Any great idea about HEDGING positions welcome here - page 33

Icham Aidibe
11969
Icham Aidibe  
Keith Watford:

.........closing the first and opening a new one puts of the idea of "protecting your original profit" and adds the idea of "potential new loss due to trading the retracement" its not the same

Meaningless

.......... having both sides of the trade open will give a bit of extra profit when retracement happens + once the trend go back to the original direction then you don't have to "re-open for the second time" and pay extra cost of commission and spread

You've already incurred the possible additional costs when you opened the "hedge"

..........If you know what you are doing enough number of times you will be profitable with the way you trade, you will use the hedge many times and you will have only a few losses, thats what happens anytime to any successful trader, few losses that doesn't count and many wins that takes the account to higher profit


If you know what you are doing, you will realise that there is no additional profit created by opening opposite trades. Something that has been proven here many times already.

That's why it is called a lock.

Please comment that setup.

Keith Watford
Moderator
28255
Keith Watford  
Icham Aidibe:

That's why it is called a lock.

Please comment that setup.

Why not simply close the first sell with 2,500 points profit.

Do not open a buy.

Open the 2nd sell and close with 2,000 points profit.

Total profit 4,500 points, the same but without any possibility of additional costs with opening the buy (possible spread, commission and swaps charges on 3 trades)

(I will ignore the fact that your maths is off due to the gap between opening the buy and the resell as it makes no difference to the end result.)

CrisZind
782
CrisZind  
Keith Watford:


If you know what you are doing, you will realise that there is no additional profit created by opening opposite trades. Something that has been proven here many times already.


This part i read it in your post about hedging and its not what im doing, but im continuing to read through that post to see if im wrong, since knowing that im wrong is most important to me


Icham Aidibe:

That's why it is called a lock.

Please comment that setup.

Its your setup man you know it best, i won't comment on that since i disagree but i dunno your original strategy 

CrisZind
782
CrisZind  

Strategy One
A forex trader can create a “hedge” to fully protect an existing position from an undesirable move in the currency pair by holding both a short and a long position simultaneously on the same currency pair.


Lets agree that there is a big part of us here just like to stick to whatever definitions they wish to chose
What is hedging as it relates to forex trading?
What is hedging as it relates to forex trading?
  • John A. Jagerson
  • www.investopedia.com
Hedging is a strategy to protect one's position from an adverse move in a currency pair. Forex traders can be referring to one of two related strategies when they engage in hedging. Strategy One A forex trader can create a “hedge” to fully protect an existing position from an undesirable move in the currency pair by holding both a short and a...
Keith Watford
Moderator
28255
Keith Watford  
CrisZind:


Lets agree that there is a big part of us here just like to stick to whatever definitions they wish to chose

Note from the article

"However, the result of a “netted out” trade and a hedged trade is the same."

But the statement is not necessary absolutely correct as there may be additional costs, already mentioned here many times.

Fernando Carreiro
5140
Fernando Carreiro  
CrisZind:
Strategy One
A forex trader can create a “hedge” to fully protect an existing position from an undesirable move in the currency pair by holding both a short and a long position simultaneously on the same currency pair.

Lets agree that there is a big part of us here just like to stick to whatever definitions they wish to chose

Just because its on Investopedia, does not mean that the author knows what he is doing. This is the reason why so many newbie retail traders fall into the trap - because there are hundreds of so-called "guru" traders, not making money from trading, but from their "tutorials" and "courses" and all sorts "education" for newbie traders.

CrisZind
782
CrisZind  
Fernando Carreiro:

Just because its on Investopedia, does not mean that the author knows what he is doing. This is the reason why so many newbie retail traders fall into the trap - because there are hundreds of so-called "guru" traders, not making money from trading, but from their "tutorials" and "courses" and all sorts "education" for newbie traders.

Well same thing here, just because its in a forum .. with all due respect of course, but the idea itself shouldn't let us divide over a definition


Investopedia is a website made by investors so there could be mistakes for sure


Im still going through the pages again to get a full view of all that 

Fernando Carreiro
5140
Fernando Carreiro  

CrisZind: Well same thing here, just because its in a forum .. with all due respect of course but the idea itself shouldn't let us divide over a definition

Investopedia is a website made by investors so there could be mistakes for sure

Im still going through the pages again to get a full view of all that 

The difference is, that I am backing up my claim with math and examples, and had you taken the time to calculate it yourself you would have reached a proper and informed conclusion instead of just defending a "belief".

Seyedmajid Masharian
1838
Seyedmajid Masharian  

when a flash crash occurs

in case of placing stop loss (do not use hedging) your whole account will be in the same danger as you are using hedging.

because stop loss does not work and manual exit is not working too due to high traffic in brokers and banks servers.

most of users that their positions are in the opposite direction of flash crash will face with even negative balance.

in such catastrophic scenarios even big brokers can face insolvency and even big banks will face with hundreds of millions of dollars loss.

so we as retail traders with hedging or not hedging are not in safe heaven.

i remember my $1000 account (not hedging at that time) with only a 0.1 lot position has fallen in a big loss within a minute.(about %90 loss)

so flash crash is not good excuse for not using hedging.

the best solution is:

use a $10000 or 10000 cent account.

place your trades with enough distance from each other.

use a reliable broker

your money management must be good and conservative

we are in Forex to make money in the long term not become a billionaire within a night only .

so do not need to increase our risk by increasing each position volume.

CrisZind
782
CrisZind  
Seyedmajid Masharian:

when a flash crash occurs

because stop loss does not work and manual exit is not working too due to high traffic in brokers and banks servers.


Thats why im surprised about your previous reply "your EA will know how to behave during a crash" there is only a couple of things to do in any situation in the market that requires exit

1- stop loss exit

2- manual exit


No EA will be able to react with a flash crash, no strategy will work


Unless your broker allows confirmed stop loss "which in theory should work" and which is the proper answer that i was waiting for but man you didn't say it