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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?

Quoting FerruFx
The best solution is to take the loss, forget it and concentrate on your next trading opportunity.

As said by someone earlier, during the time you are rescuing a position, your mental is fully dedicated to it ... and you will loose all other opportunities ... and of course, this isn't a guarantee of rescuing success.

Small SL's and even then if you think your SL is going to be hit, exit save a few pips, what I'm doing today and so far so good!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
Use opposite pending order instead of SL and later you can close one position and include the losing one into a properly balanced basket. All necessary tools for this can be found in this thread: http://www.forexfactory.com/showthread.php?t=363198.
Besides, no br*ker can ever do anything to you when using such method.
Of course, better to have enough money on account to continue usual trading even if you have 1-2 baskets open.
Quoting Indrek
Use opposite pending order instead of SL and later you can close one position and include the losing one into a properly balanced basket. All necessary tools for this can be found in this thread: http://www.forexfactory.com/showthread.php?t=363198.
Besides, no br*ker can ever do anything to you when using such method.
Of course, better to have enough money on account to continue usual trading even if you have 1-2 baskets open.
Hello,

Sorry but your idea doesn't work. Not that I want be mean, nay-sayer or whatever. It's just a fact.

Opening the opposite position is exactly equivalent as closing at loss. Un-hedging is exactly equivalent at opening a new position. You have to do it at the right time, based on your trading skills, with the same (additional) risk. It results in the same P/L at the very pip. Even the spread cost is the same (you just don't pay it at the same point in time). Bean counters will add that on top you may pay rollover in excess.

There is also no point at inserting the now bigger loser in a basket of any kind. If there was why not putting the initial loser immediately?

The basket strategy you point to comes from the thread http://www.forexfactory.com/showthread.php?t=262827 (better directing people to the original) which is NOT a strategy but a proposal to create a synthetic trend-less instrument onto which you can build mean reversal strategies. If any of the strategies derived from it, including the one you point to, can recover the initial SL it would have made the same amount of money on its own in the same time and would have balanced the loss of the first strategy. That's diversification based on un-correlated strategies.

Except for the additionnal waste of energy you win or lose the same. Don't hesitate to paper trade it to check if you don't believe me.

I tortured my brain a long time to find something which could work, at least in average even without covering 100% of the SL. I couldn't find any method better than taking the loss. Increasing the SL and reducing the position size accordingly reduces the risk of getting tick'ed out by an overshooting long wick.

Any other method results either in the same P/L with excessive effort or an increase of the risk which destroys the expectancy of the strategy because the R:R dive nose.

Best
Quoting PipMeUp
Opening the opposite position is exactly equivalent as closing at loss. Un-hedging is exactly equivalent at opening a new position. You have to do it at the right time, based on your trading skills, with the same (additional) risk. It results in the same P/L at the very pip. Even the spread cost is the same (you just don't pay it at the same point in time). Bean counters will add that on top you may pay rollover in excess.
Exactly right. Yet it's amazing how many folk can't see this.

Quoting PipMeUp
I tortured my brain a long time to find something which could work, at least in average even without covering 100% of the SL. I couldn't find any method better than taking the loss. Increasing the SL and reducing the position size accordingly reduces the risk of getting tick'ed out by an overshooting long wick.
I likewise spent a long time trying to find a MM-based shortcut to profitable trading. I don't believe that there is one. If there was, winning at forex would be ridiculously easy.
I'm taking a rest from forums. Please don't expect replies to your posts.
Quoting PipMeUp
Hello,

Sorry but your idea doesn't work. Not that I want be mean, nay-sayer or whatever. It's just a fact.

Opening the opposite position is exactly equivalent as closing at loss. Un-hedging is exactly equivalent at opening a new position. You have to do it at the right time, based on your trading skills, with the same (additional) risk. It results in the same P/L at the very pip. Even the spread cost is the same (you just don't pay it at the same point in time). Bean counters will add that on top you may pay rollover in excess.

