Hedging - Strategies | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Profitable hedging strategies? 112 replies

discuss hedging strategies here 0 replies

Option Hedging Strategies 44 replies

What Hedging Strategies do you use and what is the strategy behind it????? 3 replies

Hedging strategies 7 replies

Attachments: Hedging - Strategies
Exit Attachments

Hedging - Strategies

  • #1
  • First Post: Edited 5:13am Apr 27, 2017 12:55am | Edited 5:13am
Hello,

In my pursuit of alternative trading strategies the idea of hedging came up, I am interested in knowing if others have tried something similar:

  1. Fill the system blank with your own system
  2. Enter a buy and sell at system levels (Same pair, No SL)
  3. Let the market create a wave/rally etc and close the positive order at the extreme.
  4. Wait for the retrace and close the other order for the least possible negative pips
  5. End up with a net profit.
  6. Rinse and repeat


That is the basic idea - Has anyone adapted their trading methods around a hedging style?

Dragon Rider
  • #2
  • Apr 27, 2017 5:54am Apr 27, 2017 5:54am
Quoting barloc
Let the market create a wave/rally etc and close the positive order at the extreme. Wait for the retrace and close the other order for the least possible negative pips End up with a net profit. Rinse and repeat That is the basic idea - Has anyone adapted their trading methods around a hedging style?
You can also just open a normal position at these points?

For example:

Let's say EURUSD is at 1.0900 and you open a buy and a sell
It makes a wave and a spike to 1.0975 and you close the buy (+75 pips)
It retraces back to 1.0925 and you close the sell (-25 pips)
Overall you would've made 50 pips

You can also just open a normal short at 1.0975 (The moment you would close the buy from the "hedge") and close it at 1.0925 (the moment you would close the sell from the "hedge")
You also make 50 pips
"Men Who Can Both Be Right & Sit Tight Are Uncommon" ~ Jesse Livermore
  • #3
  • Apr 27, 2017 6:33am Apr 27, 2017 6:33am
so many hedging threads already, why another one ?
  • #4
  • Apr 27, 2017 7:09am Apr 27, 2017 7:09am
Buy EURAUD, sell EURCAD and buy AUDCAD at the start of the day (when trade commences after swaps). Attach an EA that will close all open positions once your pl gets positive. AUD & CAD have close value so tick normalization not necessary.
Works better if you can find a broker with minimal spreads/commissions.
  • #5
  • Apr 27, 2017 7:22am Apr 27, 2017 7:22am
Quoting michisuperfr
{quote} You can also just open a normal short at 1.0975 (The moment you would close the buy from the "hedge") and close it at 1.0925 (the moment you would close the sell from the "hedge") You also make 50 pips
I didn't understand what you described in the second scenario but I think your overall message was why not trade both entries separately?
The idea behind my first post is to enter the market and secure pips regardless of what the market decides to do, you may trade levels/zones with perfect accuracy and not need to guess the direction of a trade but the point of this thread is alternative trading strategies.

The logic of hedging is to find a pretty level and disregard having to be right and just manage the trade as price action develops.


So I asked -- is there someone that manually trades like this?
Dragon Rider
  • #6
  • Apr 27, 2017 7:23am Apr 27, 2017 7:23am
Quoting metta87
so many hedging threads already, why another one ?
Not to increase post counts..thats for sure
Dragon Rider
  • #7
  • Apr 27, 2017 7:24am Apr 27, 2017 7:24am
Quoting BubaYaga
Buy EURAUD, sell EURCAD and buy AUDCAD at the start of the day (when trade commences after swaps). Attach an EA that will close all open positions once your pl gets positive. AUD & CAD have close value so tick normalization not necessary. Works better if you can find a broker with minimal spreads/commissions.
Hello BubaYaga,

Could you please elaborate more on reasoning as for the trade to be in profit.

Buy EURAUD and Sell EURCAD would result in Sell AUDCAD. We also buy AUDCAD. Will both the movements cancel out each other?

Thanks
  • #8
  • Edited 10:58am Apr 27, 2017 9:39am | Edited 10:58am
Quoting barloc
{quote} I didn't understand what you described in the second scenario but I think your overall message was why not trade both entries separately? The idea behind my first post is to enter the market and secure pips regardless of what the market decides to do, you may trade levels/zones with perfect accuracy and not need to guess the direction of a trade but the point of this thread is alternative trading strategies. The logic of hedging is to find a pretty level and disregard having to be right and just manage the trade as price action develops....
Barloc,

