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Expert Advisors: Triangle Hedge

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Automated-Trading
Admin
106483
Automated-Trading  

Triangle Hedge:

Opens a virtual hedge position in MetaTrader 5.

Triangle Hedge

Author: Atsushi Yamanaka

Sergey Golubev
Moderator
99056
Sergey Golubev  

The “Hedging” Myth (based on dailyfx article)

Helping traders around the world means that I have seen many different methods to trade this market, both good and bad. One of the most damaging methods I’ve come across is the idea of ‘hedging’ a Forex trade by opening an opposing trade in the same currency pair and holding both long and short positions simultaneously. This not only incurs greater trade cost (by paying additional spread) but does not protect your position against additional losses.

Hedgers attempt to lock-in their profit or loss on a trade by opening an opposing trade, but if the spread widens, this negatively affects both sides of the trade. If the trader is over leveraged on these trades, a wider spread could incur a margin call and liquidate both positions. Worst of all, you would most likely be filled at the widened spread prices, adding insult to injury.
So now we know, hedging is not the proper way to secure a profit or a loss. Only the closing of a position can do that. Hedging also can be dangerous around widening spreads and can cause margin calls, so we need to limit the amount of leverage we are using to 10x or less.

Erdem Sen
1767
Erdem Sen  
newdigital:

The “Hedging” Myth (based on dailyfx article)

I dont think hedging is a  good strategy either. but, I guess it isnt the spread what makes hedging a bad choice, spread can only widen to a certain limit, most of the time that limit is meaningless for margin and it doesn't continues much, it has a periodical intraday pattern.

what makes hedging a bad choice is the panic, it is mostly applied in panic situations. someone with a clear mind can catch a good possibility of success with a hedging strategy.

Atsushi Yamanaka
5554
Atsushi Yamanaka  
The Lots calculation was corrected with Thick Value adjustment.
Francis Dogbe
9546
Francis Dogbe  
Sergey Golubev:

The “Hedging” Myth (based on dailyfx article)

Helping traders around the world means that I have seen many different methods to trade this market, both good and bad. One of the most damaging methods I’ve come across is the idea of ‘hedging’ a Forex trade by opening an opposing trade in the same currency pair and holding both long and short positions simultaneously. This not only incurs greater trade cost (by paying additional spread) but does not protect your position against additional losses.

Hedgers attempt to lock-in their profit or loss on a trade by opening an opposing trade, but if the spread widens, this negatively affects both sides of the trade. If the trader is over leveraged on these trades, a wider spread could incur a margin call and liquidate both positions. Worst of all, you would most likely be filled at the widened spread prices, adding insult to injury.
So now we know, hedging is not the proper way to secure a profit or a loss. Only the closing of a position can do that. Hedging also can be dangerous around widening spreads and can cause margin calls, so we need to limit the amount of leverage we are using to 10x or less.

totally i agree with you
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