Here's where the hedging rule frosts my mug.
Open a long position entered using the daily chart, I expect to be in the trade for 4 or 5 day.
I notice on my 15 minute chart that there is a retrace starting, I want to trade that retrace. I click short. Trading platform says 'hedging not allowed.'
I'm not tying to hedge - I'm trying to trade with two independent strategies one long term and one short term, and I cannot consider the two strategies independently of each other. I don't need a regulator telling me I cannot do that.
Cost with no hedging allowed:
Long - spread cost (+ long strategy risk) - close, short - spread cost (+ new short risk + new risk to long strategy) - close, Long - Spread Cost - close.
- 3 spread costs, long strategy risk, short strategy risk and new long strategy risk.
Cost with hedging allowed:
long - spread cost (+long strategy risk) - short - spread cost (+new short risk) - close short - close long.
- 2 spread costs, long strategy risk and a short strategy risk.
Which is better?
Open a long position entered using the daily chart, I expect to be in the trade for 4 or 5 day.
I notice on my 15 minute chart that there is a retrace starting, I want to trade that retrace. I click short. Trading platform says 'hedging not allowed.'
I'm not tying to hedge - I'm trying to trade with two independent strategies one long term and one short term, and I cannot consider the two strategies independently of each other. I don't need a regulator telling me I cannot do that.
Cost with no hedging allowed:
Long - spread cost (+ long strategy risk) - close, short - spread cost (+ new short risk + new risk to long strategy) - close, Long - Spread Cost - close.
- 3 spread costs, long strategy risk, short strategy risk and new long strategy risk.
Cost with hedging allowed:
long - spread cost (+long strategy risk) - short - spread cost (+new short risk) - close short - close long.
- 2 spread costs, long strategy risk and a short strategy risk.
Which is better?