replies
1 Pip Spread plus Scalping allowed Brokers 21 replies
[NFA] broker cancel executed orders no longer allowed 3 replies
DislikedI sense I'm going to have problems with all brokers. Logic + right conditions you can't loose I wonder if this is what the big player HF trading is all about. 10k to 4mil+ in less then a year on backtest.. plateus when you hit the 100 lot size limiterIgnored
Disliked{quote} you must be careful, i had my custom version of forex hacked, on backtest it turned 1k into millions, did it every single time but on farward tests it didnt even make a dime... forex is a marathon not a race, you need to be smart also and have other skills in order to make it.Ignored
Disliked{quote} you must be careful, i had my custom version of forex hacked, on backtest it turned 1k into millions, did it every single time but on farward tests it didnt even make a dime... forex is a marathon not a race, you need to be smart also and have other skills in order to make it.Ignored
Disliked{quote} Cover this by adjusting TP or Lot size slightly after calculating the difference? And yeah will be doing allot more testing. I lied a little.. you do loose a little equity if the market fails to decide a direction after X attempts or you can play it super safe but it takes much longer to compound... It's just about finding that relatively safe X amount with respectable lot sizes based on a low equity percentage.. ohh and backtest was from 1k lol.. {image}Ignored
Disliked{quote} Hello krmpy, By x attempts do you mean consolidation/range ? also is your risk reward 1:1 ? thanks and good luck for your trading.Ignored
DislikedHello, I was wondering if hedging trades is legal in the forex market? From what I've read this is regulated in the U.S..?Ignored
Disliked{quote} You've written an EA, right? And by "hedging" I assume that you mean having both buy and sell positions open simultaneously in the same pair? So if your br0ker doesn't allow same-pair hedging, then all you do is modify the EA code to keep track of the net position (long, short or zero), and simply adjust the position to the net, at every point (when the long and short positions in the hedge balance each other, you are simply out of the market). I converted an EA for a client back in 2012, and it worked fine, i.e. made exactly the same pips...Ignored
Disliked{quote} Hanover, I didn't get it. What do you mean by net position? Do you mean if someone wants to Hedge (as you defined about) one lot Long with one lot Short, should close the Long and remain on sidelines. But if someone wants to hedge one out of two lots Longs, each opened with a different profit/loss target, should close one but keep track of it as if it was hedged?Ignored
The net position is all that counts. Suppose trader 'A' has 3 lots long and 2 lots short on EURUSD at $10/pip. Then price rises 10 pips. So he makes $300 (3 lots x $10/pip x 10 pips) on the long position and loses $200 on his short, for a net result of $100. Trader 'B' simply holds the net position of 1 lot long. Price rises 10 pips, so he makes $100, exactly the same. Suppose price then falls 20 pips. 'A' loses $600 on his long and gains $400 on his short, for a net result of $-200. 'B' simply loses $200 on his long, for the same $-200 result. No matter what price does henceforth, as long as 'B' maintains the same net position as 'A', they will both bank the same amount.
[EDIT: fixed the math errors in the paragraph above, but the principle and end result remain the same].
OK, some more examples:
Example 1: you're net 3 lots long, and the rules require that you open a sell position of 2 lots at this level. Hence you simply close 2 lots long, leaving the same net result (1 lot long).
Example 2: you're net 3 lots long, and the rules require that you open a sell position of 5 lots. Hence you close the 3 lots long, and open a sell position of 2 lots, leaving the same net result (2 lots short). Mathematically, 3 minus 5 equals -2.
If you reach a profit target or a stoploss, you'd be closing part or all of a position. Again, you calculate the effect that this would have on the net position, and close trades accordingly. So if you're 3 lots long, and you are required to close 1 lot when price reaches a certain target, and price hits that target, you do so, leaving 2 lots long still open.
Conclusion:
Entries and exits are merely adjustments to your net position. As I've said many times: to be profitable, you must be net long while price is rising, and net short when it's falling, frequently/heavily enough to overcome costs. That is all that counts. Whether you use entries, exits, hedging, scale in/out, SLs, TPs, all of these are merely different ways of adjusting your net position.
For example, if you're 1 lot long and you reach your TP, it doesn't matter whether you close the position or simply sell 1 lot. Either way, you're net position becomes zero. Closing a long position is the same as opening a short position, and vice versa. In fact, the TP is a sell order that your br0ker effectively matches with an equal buy order placed by another trader.
Your strategy is ultimately where you time these changes to your net position. The more accurate your timing is, relative to market highs/lows in your chosen trading horizon, the more pips you bank. Strategy is all about timing and direction; the way in which you adjust your position is merely an operational issue.
About the extra costs when same-pair hedging: when hedged, if your hedge is open at 5pm New York time, you receive less swap on the 'carry trade' position than your br0ker charges you on the opposite position, i.e. an overall loss on the swap. Hence you save yourself money by simply being out of the market. Also, in some situations you can pay more spread when hedging, as in Merlin's example here.
So it's easy enough to get around all of the NFA's anti-hedge and FIFO rules, by simply maintaining a net position.
Typed this in a hurry and I've waffled a bit, hope it all makes sense.
Have a wonderful Xmas and New Year.
David
Disliked{quote} Chicky, Simply calculate the net position at every given point. Some examples: if currently 'hedged' at 3 lots long and 2 lots short, this nets out to 1 lot long, so EA is simply 1 lot long. if currently 'hedged' at 1 lot long and 1 lot short, this nets out to zero, so EA is simply out of the market. etc The net position is all that counts. Suppose trader 'A' has 3 lots long and 2 lots short on EURUSD at $10/pip. Then price rises 10 pips. So he makes $30 on the long position and loses $20 on his short, for a net result of $10. Trader 'B'...Ignored
Disliked
Example 1: you're net 3 lots long, and the rules require that you open a sell position of 2 lots at this level. Hence you simply close 2 lots long, leaving the same net result (1 lot long).
Example 2: you're net 3 lots long, and the rules require that you open a sell position of 5 lots. Hence you close the 3 lots long, and open a sell position of 2 lots, leaving the same net result (2 lots short). Mathematically, 3 minus 5 equals -2.
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Disliked{quote} This would work in theory but will increase your exposure significantly.. You'll have allot less cover orders to work with.. And will actually require a decent entry strategy to counter that.. Long term positions will help with that. I guess if your trying to avoid NFA thats the work around. Hopefully for me being in AUS this won't be required.Ignored
Disliked{quote} You are very capable person and I have great respect for you, one reason I chose you for this question. Very carefully, It is deeper than many may think...........Ignored