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Three Pairs Hedging

  • #1,041
  • Jul 3, 2017 7:00am Jul 3, 2017 7:00am
Quoting brucech
{quote} Hi Lghr, Thanks for the EA. Could you please explain the use of the EA? Does it take trades? I have attached to a chart but not actions as of yet. Bruce
Hi, please be patient waiting, when condition reach, it will open.
my suggestion, you can set to GBP, such as GBPUSD, NZDUSD, GBPNZD, etc.
  • #1,042
  • Jul 3, 2017 7:05am Jul 3, 2017 7:05am
Quoting lghr
{quote} Hi, please be patient waiting, when condition reach, it will open. my suggestion, you can set to GBP, such as GBPUSD, NZDUSD, GBPNZD, etc.
Great. Thanks.
Could you put an option for Magic Number?

Thanks.

Bruce
  • #1,043
  • Jul 3, 2017 7:06am Jul 3, 2017 7:06am
Quoting brucech
{quote} Great. Thanks. Could you put an option for Magic Number? Thanks. Bruce
The "M" in option is Magic Number.
  • #1,044
  • Jul 3, 2017 7:08am Jul 3, 2017 7:08am
Quoting lghr
{quote} The "M" in option is Magic Number.

Foolish me! I should have figured that! Thanks.
  • #1,045
  • Jul 5, 2017 11:17am Jul 5, 2017 11:17am
Quoting Nicholishen
{quote} No... they are a function of exchange rates, but they are not equivalent. counter currency units = base currency units * exchange rate
Sure, the arithmetic for lot sizes includes exchange rates, but the main point is that exchange rates are simply fractions with one currency the numerator and the other the denominator.
Open to new approaches.
  • #1,046
  • Jul 6, 2017 3:48am Jul 6, 2017 3:48am
Quoting lghr
{quote} Hi, please be patient waiting, when condition reach, it will open. my suggestion, you can set to GBP, such as GBPUSD, NZDUSD, GBPNZD, etc.
I have put two EAs on, but after 3 days still no entries.

Bruce
  • #1,047
  • Jul 6, 2017 2:37pm Jul 6, 2017 2:37pm
It's a safe EA...just one trade yearly
  • #1,048
  • Jul 6, 2017 3:06pm Jul 6, 2017 3:06pm
Quoting cash4u2
Hi Guys, I am a great fan of hedging ;-) Here I show you how I hedge "circel pairs" = GBPUSD > USDCHF > GBPCHF" "Circel pairs" means each currency "GBP" "USD" and "CHF" appears twice in these three pairs. GBPUSD = Buy USDCHF = Buy GBPCHF = Sell or GBPUSD = Sell USDCHF = Sell GBPCHF = Buy I used no indicator at all, but it took sometimes a while to get in profit. I used same lotsize on all three pairs and TP of 100$ One might say, hey, why did you not trade just GBPUSD and GBPCHF? Because, it causes such a big DD which can blow an account in very...
THIS IS NOT HEDGONG cash4u2
HEDGING:
TOTAL PIP VALUE=0
TOTAL MARGIN = 0
THERE ARE COMPLICATED EQUATIONS TO OBTAIN APPROPRIATE LOTS FOR ECH PAIR.
IF U R ARABIC, U CAN READ MY TOPIC HERE EVERYTHING IS EXPLAINED THOROUGHLY
http://forum.arabtrader.com/t240307.html
Forex Philosopher
  • #1,049
  • Jul 6, 2017 3:18pm Jul 6, 2017 3:18pm
Maybe an explanation for non arabic people....many thx
  • #1,050
  • Edited 2:40pm Jul 7, 2017 2:27pm | Edited 2:40pm
Quoting madscalp
Maybe an explanation for non arabic people....many thx
Read here. https://www.forexfactory.com/showthr...9#post10040969

If that still doesn't make sense here is a more thorough explanation https://www.kreslik.com/forums/neoti...ble-hedge-t307

THIS SYSTEM IS NOT HEDGING. This system opens (ignorant) synthetic positions that waste money. This is the worst system on FF because it looks intelligent on the surface but once you get to the core of it - you are opening huge positions to create very small synthetic positions. If you like tying up margin cap and needlessly wasting money on Swaps, commissions, and spreads then this system is for you!

On a side note I made a position calculator since nobody seems to really know exactly why this system is such a waste of time and money.

If you are using this system, run this script to print out what your net position really is.
Attached File(s)
File Type: mq4 NetPositionCalculator.mq4   2 KB | 793 downloads
  • #1,051
  • Edited 3:12pm Jul 7, 2017 2:52pm | Edited 3:12pm
Quoting MetaCoder
{quote} Sure, the arithmetic for lot sizes includes exchange rates, but the main point is that exchange rates are simply fractions with one currency the numerator and the other the denominator.
1 = (A/B)(B/C)...(n/A)

That doesn't share equivalency in lot calculation; two entirely separate functions.

How this system is supposed to be traded is when (A/B)*(B/C)*(C/A) = significant deviance from 1 = arbitrage. How you trade said arbitrage is by entering with net 0 units on all currencies. When rates return to 1 you'll be in profit.

Retail traders cannot trade this system because HFT firms spend millions on infrastructure to get this risk-free profit faster than you.

