DislikedHi CookieMonsta thank you for your kind words on my trading but i am sure i am just about average atm. i also noted that fti said there are way of protecting book so that it never busts, this is what also lead me down this path to investigate how that was possible? have i found it? i do not know but it works well for me so why try to fix something that is not broken. regards Phil.Ignored
yes, i have been researching along this path, and that has also led me to the rotation method and also options, because sometimes, the pair tears too, and the collar option mo shown can be used to protect book.
there is something i realized about delta neutral hedging from classic textbook, its already been priced into the option already, but actually there is an way to handle it if one is long volatility, i do not follow the main stream suggested delta neutralizing way, primarily because fti's dance, rescue and attack already factors in the volatility, and will converge on the current volatility faster than using a model for assessing if the position should be delta neutral or not and what is the hedge ratio. that was my insight into the deficiency of current delta hedging mo. the mm itself serves using options fairly well. that was my insight into options trading.
this is just my understanding/intepretation of the 3legged animal, if you are long 1 eurusd and short 1 gbpusd, you are long 1 eurgbp, so if you go short 1.6x eurgbp, you are squared 1.0, implemented a lock with a loss/gain and have now gone short 0.6 eurgbp, and you can invert this on the fly by varying the ratios of each position. the basis then becomes to incorporate the fibo mm into it so as not to expand the book's risk too fast. then its to incorporate the dance into the rotation.