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Hedge a losing position? 62 replies

Take a loss in a losing position or wait for it to turn around? 16 replies

Money Management - Losing Position 5 replies

How to rescue a losing position?

Thanks all for your responses.

Just to share, I do have a 200 pips "protection stop" in place to protect my account in the event of sudden spike induced by CBs. By rescuing a losing position I meant to :
- BE ,or
- be in the new direction (trend change), or
- minimise loss

Loss is expected for any business (forex too), but we can always reduce it if managed properly which I'm seeking now.
All tradings end up either in profit or loss. If we can manage the loss, our equity growth will improve tremendously.
Hedging/locking in same pair will lock the "loss" till we determine what to do next. I consider quite safe as the "loss" is a constant, but will have to make sure the losing account does not hit margin call. No issue for me as this is an important component of my money mgt. The only problem I see is that part of my capital being used to hedge, thus its opportunity cost.

Would like to know if anyone has used Nanningbob's recovery method : 1,1,2,4 or 1,1,3,3, can share your experience please ? Or any prevailing methods.

Thanks.
Forex is my business
It depends if you are trading with the trend or counter trend trading
Hang on to the position. Losing is just a matter of time. Hang on to it and put it out of your mind. It will reverse and you can cash in. I have done this millions of times and just because of this I have never lost money. Ending a losing position = guaranteed loss.
Argue for your limitations, and sure enough, they're yours. Richard Bach
Quoting incomeideas
Thanks all for your responses.

Just to share, I do have a 200 pips "protection stop" in place to protect my account in the event of sudden spike induced by CBs. By rescuing a losing position I meant to :
- BE ,or
- be in the new direction (trend change), or
- minimise loss

Loss is expected for any business (forex too), but we can always reduce it if managed properly which I'm seeking now.
All tradings end up either in profit or loss. If we can manage the loss, our equity growth will improve tremendously.
Hedging/locking in same pair...
Same questions as the other thread, and if you hear a collective roll of eyes it's because it's been answered ad nauseam on hundreds of threads. But hey, it's Christmas so... basically your nedging is an accounting trick. Professionally, most traders are required to mark to market at the end of every day- that means a trade that's gone south will be written down as -xxx amount in the red. Nedging simply extends the time horizon of that trade beyond what you probably intended. It obviously achieves NOTHING closing and reopening a trade would do except for relieving yourself of the mental anguish of accepting that loss. Behind it though are two important facts: 1) We all have a finite capacity for enduring drawdown and loss and 2) Markets revert to the mean more than they trend
You need to define 2) of course, depends on your TFs et al.

As for any recovery method, yes viable so long as
a) you've calculated your maximum risk before you trade
b) your recovery is aligned to the structure of the market.
c) you perform the same kind of progression compounding into profitable trades
FTI has written an entire thread explaining how this can be done professionally. Mostly you'll see people doing a), not understanding b), and having difficulty implementing c), thus the bad press.

GL
The way I solved this dilemma was pretty easy.. I set my stop loss to 3 pips, maximum 5.. That's it.. I get stopped out 2 or three times before I catch the 30-40 pips move but this absolutely made me better be razor sharp when it comes to entries.. There are not ifs/buts or other questions I have to answer while making the entry decision.
Quoting attila
The way I solved this dilemma was pretty easy.. I set my stop loss to 3 pips, maximum 5.. That's it.. I get stopped out 2 or three times before I catch the 30-40 pips move but this absolutely made me better be razor sharp when it comes to entries.. There are not ifs/buts or other questions I have to answer while making the entry decision.
Thanks for sharing attila.

I presume you are scalping in low TF ? I guess price momentum thrust will be needed in order to attain high win rate with SL 3-5.
How do you exit the trades ?
Forex is my business
Quoting incomeideas
Thanks for your reply mfoste1.
Not that I don't accept losses as part of my businsess. But I believe accepting loss should be the last option, there should be some ways to minimise or alleviate the loss.
Maybe you need to accept that your business model is flawed then. Going into a trade without a plan should things go against you isn't exactly what I'd call a good business practice.
Quoting incomeideas
Thanks for sharing attila.

I presume you are scalping in low TF ? I guess price momentum thrust will be needed in order to attain high win rate with SL 3-5.
How do you exit the trades ?
Yes, lower TFs.. I'm actually going down to the tick chart.. Exits... depends.. I'm not really scalping, just trying to catch "the move of the day". There are around 5-7 of these every 24 hours.. I don't hold over night, intraday only.

I don't want to side track the thread.. It's about how to rescue a trade gone bad.. TBH, I don't see another way than just cut it lose, and if you still believe in the direction, just pick it up from a better price again..
Quoting JR97
Maybe you need to accept that your business model is flawed then. Going into a trade without a plan should things go against you isn't exactly what I'd call a good business practice.
The loss management/damage control portion of the plan has yet to establish, thus the purpose for this thread.
Forex is my business
Quoting incomeideas
The loss management/damage control portion of the plan has yet to establish, thus the purpose for this thread.
If you're trying to hedge it(hedging as in the same pair, opposite direction to the loser) , it'll work.. but only while the price is ranging.. You'll get killed when it starts trending.
Quoting incomeideas
By rescuing a losing position I meant to :
- BE ,or
- be in the new direction (trend change), or
- minimise loss

Loss is expected for any business (forex too), but we can always reduce it if managed properly which I'm seeking now.
Sorry, but I don't understand what you are trying to do. The concept/idea of "rescue" is equivalent to that of martingale, which does not work unless you have "limitless" funds.

