Please see below...
Yes, this is new for me, and I'm not willing to say this is a great system (yet :-)).
In my system, I may have taken profit once or even twice before the hedge goes down a percent or two.
Again, there may have been 1, 2, 3, maybe 5 intrad day moves that I may have captured here.
Which will retrace, the EUR/USD or the USD/CHF? I don't care about a retrace, I care about one of them retracing slightly more than the other.
Unless I can grab 1, 2, maybe 3 take profits during this time. I do understand your point though, and it is well taken. Might give this a try.
As I'm watching the market, it rises and falls. It was just down $25.00, it's now down $31.00 (3% of my account value), and earlier this morning it went up by $25.00. It fluctuates quite a bit. Would be nice to grab 1% or so every time it peeks its little head above water.
It seems to dance around quite a bit every couple of hours. I wish I could watch it more, but that is what the EA will do. Grab 1% every time it happens.
Makes good sense. Thanks again for your input.
DislikedMike,
I know this is new for you, and i'm not saying that it's a horrible system (yet :-)) but, I want you to see the point of view I'm taking.Ignored
DislikedOk, here's some more math...the first day, the hedge goes up 1%, and the second day, the hedge goes down 1%...in the real world, this would be equivalent whether you bought and sold in between. The BIG difference is that when you open the next position, you pay the spread...Ignored
DislikedI realize that you don't want your loss to evaporate, but face it, the math works out the same way...you have an account of $10K...so the first day, you make 1%. At the end of the first day, you have $10,100. The second day, you LOSE 1% so at the end of the second day, you have $9,999. Well, guess what...if your investment starts at 100% and it goes up to 101%, and the next day you lose 1% of 101%, you end up with 99.99% of your original balance. The math works out no matter what way you do this since you're ALWAYS betting in the same direction.Ignored
DislikedI see where psychologically, you don't want to turn a winner into a loser, sort of thing, but if you're ALWAYS betting long and you're ALWAYS in the market, then at some point, the price will retrace. Maybe it won't ever go back to the original price, but since you're never out of the market during a retracement, it makes no difference (other than you paying the spread).Ignored
DislikedMy recommendation (if you're going to go with this "the price of the hedge will ALWAYS go up, and if it goes down, the swap will save us"-mentality) is to always keep 40% invested...so as your margin grows to a point where you can add positions, do so...otherwise, you're unnecessarily paying the spread. The only time you should sell your positions is when you need to actually withdraw money.Ignored
DislikedThis is the only problem I have with this, is that you're still betting that the hedge will always have to rise in value, continuously. It's different if you were to buy the hedge at 3pm EST every day, and held until the swap passed and then if you made 1%, then close it and wait for the next 3pm EST period. Then, you run the possibility of the price of the hedge coming down during that period. Obviously, if you catch it at a lower price than you previously sold for, that's where you start to take advantage of compounding.Ignored
DislikedSo for example, let's say you monitor the price of the hedge. At 3pm, it's at price X. You collect the swap, and the price rises to Y which is > than X * 1.01 (1% gain). If at 3pm the next day the price goes to Z which is < Y, then you start to see some benefit because you're counting on the price of the hedge to rise continuously. Even if the price were to rise to W which is > than Y, you have no expectation of the price until the next 3pm period.Ignored
DislikedIt's like the whole dollar cost averaging thing...Dollar cost averaging has it's best performance if the price dips and then comes back up (and you buy lower as the price goes down). If you buy as the price rises, you only benefit if the price continues to rise because the BEST position to be held will be the lowest price (which would be the first).Ignored