lets discuss a bit about hedging strategy - page 3

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Marco vd Heijden:

This could be a dead end, as was suggested by many, and even given more strength by accompanying pow in the form of math or code.

But hedging on a single pair and multi instrument hedging are two very different things.

So my advice to you is to study the correlation of momentum between pairs.

yes i agree with you marco.

now the so-called 'hedging' on a single pair might seem as the 'smart-ass' move by some, but now i see it is really pointless...


sure, i will try and study the correlation between pairs and try to figure out what works for me.

Thx

 
I have tried grid and martingale, with and without hedging.  Hedging doesn't work. I have given up on that.  I prefer grid over martingale (martingale is a sure shot margin call + risk-reward isn't worth it + you always have drawdowns that dwarves your profits). Grid still works as it works in the direction of the trend, however, finding the elements that work is a holy grail; elements such as grid distance (which is different for each symbol), lot sizing, TP, etc.,  If you have a huge account size (let's say USD 100k+ with 1:500 or better leverage), then I have an EA that performs very well, with a hard stop at 20% drawdown on your account balance.  Backtest shows that such an event happened only twice in the last 5 years on trading XAUUSD.  Average return is USD 25k profit per year on 100k investment. So you are getting approx 25% ROI on a max 20% risk in the first year.  There onwards, your risk minimizes as you can withdraw profits > potential risk (20k).  But then, if you have 100k to spend, you might as well buy NQ a decent drop and forget about it.  Unless the bubble bursts ala 1929 (and if it does, buy NQ with everything you have got - the next crash will not happen for another 100 years), you will have hard assets on 0 leverage that will pay dividends and a peaceful sleep while growing >25% average / year.
 
SULAIMAN LALANI #:
I have tried grid and martingale, with and without hedging.  Hedging doesn't work. I have given up on that.  I prefer grid over martingale (martingale is a sure shot margin call + risk-reward isn't worth it + you always have drawdowns that dwarves your profits). Grid still works as it works in the direction of the trend, however, finding the elements that work is a holy grail; elements such as grid distance (which is different for each symbol), lot sizing, TP, etc.,  If you have a huge account size (let's say USD 100k+ with 1:500 or better leverage), then I have an EA that performs very well, with a hard stop at 20% drawdown on your account balance.  Backtest shows that such an event happened only twice in the last 5 years on trading XAUUSD.  Average return is USD 25k profit per year on 100k investment. So you are getting approx 25% ROI on a max 20% risk in the first year.  There onwards, your risk minimizes as you can withdraw profits > potential risk (20k).  But then, if you have 100k to spend, you might as well buy NQ a decent drop and forget about it.  Unless the bubble bursts ala 1929 (and if it does, buy NQ with everything you have got - the next crash will not happen for another 100 years), you will have hard assets on 0 leverage that will pay dividends and a peaceful sleep while growing >25% average / year.

martingale with hedging is not good i agree. but scalper with hedging is another thing, i have strategy that works well with scalper plus hedge

 
does any body used hedging, i want to know what are the strategy are used to close opposite hedge trade ?
 
I strongly disagree with the strategy you have presented. Hedging strategies like the "sure-fire" approach can be highly risky and have the potential to lead to significant losses. Here's why:

1. Martingale Effect: The strategy you described follows a martingale approach, where positions are opened in larger sizes after consecutive losses. While it may seem like a way to recover losses quickly, it can result in a snowball effect where losing trades accumulate, potentially wiping out your entire account.

2. Lack of Risk Management: The strategy lacks proper risk management. Relying on predetermined Take Profit and Stop Loss levels may not adequately account for market conditions, volatility, or unexpected events. A single market shock or extended ranging periods could lead to multiple consecutive losses without any means to control the downside.

3. Limited Profit Potential: While your backtesting results may seem promising, it is essential to consider the long-term profitability of such an approach. As you mentioned, you manually backtested the strategy, which may introduce biases and limitations. Real-time market conditions can differ significantly, and there is no guarantee that historical performance will be replicated in the future.

4. Increased Trading Costs: Opening multiple positions, including pending orders, can lead to higher trading costs, such as spreads and commissions. These additional expenses can eat into potential profits and diminish the effectiveness of the strategy over time.

5. Emotional Stress and Discipline: Implementing a strategy that relies on opening positions regardless of a setup can lead to emotional stress and lack of discipline. It may encourage impulsive decision-making and deviate from a structured trading plan. Trading based on emotions rather than logical analysis can have detrimental effects on long-term profitability.

In conclusion, I would strongly advise against using the hedging strategy you described. It carries significant risks, lacks proper risk management, and may lead to substantial losses. It is crucial to focus on well-established trading principles, such as risk management, proper analysis, and a disciplined approach, to achieve consistent and sustainable profitability in the financial markets.
 
I would suggest focusing on refining your existing strategy, rather than relying on hedging. By continuously tweaking, adjusting, and practicing your approach, you can reduce your mistakes over time. This process allows you to fine-tune your strategy and increase your chances of success. Remember, trading is a skill that improves with experience and deliberate practice. Stay dedicated, remain disciplined, and focus on continuous improvement.
 
Mayank Gupta #:
does any body used hedging, i want to know what are the strategy are used to close opposite hedge trade ?
I am using heding last 5 years. If you know what are you doing it is great way to reduce trading risk, and to turn losing trades to winning. There are several techniques and ways to do it. It's nothing complicated.
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