This thread is trading this system wrong on 2/2 criteria.
  • #1,052
  • Jul 7, 2017 4:15pm Jul 7, 2017 4:15pm
Quoting Nicholishen
{quote} 1 = (A/B)(B/C)...(n/A) That doesn't share equivalency in lot calculation; two entirely separate functions. How this system is supposed to be traded is when (A/B)*(B/C)*(C/A) = significant deviance from 1 = arbitrage. How you trade said arbitrage is by entering with net 0 units on all currencies. When rates return to 1 you'll be in profit. Retail traders cannot trade this system because HFT firms spend millions on infrastructure to get this risk-free profit faster than you. This thread is trading this system wrong on 2/2 criteria.
There are a bunch of different systems being discussed on the thread and I think you just want to be seen as the one who tells everyone else they're wrong. Due to the nature of fractions, lot sizes and exchange rates are tied together inextricably in a system where you're trying to keep equity as stable as possible. You clearly understand this but that doesn't mean others don't understand it just as well.

I don't see anyone seriously proposing trying find arb opportunities in their hedging triangles. I wrote an EA years ago that monitors a couple dozen triangles for any exploitable deviations, so I understand all of this very well. There are precious few deviations / distortions / arb opportunities to exploit, and those that occur are very fleeting.
Open to new approaches.
  • #1,053
  • Jul 7, 2017 4:22pm Jul 7, 2017 4:22pm
The main mistake -I- see, if trying to make money from synthetic hedges, is in opening the trades for all 3 pairs at the same time. If you do that, you might as well size the lots the same for every pair because that will create the possibility of getting into profit, but when it happens, it'll just be by luck. Your triangle could also stay negative for quite a long time.
Open to new approaches.
  • #1,054
  • Jul 7, 2017 4:27pm Jul 7, 2017 4:27pm
there are three currencies YYY, XXX and ZZZ
and Dominating currency is DDD

M1: ,Margin for pair 1 named YYYXXX
M2: ,Margin for pair 2 named YYYZZZ
M3: ,Margin for pair 3 named XXXZZZ

P1: ,PipValue for pair 1 named YYYXXX
P2: ,PipValue for pair 2 named YYYZZZ
P3: ,PipValue for pair 3 named XXXZZZ

To get accurate balancing: the net should sum to zero.

M1+M2+M3=0
P1+P2+P3=0

we know FROM GENERAL RULES that:
P1=Lots1*XXXDDD ----- M1=C*Lots1*YYYDDD
P2=Lots2*ZZZDDD ----- M2=C*Lots2*YYYDDD
P3=Lots3*ZZZDDD ----- M3=C*Lots3*XXXDDD

so e have 3 variables: Lots1, Lots2 and Lots3.
Forex Philosopher
  • #1,055
  • Jul 7, 2017 4:29pm Jul 7, 2017 4:29pm
Quoting MetaCoder
The main mistake -I- see, if trying to make money from synthetic hedges, is in opening the trades for all 3 pairs at the same time. If you do that, you might as well size the lots the same for every pair because that will create the possibility of getting into profit, but when it happens, it'll just be by luck. Your triangle could also stay negative for quite a long time.
it is impossible to profit in this way (hedhing at the sa,e time)
no way to profit at all. always loss
Forex Philosopher
  • #1,056
  • Jul 7, 2017 5:35pm Jul 7, 2017 5:35pm
Quoting MetaCoder
The main mistake -I- see, if trying to make money from synthetic hedges, is in opening the trades for all 3 pairs at the same time. If you do that, you might as well size the lots the same for every pair because that will create the possibility of getting into profit, but when it happens, it'll just be by luck. Your triangle could also stay negative for quite a long time.
That's what this system is all about, "Three pairs hedging". If you have offsetting units then you're creating a negative carry trade where you lose money on swaps and fees. Like I said before the only way to profit from this system is to find net positive swap rings, and I haven't seen that for a very long time. If anyone is proposing any other way to profit from this system other than swap arb or pricing arb, then I will assert that there is a better and lower cost way to achieve the same net position.

Metacoder, at the present moment the only benefit of this system (that I see) is for the brokers to make more money. How is opening multiple offsetting positions in any way beneficial to the trader?
  • #1,057
  • Jul 7, 2017 5:47pm Jul 7, 2017 5:47pm
Quoting MetaCoder
The main mistake -I- see, if trying to make money from synthetic hedges, is in opening the trades for all 3 pairs at the same time. If you do that, you might as well size the lots the same for every pair because that will create the possibility of getting into profit, but when it happens, it'll just be by luck. Your triangle could also stay negative for quite a long time.
Also, why would you open 1:1:1 lot EU,EG,GU trade when you could just open a 0.12 lot GU trade? It's literally the same thing without all the exorbitant fees.
  • #1,058
  • Jul 7, 2017 7:21pm Jul 7, 2017 7:21pm
Quoting Nicholishen
{quote} Also, why would you open 1:1:1 lot EU,EG,GU trade when you could just open a 0.12 lot GU trade? It's literally the same thing without all the exorbitant fees.
you are one of few understand the math secrets behind these matters
1:1:1 on three pairs are actually single position on one pair. (plus more spreadds)
0,12 spread losses is very much less than 3 lot spreads losses
so: This is an enough prove that Hedging is very stupid idea
Forex Philosopher
  • #1,059
  • Jul 7, 2017 7:32pm Jul 7, 2017 7:32pm
Quoting madscalp
Maybe an explanation for non arabic people....many thx
https://www.forexfactory.com/showthr...2#post10065262
Forex Philosopher
  • #1,060
  • Jul 7, 2017 7:59pm Jul 7, 2017 7:59pm
Quoting Master-Mind
{quote} you are one of few understand the math secrets behind these matters 1:1:1 on three pairs are actually single position on one pair. (plus more spreadds) 0,12 spread losses is very much less than 3 lot spreads losses so: This is an enough prove that Hedging is very stupid idea
This was all explained nicely within the first 10 pages of the thread. People (not you) are obviously too lazy to read it, or just choose to ignore it hoping it is their pie in the sky system. It will pop up again in a few months with some other dolt thinking he has it all figured out. Rinse and repeat.
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