There is...
Sorry, I am a professional trader, so I do not waste time on paper trading. I just gave an idea about what to do. I trade this way all the time, and I never use ordinary SL.
Why I use same pair initially? 1. Because I am not watching charts permanently - I trade hourly charts, so I open my terminal quite occasionally. 2. Initial hedge has to be changed into basket only when the possible basket reaches extremum.
I keep my account big enough, so I can afford to have different baskets open in some loss for some days or weeks, while taking ordinary trades on the background. That allows me to play with different trade combinations if I want to.
I am capable to consistently make my living from trading. So, I know what I am speaking about.
Hi,

Have a look at this thread,

http://www.forexfactory.com/showthread.php?t=57639

Uses rescue and attack sequences.

Thanks,
LO-Trader.
Quoting hanover
I likewise spent a long time trying to find a MM-based shortcut to profitable trading. I don't believe that there is one. If there was, winning at forex would be ridiculously easy.
When all traders will understand that, they will spend their time to increase their trading skills instead of trying to find how to avoid/rescue losses.
MT4 EAs/Indicators/Alerts coder
Quoting PipMeUp
The basket strategy you point to comes from the thread http://www.forexfactory.com/showthread.php?t=262827 (better directing people to the original) which is NOT a strategy but a proposal to create a synthetic trend-less instrument onto which you can build mean reversal strategies. If any of the strategies derived from it, including the one you point to, can recover the initial SL it would have made the same amount of money on its own in the same time and would have balanced the loss of the first strategy. That's diversification based...
Some more remarks concerning your post.
1. I was not speaking about a strategy. I just pointed to a thread where anyone can find the best tool. What to do or not to do with that tool is everybody's own choice.
2. Yes, Arb-o-Mat can make money on its own but I prefer to trade in ordinary way initially because it is much more profitable and gives faster results. But whenever I happen to make a bad entry, I use basket style to come out of the loss (to be specific - to turn the loss into a win).
3. Account size should be enough to keep 1-2 baskets per month on the background of ordinary trading. If the main trading system is good then it is quite unusual to have more than 1-2 losses in a month. Mostly I have wins and breakeven trades only.
4. Everybody has to find his own way. Nobody will ever post a working strategy in a public forum. But many people can create these.
Cheers!
the trick is do to lots of scratch trades...in my short term trading I realize that 3/10 trades are winners ....if traded without modification I would lose money ...I realized that I should close my position immediately if momentum stalls ....that way I cut 1-2 potential winners and 6-7 potential losers around BE point ....the remaining winners are more than enough to pay for the tiny losses incurred. once my 2×atr SL is hit I know I'm not playing well coz I should bail out before 1ATR is hit....any delay getting out always degrades my performance ...I can almost. always make 5% monthly this way.
Quoting FerruFx
When all traders will understand that, they will spend their time to increase their trading skills instead of trying to find how to avoid/rescue losses.
Yes, agree 100%. The only way to win is to be net long while price is rising, and net short while it's falling, frequently/heavily enough to overcome costs. In other words, it's all about timing of entries and exits (or adjustments to your net position).

Quoting pemully
the trick is do to lots of scratch trades...in my short term trading I realize that 3/10 trades are winners ....if traded without modification I would lose money ...I realized that I should close my position immediately if momentum stalls ....that way I cut 1-2 potential winners and 6-7 potential losers around BE point ....the remaining winners are more than enough to pay for the tiny losses incurred. once my 2×atr SL is hit I know I'm not playing well coz I should bail out before 1ATR is hit....any delay getting out always degrades my performance ...I can almost. always make 5% monthly this way.
Agreed, virtually all of the successful traders that I know operate in a way that their average win size > average loss size, i.e. cut their losses quickly, and let their profitable trades run. In my experience there are ways of increasing win rate toward 50% while still maintaining the above, by carefully selecting my setups and by having confirmation of direction from higher timeframes.
I'm taking a rest from forums. Please don't expect replies to your posts.
Quoting mfoste1
"When you find yourself in a hole, stop digging"
absolutely..
Memories caught in time but never forgotten
a way to recover a loss is the Jackos` Anti Hedge, but only in a trend.
just want to echo what others have stated......there is no rescuing, there is only acceptance of small losses. to minimize losses, explore strategies related to pyramiding and moving your stop to breakeven. but if you do that too soon you will run into problems as well. money management is essential, but rescuing trades is not the right mentality, in my opinion.
Rescuing a losing trade at random will speel doom for a trader sooner than latter. However a well informed decision to attempt to rescue a trade or not may depend on a trader's strategy. Some strategies have planned trade sequences that depend on outcome of preceding trade, etc. (These in themselves depending on market conditions).

