markets are not moving based on mathematics they are chaotic and based on reflexivity but mathematics are rule based .
no one can predict the market using mathematics.
market prices are reflex of the crowd on news or their emotions about economy , politic etc...
can you understand how millions of people think and make decision based on them?.
price and crowd emotions constantly affect each other. (based on soros theory of reflexivity)
how can you predict crowd expectations and those reflects on price and vise versa by using mathematics or any other methods.
for example remember swiss national bank decision on 15 jan 2015. market has fall more than 6000 pips on eurchf only.(flash crash)
even big banks and brokers fall in big losses . some big brokers have fallen in insolvency.
how they could not using mathematics to predict such big move.
do their facilities less than you and i (retail traders) or they have the best analyzer and algos.
that's why i am sure the only way is smart hedging, and to do that we must assume all market conditions to improve that.
NO ONE can predict the market.
Ever hear of statistics? Its is a branch of mathematics!
I don't need to predict anything! Like many other traders, I use the mathematics of statistics to analyse the many possible outcomes, assigning probabilities to each for both the risk and the reward, knowing fully well that I will not win every time, but that over a certain period of time of repeating the process, there is an edge (an imbalance of outcomes), that can be exploited in our favour. Ever consider why there is a metric called "Profit Factor"? Do you even know how to evaluate it?
How do you think a Casino makes money? The players (the crowd) are just as unpredictable, yet the house still makes a profit because it understands the math, the probabilities, the statistics of the results over a large number of plays. They don't care about individual plays, but rather the NET result over a large number of plays. Just like I provided you with the basic math to calculate the NET resulting order of a basket of orders, which you so quickly dismissed.
That is how you beat the market - not by predicting it, but by understanding the specific probabilities of the various outcomes spread out over time.
It is your choice of whether you wish to learn to do it the correct way, to put in the effort and make a profit, or if you wish to continue to play the fool and achieve nothing but an inflated ego.
Hedging can only be used at the last resort when everything else fails as I have hinted, as an insurance for black swan events, and nothing more.
It can't be used as a normal "everyday strategy".
Maybe it is time to leave this thread since so many people are so against hedging.
Or that you may want to reword the term, "hedging", as it already has an implied meaning to it.
You could be meaning other forms of strategy, which is not looked into, but similar to "hedging".
You talk about "smart hedging", but it may not be the type of hedging which the general public knows of.
You also sound like a PhD scientist since you mention about your research paper.
I am a Masters graduate and I know PhD stuff, just not tune yet to the complexity of formulas and abstract theories.
The only people who can understand you are your professors or your masters underlings, but you will need to convince them on what you are talking about, as layman as possible.
Need to pick your audience to do the thinking cap for you.
If you have the money, you can start a company or a fintech institution employing the RIGHT people to think for you. They will not complain against their boss.
If you need me, I am all ears.
To tap on the 1% of the intellect, you need to know where to look.
All the best :D
Hedging can only be used at the last resort when everything else fails as I have hinted, as an insurance for black swan events, but nothing more.
The only people who can understand you are your professors or your masters underlings, but you will need to convince them on what you are talking about.
so many people are so against hedging
this makes me sure that i am going in right direction.
to be successful goes against the crowd.
if you think you can be wealthy following crowd rules i can say you that 99% of retail traders lose money ....
you have to be different to make different money.$$$
Lolx, that is why we have different fingerprints.
If you manage to make your mark in this world that doubted you, you are king.
1 against many.
i am sure i will be .
if most of traders are thinking truly most of them must be like George soros or warren buffet...
i am a professional trader that have been in the marketplace since 9 years ago .
check tens of thousands of EAs , indicators , strategies like price action , ichimuko etc...
and can assure you 99% of them not work in long term.
because market is unpredictable and full of uncertainty. so no one can predict the
market direction with %100 accuracy even big players like central banks.
( remember George soros and the bank of England , https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp )
i said %99 of systems but %1 can make consistent money a part of those is hedging i think.
if you have any idea about hedging come here and give your comment.
Hedging is used to save some trades sometimes
Perhaps if you introduce where your strategy fails we can offer some ideas "but only if our hedging style works with your failed trades"
I hope you don't get me wrong here but you are asking for something from a to z .. some of the questions answered in this forum are more specific than yours but i hope you get your answer though
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