I wanted to start a thread to get alternative ideas on exiting a hedged forex trade with little loss, or some profit.
For example let's say I am long on the GBPUSD, and the market starts going quickly against me, instead of taking a good loss, and chalking it up to experience, I hedge my position by going short the GBPUSD. Now I am fully hedged with this pair, lets say for example sake that the gap is 50 pips.
What I do then, is then let the trade go, till either the short or long runs up against a known hard support or resistance level. When it does, and looks like it is starting to retrace, I take the profit from either the long or the short. Lets say for our example it is the long that is taken out with profit.
This leaves me with a short trade that is losing 50 pips. What I do now, is let the trade retrace from whatever level of support and resistance that I took the original profit.
When the retracement appears to be over and headed back the other way, I once again hedge the trade by going long again, this time hopefully the gap has narrowed, lets say to maybe 40 pips this time.
I keep doing this until the gap between the trades is so narrow that a small loss does not compare to the profits I have already taken off the table.
I am curious to hear other traders ideas how they take themselves out of a trade that has been hedged.
For example let's say I am long on the GBPUSD, and the market starts going quickly against me, instead of taking a good loss, and chalking it up to experience, I hedge my position by going short the GBPUSD. Now I am fully hedged with this pair, lets say for example sake that the gap is 50 pips.
What I do then, is then let the trade go, till either the short or long runs up against a known hard support or resistance level. When it does, and looks like it is starting to retrace, I take the profit from either the long or the short. Lets say for our example it is the long that is taken out with profit.
This leaves me with a short trade that is losing 50 pips. What I do now, is let the trade retrace from whatever level of support and resistance that I took the original profit.
When the retracement appears to be over and headed back the other way, I once again hedge the trade by going long again, this time hopefully the gap has narrowed, lets say to maybe 40 pips this time.
I keep doing this until the gap between the trades is so narrow that a small loss does not compare to the profits I have already taken off the table.
I am curious to hear other traders ideas how they take themselves out of a trade that has been hedged.