MT5 a step backwards?? - page 10
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
BENEFITS OF HEDGING
1) DRAWDOWNS minimized.
2) You make money on retracements.
BENEFITS ON NONHEDGING
1) Net positions do not look flat; however, you just continually add to your position.
However, why BUY a falling knife when you can SELL. It is much safer.
The same number of pips. You make 1000 pips on the first buy order, opened at 1.2000 and closed at 1.3000, and 3000 pips on the second buy order, opened at 1.2000 and closed at 1.5000. (Note that the total is 4000. Your original calculation of 3000 is wrong. In your original example, if you open at buy order in stage 1 at 1.2000 and close it in stage 4 at 1.5000, that's 3000 pips, not the 2000 which you wrote.)
YOUR EXAMPLE is risky trading because YOU ARE COMPOUNDING to YOUR DRAWDOWN. Thus, you failed to realized that SHORTING a retracement is SAFER.
BENEFITS OF HEDGING
1) DRAWDOWNS minimized.
2) You make money on retracements.
The financial results and drawdown are identical in the non-hedged equivalent which I have given for your hedged example. This is not a benefit of hedging. You can achieve the same financial results in hedged and non-hedged environments - with the exception, again, that non-hedged versions will tend to do better on swap.
More realistically, I'd say:
BENEFITS OF HEDGING
1) Easier to code. Requires less thought and expertise.
In the end, it is about capital preservation and minimized drawdown.
You are compounding your drawdown and probably end up STOPPING OUT before actually making it to takeprofit.
YOUR EXAMPLE is risky trading because YOU ARE COMPOUNDING to YOUR DRAWDOWN. Thus, you failed to realized that SHORTING a retracement is SAFER.
You failed to realized that RESULT is just one factor in Forex. YOU forgot about RISK, CAPITAL PRESERVATION, MINIMIZING DRAWDOWN.
Again, you probably end up stopping out first if the retracement continue on down a little farther.
My example was just a perfect example BUT it can retraces more down.
Thus, the result cannot be the same if you stopped out.
WHAT I AM SAYING is that your EXAMPLE may be the same as HEDGING on some trades BUT NOT ALL trades.
You need to account for MURPHY'S LAW with DEEPER retracements!!!!!!
FOR YOUR EXAMPLE to be EQUIVALENT TO HEDGING, it has to be same on all examples!!!
You failed to realized that RESULT is just one factor in Forex. YOU forgot about RISK, CAPITAL PRESERVATION, MINIMIZING DRAWDOWN.
Once again: the net position in the market for the hedged and non-hedged versions is identical, and therefore the RISK is identical, the CAPITAL PRESERVATION is identical, and the DRAWDOWN is identical.
You are again confusing the nature of the orders placed into the market with the internal trading logic of the EA. In MT5, the EA can continue to say to itself "I am long 1 lot starting at 1.2000 and short 1 lot starting at 1.3000". What has to change is what it says to the market. In MT5 it has to achieve the same effect using a different pattern of orders, while behaving in the same fundamental way, achieving the same results, with the same level of risk etc. The fact that it has to use a different pattern of orders in order to achieve the same net market position does not mean that the internal logic of the EA has changed, become riskier, or whatever.
WHAT I AM SAYING is that your EXAMPLE may be the same as HEDGING on some trades BUT NOT ALL trades.
You need to account for MURPHY'S LAW with DEEPER retracements!!!!!!
FOR YOUR EXAMPLE to be EQUIVALENT TO HEDGING, it has to be same on all examples!!!
UNLESS YOU ARE FILTHY RICH WITH DEEP POCKETS, I DON' RECOMMENT COMPOUNDING TO YOUR DRAWDOWNS ON A FALLING KNIFE.
My pockets are not deep; therefore, I prefer hedging!