Q1: Sell 1 lot eur/chf or sell 1 lot eur/usd with 1 lot usd/chf? Q2: How to use EA to close pofit for "hedge" or "statistical arbitrage"?

[[Deleted]]

Evening to all,

I'm new to forex and have 2 simple questions :)

Q1: When i approached a naysayer Remisier "buddy" (Mr A) and asked him about hedging eur/chf, he asked his broker colleague who is supposed to be a forex expert (Mr B),
instead of buying 1 lot of eur/usd and 1 lot of usd/chf, he suggested i should just buy 1 lot of eur/chf.
He also said that "hedging" is only what traders use to make it sound sophisticated for investors to admire and its a scam to generate more spread earned.

I got a feeling it might not be so, hence i am practising through demo account and i believe it will work wonders. Any comments on this "hedge" or "statistical arbitrage" theory?

Q2: I believe that after hedging (for short(forget about political correctness)) i can use EA to tabulate or close trades at say 1 or 2% and can go sleep with peace and wake up logging in to see good news. :) How do i do the EA and what to attach to which charts?

I open positions manually and would like EA to close trade for me.

Thanks in advance, right teaching leads to right believing leads to right living.    :)

[[Deleted]]

there is nothing easier than to try it. theory says that this Mr. B... let's look at the numbers. Look it this way:
- buy 1 lot eurusd means that you are buying 100 000 euro and selling [depends on eurusd] something like 132 000 usd
- buy 1 lot usdchf means that you are buying 100 000 usd and selling [depends on usdchf] somehing like 120 430 chf

so you have
-32 000 usd
-120430 chf
=- 158967.60 chf

if you would buy 1 lot eurchf you would have
-159 000 chf

-- so the answer for Q2 is: what about stop losses?

Mr. B is right after all...

[[Deleted]]

zolero wrote:
there is nothing easier than to try it. theory says that this Mr. B... let's look at the numbers. Look it this way:
- buy 1 lot eurusd means that you are buying 100 000 euro and selling [depends on eurusd] something like 132 000 usd
- buy 1 lot usdchf means that you are buying 100 000 usd and selling [depends on usdchf] somehing like 120 430 chf

so you have
-32 000 usd
-120430 chf
=- 158967.60 chf

if you would buy 1 lot eurchf you would have
-159 000 chf

-- so the answer for Q2 is: what about stop losses?

Mr. B is right after all...

thanks for your reply,
Q2 is no s/l will be programmed, manual s/l as the daily movements or even up to a month movement for eurchf will not jeopardise my
margin. Less than 20% in bad times.
Q2 part2 which chart to attach the EA to if i want to hedge?

thanks zol.

[[Deleted]]

barakah:

thanks for your reply,
Q2 is no s/l will be programmed, manual s/l as the daily movements or even up to a month movement for eurchf will not jeopardise my
margin. Less than 20% in bad times.
Q2 part2 which chart to attach the EA to if i want to hedge?

thanks zol.

again, if EURCHF will not jeopardize your trade maybe it will not bring any profit as well? What I wanted to explain was that even if you're trying to be smart, you're just opening plain EURCHF trade. You can't make more money than EURCHF is moving although you can lose a little more because of spread. What you are trying to open is zero-risk position where it doesn't matter is one goes up ore down because other pair is moving in same pace, depending on correlation. You could think a little more complicated position where opening two position doesn't mean the same as opening just one - like if you would open eurjpy and gbpusd (haven't looked to their correlation). depending on correlation you must open buy for both (correlation is near to -1) or one buy one sell (+1). Now, remember, there is no perfect market and correlation is never +1 or -1. To open a correct position is a longer story than just 1 lot vs. 1 lot...

Q2 part 2: it doesn't matter. if you know how to make correct EA you can put it where ever you want to.