I just wanted to point out, that you won't have any advantage/edge by having a buy and sell open at the same time before a move (The opposite is the case, because you will pay double spread/commissions/swap) and you will not secure through this pips, because every pip you make on the one side, you will lose on the other side.
You will start making pips when you close one side at some point (And at this point you can just open a normal order)
"Men Who Can Both Be Right & Sit Tight Are Uncommon" ~ Jesse Livermore
  • #9
  • Apr 27, 2017 11:11am Apr 27, 2017 11:11am
Quoting barloc
{quote} I didn't understand what you described in the second scenario but I think your overall message was why not trade both entries separately? The idea behind my first post is to enter the market and secure pips regardless of what the market decides to do, you may trade levels/zones with perfect accuracy and not need to guess the direction of a trade but the point of this thread is alternative trading strategies. The logic of hedging is to find a pretty level and disregard having to be right and just manage the trade as price action develops....
Hi Barloc,

There are some who trade using hedging. You can check a recent thread that I opened on a similar topic: {Hedging On different Pairs}

https://www.forexfactory.com/showthr...=657929&page=9

Will be following your thread interestingly...

Thanks
  • #10
  • Apr 28, 2017 1:56am Apr 28, 2017 1:56am
Quoting barloc
Hello, In my pursuit of alternative trading strategies the idea of hedging came up, I am interested in knowing if others have tried something similar: Fill the system blank with your own system Enter a buy and sell at system levels (Same pair, No SL) Let the market create a wave/rally etc and close the positive order at the extreme. Wait for the retrace and close the other order for the least possible negative pips End up with a net profit. Rinse and repeat That is the basic idea - Has anyone adapted their trading methods around a hedging style?...
At least you're not adding to the same hedged position and paying double spread.

Hedging same pair = closing the position.
  • #11
  • Apr 28, 2017 10:19am Apr 28, 2017 10:19am
Quoting aaven
{quote} Hello BubaYaga, Could you please elaborate more on reasoning as for the trade to be in profit. Buy EURAUD and Sell EURCAD would result in Sell AUDCAD. We also buy AUDCAD. Will both the movements cancel out each other? Thanks
Practical observation of his suggestion has proven that it is indeed possible to profit, the frequency of its occurrence you'd need to examine yourself as well as spread and swap costs. You should also notice that I did the opposite of his suggestion (why not?).

Rather than ask questions it might benefit you more to do your own research IMHO.
Attached Image (click to enlarge)
Click to Enlarge Name: CHART.JPG Size: 124 KB
  • #12
  • Apr 28, 2017 1:54pm Apr 28, 2017 1:54pm
Quoting sinqua
{quote} Practical observation of his suggestion has proven that it is indeed possible to profit, the frequency of its occurrence you'd need to examine yourself as well as spread and swap costs. You should also notice that I did the opposite of his suggestion (why not?). Rather than ask questions it might benefit you more to do your own research IMHO. {image}
Sinqua,

Thanks for your inputs and for listing your demo trade...

I am doing my best to research, so far i haven't stumbled that clearly explains this phenomenon. Also ran 1-2 sample trades, still trying to wrap my head around it.

For me the positions could be in profit, but i need to know the reasoning to judge it's weakness... I mean we don't want the approach to show its erratic behavior{which could be normal in some sense} at a later stage where we are trading a considerable position size.

If you don't mind, what's your take on why it should work?

Thanks
  • #13
  • Edited 3:28pm Apr 28, 2017 3:15pm | Edited 3:28pm
Quoting aaven
{quote} Sinqua, Thanks for your inputs and for listing your demo trade... I am doing my best to research, so far i haven't stumbled that clearly explains this phenomenon... If you don't mind, what's your take on why it should work? Thanks
Good to know you're doing your research, the answers are clearer that way. Heres my two cents.

Off the top of my head, I'll point a finger at the variable pip values for each pair, if your lot size were normalized to account for this, then all this 3 way hedge would do is incur you a loss by spreads and swap.

Now given you intend to use a constant lot across all 3. You could watch the first 2 - euraud & eurcad given euraud has a higher pip value you would decide on your forecast for this pair (euraud) place a buy/sell (say buy) then hedge it with (eurcad) (ie Sell) then lastly hedge em both with a buy on audcad.

This is just a quick analysis you can build upon. Good luck.
  • #14
  • Apr 28, 2017 3:44pm Apr 28, 2017 3:44pm
Quoting barloc
Hello, In my pursuit of alternative trading strategies the idea of hedging came up, I am interested in knowing if others have tried something similar: Fill the system blank with your own system Enter a buy and sell at system levels (Same pair, No SL) Let the market create a wave/rally etc and close the positive order at the extreme. Wait for the retrace and close the other order for the least possible negative pips End up with a net profit. Rinse and repeat That is the basic idea - Has anyone adapted their trading methods around a hedging style?...

This is a bad strategy. If you knew that the price has reached the "extreme", you don't have to have a "hedging" strategy in the first place.
  • #15
  • Last Post: Aug 7, 2019 11:06am Aug 7, 2019 11:06am
Very good Ideas. Thanks I will try your way of this tragedy. Best wishes from me
0 traders viewing now