A trade is not rescuable, period. When the market comes agianst you more than you've expected, you close the position. This is the best strategy I know. The question is, how skillful you are to calculate the most optimum SL.

Hope it helps.
The only option is to close it. Hedging won't work because if price does start heading your direction you're going to lose the same amount you win back.

Next time be responsible and eat your loss like a pro before it becomes too large to swallow.
Conventional wisdom leads to conventional results.
If your method which is generally right says its going to keep losing the exit and flip sides.

Do not hope it will change direction do not worry that it might cause it likely wont.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
Quoting attila
Yes, lower TFs.. I'm actually going down to the tick chart.. Exits... depends.. I'm not really scalping, just trying to catch "the move of the day". There are around 5-7 of these every 24 hours.. I don't hold over night, intraday only.

I don't want to side track the thread.. It's about how to rescue a trade gone bad.. TBH, I don't see another way than just cut it lose, and if you still believe in the direction, just pick it up from a better price again..
sam Don't tell my wife I'm trading again smjones
Quoting Kanzler
The only option is to close it. Hedging won't work because if price does start heading your direction you're going to lose the same amount you win back.

Next time be responsible and eat your loss like a pro before it becomes too large to swallow.
This one is very debatable.. Very few have the skills to do that.. It depends how/why you're hedging.. The idea would be of course to go with a higher size trade as a hedge and as you make money on that, scale the loser out.. This requires so much finesse and focus that I'm not sure it's worth the effort. I did that, but I realized I'm better off just cutting it, take a walk and come back later for the next trade..

Hedging is very misunderstood in this forum... It depends why you're hedging.. If you hedge out of fear, you'll lose. If this is the strategy you want to employ, then better lower that trade size, so you can have enough meat left for the hedge.. Is it all worth it? I am not so sure..
Quoting attila
This one is very debatable.. Very few have the skills to do that.. It depends how/why you're hedging.. The idea would be of course to go with a higher size trade as a hedge and as you make money on that, scale the loser out.. This requires so much finesse and focus that I'm not sure it's worth the effort. I did that, but I realized I'm better off just cutting it, take a walk and come back later for the next trade..

Hedging is very misunderstood in this forum... It depends why you're hedging.. If you hedge out of fear, you'll lose. If this is...
I've never seen the point of hedging for trade purposes If you're going to hedge just stay out of a position, you save yourself spread fees. Then again maybe I'm just missing something others see.

And yeah, that seems to be way more trouble than it's worth. The risk of the trade going against you still holds as well and you could just start losing twice the amount.
Conventional wisdom leads to conventional results.
Thanks all for your replies.

Some may think that I'm stubborn and not willing to cut loss and move on. I have been doing that during my 6 years of tradings dutifully. But not until early this year, I coincidently bumped onto a thread of some forum where this guy/gal's myfxbook 8 mths stats send me to rethink again.
In his/her Myfxbook stats, Loss pips was less than 500 (5 trades), but profit in pips was 8000+ (can't remember the total trades, but definitely >200). He/she was on live account and manual trading (no EA). He/she did share briefly on his/her loss management method (something like in my post #21). I regretted not bookmarking it and taken this valuable info seriously. Now I could not google it out not even in Myfxbook. My poor memory could not recall which forum or that guy/gal name.

In short, I'm convinced such loss management method exists - because someone has been doing it.
Forex is my business
Quoting incomeideas
Thanks all for your replies.

Some may think that I'm stubborn and not willing to cut loss and move on. I have been doing that during my 6 years of tradings dutifully. But not until early this year, I coincidently bumped onto a thread of some forum where this guy/gal's myfxbook 8 mths stats send me to rethink again.
In his/her Myfxbook stats, Loss pips was less than 500 (5 trades), but profit in pips was 8000+ (can't remember the total trades, but definitely >200). He/she was on live account and manual trading (no EA). He/she did share briefly on...
If anybody could get out of paying their dues to the market from an already losing trade with any consistency, they would be a very rich person indeed. I would think that over. It's the holy grail except flipped - instead of looking for the ultimate way to win, you're looking for the ultimate way to not lose.
Conventional wisdom leads to conventional results.
Well.. it's all hocus pocus... If I take a long on m30 and a short on h4, is that hedging or not?

Quoting Kanzler
I've never seen the point of hedging for trade purposes If you're going to hedge just stay out of a position, you save yourself spread fees. Then again maybe I'm just missing something others see.

And yeah, that seems to be way more trouble than it's worth. The risk of the trade going against you still holds as well and you could just start losing twice the amount.
Quoting attila
Well.. it's all hocus pocus... If I take a long on m30 and a short on h4, is that hedging or not?
Agreed, and it makes no sense to hold both positions at the same time. Most brokers won't allow it anyhow.
Conventional wisdom leads to conventional results.
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