Some traders use rescuing method(s) as a primary strategy.

I prefer to take profits at first opportunity while wrestling with the losses. Most times I win back something, at other times I loss more than if I had simply cut. However, overall its more profitable. This is not a random approach but as a premeditated, well planned strategy.
What is rescuing a losing position?

Is it rescuing a losing position by averaging down?

"Rescuing a losing position" doesn't make any sense. You don't rescue anything in trading. You just open and close positions. Some for profit, some for losses. You're supposed to open them where you think it makes sense. Then close them when (again) when you think it makes sense. You don't base trades off rescuing losers. That's a recipe for disaster!
Top-Forex-Systems. com
A simple attempt (as a trading strategy I had used in the past) at rescuing a losing poition goes as follows:

At some point in a losing trade I decide to exit this trade in loss before it hits the location of a hard stop. I wait until it consolidates at that region and exit it. Its still a loss but some pips are rescued. I keep waiting for this until I get it or finally exit the trade at the hard stop... More like a reverse trailing stop loss.

My reason is that it takes only one hit to take out a trade at stop loss but price may not return to that price again for a long time meanwhile one is out of the trade. All this while the price will be consolidating but the full loss has already been taken. If I had endured I would have left at a better price.

The rescue significantly reduced the overall loss.
Quoting 2+2=4ex
You don't base trades off rescuing losers. That's a recipe for disaster!
MT4 EAs/Indicators/Alerts coder
Quoting 2+2=4ex
What is rescuing a losing position?

Is it rescuing a losing position by averaging down?
This is one method. Do you have a problem with it? Will you still have a problem with it if a trader is making above average returns with it? ie is your problem with it not subject to reason?


Quoting 2+2=4ex

"Rescuing a losing position" doesn't make any sense. You don't rescue anything in trading. You just open and close positions. Some for profit, some for losses. You're supposed to open them where you think it makes sense. Then close them when (again) when you think it makes sense. You don't base trades off rescuing losers. That's a recipe for disaster!

At price A you may fell comfortable having 3 lots in the trade while at price B (or set up B) you judge merits 5 lots. If you started with 4 lots then exiting one lot at position A gives you what you want while adding one more unit at position B satisfies your judgement. Not all traders go in with everything at their first entry. Would you do so against your better judgement?

Every set up are not equal. Trading is not always full position opening and full position closing.
Quoting kingsurfer
A simple attempt (as a trading strategy I had used in the past) at rescuing a losing poition goes as follows:

At some point in a losing trade I decide to exit this trade in loss before it hits the location of a hard stop. I wait until it consolidates at that region and exit it. Its still a loss but some pips are rescued. I keep waiting for this until I get it or finally exit the trade at the hard stop... More like a reverse trailing stop loss.

My reason is that it takes only one hit to take out a trade at stop loss but price may not return...
I don't understand what you are saying. It seems to me like you are just exiting from a losing trade. Exiting the trade before it hits a hard stop does not mean it was rescued. It doesn't mean anything other than price moved in one direction and you ended up closing it. Sometimes it happens to make a profit and other times a loss.

Just curious... How about if you close the trade (aka rescue) right before it turns around to what would have eventually been a profit. Is that considered rescuing a trade from profit?
Top-Forex-Systems. com
Quoting FerruFx
Thank you.
Top-Forex-Systems. com
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