No doubt many of you have heard about Hedging in Forex; and that it can be useful to reduce losses or recover positions, or lock in profit of main position.
I have done research about it in the past; but I have come to conclusion that hedging is a myth. It is simply applying a stop loss to your position in a different way.
This thread is to discuss hedging.
All comments, critics, pros, cons, are welcome here. It is a matter for discussion.
My aim is to learn more about it, and see if I can use it to my advantage.
In my current forex broker, there is no such a thing as hedging. When I open a position to buy 1 lot EURUSD, then open another position to sell 1 lot of EURUSD; at the brokerage account; the position is flat. There is no holdings. The two positions only exists in my software per se.
The following questions may help navigate through this topic:
1. When do you decide to start heding your position (i.e. if a loss reached x pips)
2. When do you decide to close the hedge (i.e. if the hedge position reached x pips profit)
3. What do you do if the hedge started losing money (i.e. -20 pips loss, in addition to main position loss)
4. What happen if you close the hedge with a loss; then the market went against the main position again; do you enter another hedge again?
5. Whan happen if the market kept going against you for at least 500 pips; do you wait until your main position makes profit? when if the market does not return to your entry price?
6. Why hedging is used in the first place? is it to reach 100% winning positions? why don't you accept you were wrong in opening the main position?
in other words; when do you decide that the main position was not a good call; and that we should close it?
7. etc
Interesting Threads and Posts about this topic:
================================
Hedge Trade-panel
- Hanover did extensive research on this subject:
https://www.forexfactory.com/showthr...56#post7907056
https://www.forexfactory.com/showthr...07#post7908007
- dancingphil explains how hedging is done for recovery
https://www.forexfactory.com/showthr...61#post7756061
Update on 29 Sept 2019:
================================
I have done tons of research in recent weeks; and done lots of experiments on hedging. I reviewed many styles of hedging; and tested them.
Here is my conclusion:
If anybody in FF, or in Forex forums; tells you he is hedging losses; yawn for a bit; then take a 180" turn and RUN for your life! You have spotted an idiot.
Hanover is the most who have spoken about hedging; and I agree with him 100%. If you would like to know more about hedging; and why it is for idiots; read all Hanover posts.
I have done research about it in the past; but I have come to conclusion that hedging is a myth. It is simply applying a stop loss to your position in a different way.
This thread is to discuss hedging.
All comments, critics, pros, cons, are welcome here. It is a matter for discussion.
My aim is to learn more about it, and see if I can use it to my advantage.
In my current forex broker, there is no such a thing as hedging. When I open a position to buy 1 lot EURUSD, then open another position to sell 1 lot of EURUSD; at the brokerage account; the position is flat. There is no holdings. The two positions only exists in my software per se.
The following questions may help navigate through this topic:
1. When do you decide to start heding your position (i.e. if a loss reached x pips)
2. When do you decide to close the hedge (i.e. if the hedge position reached x pips profit)
3. What do you do if the hedge started losing money (i.e. -20 pips loss, in addition to main position loss)
4. What happen if you close the hedge with a loss; then the market went against the main position again; do you enter another hedge again?
5. Whan happen if the market kept going against you for at least 500 pips; do you wait until your main position makes profit? when if the market does not return to your entry price?
6. Why hedging is used in the first place? is it to reach 100% winning positions? why don't you accept you were wrong in opening the main position?
in other words; when do you decide that the main position was not a good call; and that we should close it?
7. etc
Interesting Threads and Posts about this topic:
================================
Hedge Trade-panel
- Hanover did extensive research on this subject:
https://www.forexfactory.com/showthr...56#post7907056
https://www.forexfactory.com/showthr...07#post7908007
- dancingphil explains how hedging is done for recovery
https://www.forexfactory.com/showthr...61#post7756061
Update on 29 Sept 2019:
================================
I have done tons of research in recent weeks; and done lots of experiments on hedging. I reviewed many styles of hedging; and tested them.
Here is my conclusion:
Hedging is for Idiots !!!
If anybody in FF, or in Forex forums; tells you he is hedging losses; yawn for a bit; then take a 180" turn and RUN for your life! You have spotted an idiot.
Hanover is the most who have spoken about hedging; and I agree with him 100%. If you would like to know more about hedging; and why it is for idiots; read all Hanover posts.