Buy Gbp/Usd and Sell Euro/Usd - page 5
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When you go short gbpusd and long eurusd at the same moment you are in fact playing a long eurgbp. If the eurgbp trends higher, obviously you can close both your positions with an overall profit at some point. But if the eurgbp falls, your so called "hedged" positions are in fact losing money. No matter if the dollar is strong or weak, your equity curve is descending. You cannot close both positions at the same time, because it would be a loss. If you close only the one in profit (let's say the eurusd long is in profit), what happens if the dollar keeps falling? Your other position, the short gbpusd will lead to a bigger loss than the win generated by eurusd you just closed. If you close the loser thinking that you let your winner run, maybe the opposite happens - the trend stops, and your winner becomes a loser too.
So the point is that you do not know when to close one of the 2 hedged positions you have open and let the other one run. And you can close them both at the same time in profit only if eurgbp is moving in the desired direction. But if you are so sure that eurgbp will move in a certain direction, then you can just play that pair from the start, and not pay the spread twice.
This maybe my another wacky idea but...
How about if we do like this :
1. Short Gbp/Usd and Long Euro/Usd (= Long Euro/Gbp) then Lock with Short Euro/Gbp (that's 3 pairs). Or...
2. Long Gbp/Usd and Short Euro/Usd (= Short Euro/Gbp) then Lock with Long Euro/Gbp.
But i believe it will give different result when we just Short Euro/Gbp then Lock with Long Euro/Gbp (1 pair hedge) cus i think we still have opportunity to catch the delay of those volatile.
What do you think about that LazyPawn?
Hi
When I first read this thread I thought that this is a good strategy. However, on a second thought .... I would like some explanations please.
What is the difference between "hedging" the eurusd and the cable and trading the EURGBP cross? (Except from the swap part. That's clear)
Is there a time gap between the price movement of the majors and the price movement of the cross? Let me put it this way: Can the price of EURUSD divided by the price of GBPUSD be different (at a certain time) from the price of EURGBP?
If it is, we can earn some pips. If it isn't... why pay the spread twice?
I know that if you are long on GBPUSD and short on EURUSD you will earn from the swap but what happens when the EURGBP is going up consistently for several days? Please see 14 to 21 August ... it was a 100 pips loss. Am I right?
What if on the 6th of July 2006 we have chosen to sell the GBPUSD and BUY the EURUSD? It was a top in EURGBP at 0.6962 and the pair never got back there. When and how we would have exited that trade? It is still on floating loss today (around 250 pips loss).
I guess I got excited to soon.
actually i don't clear about this system much
but i got +30 pips form short GU /long EU during the US non-farm News released
last friday (infact i floated them for 5 hrs ago)
i think the different is there is still be an ecfect of USD
but EG does not, there're only affected by EUR and GBP themself
may this help
Hi
When I first read this thread I thought that this is a good strategy. However, on a second thought .... I would like some explanations please.
What is the difference between "hedging" the eurusd and the cable and trading the EURGBP cross? (Except from the swap part. That's clear)
Is there a time gap between the price movement of the majors and the price movement of the cross? Let me put it this way: Can the price of EURUSD divided by the price of GBPUSD be different (at a certain time) from the price of EURGBP?
If it is, we can earn some pips. If it isn't... why pay the spread twice?
I know that if you are long on GBPUSD and short on EURUSD you will earn from the swap but what happens when the EURGBP is going up consistently for several days? Please see 14 to 21 August ... it was a 100 pips loss. Am I right?
What if on the 6th of July 2006 we have chosen to sell the GBPUSD and BUY the EURUSD? It was a top in EURGBP at 0.6962 and the pair never got back there. When and how we would have exited that trade? It is still on floating loss today (around 250 pips loss).
I guess I got excited to soon.I do long on GBPUSD and Short EURUSD and floated by last friday, and today EURGBP goes up about 20pips away from last friday. It's mean if my positon is short on EURGBP, now i must be -20 pips loss. But in my real position (long GBPUSD short EURUSD) i've only loss -7 pips.
maybe other theorist can explain why i don't loose about -20 pips but only -7 pips?
cos you get some +pips from eurusd
A ratio of 1:1.5 works much better on this due to the fact that the GBP moves much more than the EUR. One indicator I use is when EUR/GBP is at top BB and showing signs of heading downwards. This has been very profitable for me. If you have about 3 dfferent hedging systems in your a/c at same time, you are semi protected from major price shift in 1 as you should be making daily profits on the other 2 to more than cover the loss (which is gaining interest). A hedged trade is only a losing trade if it is closed so if you are conservative with margin, use different hedging systems and comfortable with the fact that you may have 1 or 2 trades negative in you a/c for long time, this is about the safest bet in forex in my opinion.
Hi all
some days ago i got an eamil from a hedg founds club that offers siganls for hetro pair hedging.i saw the statments and it looked good to me.the idea behind this method is "Comtroling the market by the market"
we choose two pairs, one high volatile and the other less.(GBPUSD and URUSD).we do our entry in the higher volatile pair and istead of sl we use an opposite position in less volatile pair(EURUSD)we never close any hedg positions in loss, all must be close on profit.As i see in the attached performances in the site(http://www.fx-hedgefunds.com/modules/tinyd1/) some of positions have been opened for a month.any way they trade base on the corelation and so on.i developed an EA based on this concept(special thx to shadowwz who coded it for me).it does the entries based on silver trend signal and ATRStop indicator as a filter and no sl.
important properties:
NO_Trades=how many traes(couple positions)can be open toghether[Def.=3]
net_profit =when each couple positions(opened at the same date and time) be in net_profit(in pips) the EA closes the positions.[30-50 pips suggested]
net_loss=the same story as above but for loss in pips.
so those are the most important prop. tha need to be checked.i have no clue what time frame is the best but i think H4 would be the first option.at the end i share the Ea for forward test and more developement.
any comment are apperciated.
P.S:The EA should ttached only on GBPUSD chart.Thanks Kamyar, for the effort given. I just confuse
why you said "The EA should attached only on GBPUSD chart", how about the EUR/USD, do this EA will automaticaly open an orders or how?
it open both EU and GU by attatching in only one chart
it open both EU and GU by attatching in only one chart
Thanks Phoenix...hope this EA can make a profit.
if you need to trade daily you need to add one or maybe some indicator(s) to defind when to sell/buy each pair
but if you can wait .. go ahead .. collect swap along and play games or karaoke or anything you like
good luck