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Profitable hedging strategies?

  • #81
  • Apr 14, 2016 10:25am Apr 14, 2016 10:25am
Hi All,

I use a hedging strategy to trade after being sick of my trades going through my stop losses.

firstly, I use an 18 EMA. For example. the price crosses the line indicating the price could start going up. I buy and sell at the exact same time. Now the price has gone up 100 pips and is turning to come down, it has crossed the EMA. I exit the buy and place a buy stop above the high just in case the price goes up again. I wait for the price to come down 50 pips and take the other trade at a loss considering it may actually be a pull back anyway,
  • #82
  • Apr 15, 2016 4:00am Apr 15, 2016 4:00am
Allow me to make an opinion. I do not use hedging strategy. Because I think it is not correct in many respects. First, it often happens that the trader is worried, and he did not have the patience to wait out the negative, but close it and take losses, he does not want. Then, the trader opens the order in the opposite direction. I believe that the risk of losing from the hedging of a lot more. Because such a strategy - a way to delay its loss. That's my opinion, maybe I just was not competent, because I never use it.
  • #83
  • Apr 15, 2016 5:38am Apr 15, 2016 5:38am
Quoting DenForex
Allow me to make an opinion. I do not use hedging strategy. Because I think it is not correct in many respects. First, it often happens that the trader is worried, and he did not have the patience to wait out the negative, but close it and take losses, he does not want. Then, the trader opens the order in the opposite direction. I believe that the risk of losing from the hedging of a lot more. Because such a strategy - a way to delay its loss. That's my opinion, maybe I just was not competent, because I never use it.
I think you are wrong. having patience while in negative isn't good at all unless you have a stop loss. For example just before Christmas. If you bought GBP/CHF or GBP/JPY and just waited, by this time you would be over 5,000 pips down combined. Hedging is great as you can trade it down, lock in your profit and get out the losing trade on the pullback making yourself a handsome 300 pips or so per week. You just need to know what pairs to trade this strategy on and do a little homework. I suggest never hedge on GBP or USD pairs. JPY AUD and NZD pairs are ideal for hedging.
  • #84
  • Apr 25, 2016 11:05am Apr 25, 2016 11:05am
Quoting damien91
{quote} I suggest never hedge on GBP or USD pairs. JPY AUD and NZD pairs are ideal for hedging.
Interesting observation - I have been hedging EUR/USD and GBP/USD for some time now with excellent results I wonder why you suggest otherwise ?
  • #85
  • Apr 26, 2016 1:51pm Apr 26, 2016 1:51pm
Quoting RisklessPips
{quote} Interesting observation - I have been hedging EUR/USD and GBP/USD for some time now with excellent results I wonder why you suggest otherwise ?

Recently i traded on Eur/usd and gbp/usd and i need to hedged. Because volatility was so high i made my profit on upmovement and when theprice back i made profit too. It's help me to be patient during the drawdown.
  • #86
  • Apr 26, 2016 2:44pm Apr 26, 2016 2:44pm
Hedging is one of the most powerful ways to trade the markets. For me, it is the most powerful approach.

It took me two full years and about 150k to understand how to do it. Fortunately for me, at least half of these 150k is gone on EA developments. The other part I have paid for the lessons I had to learn the very hard way - by live trading experience.

Briefly put:

1. Forex is a game of stop losses, not profits. Only the fools expect profits. That is why about 99.99% of all retail traders are net losers.

2. Knowing 1, one should look for ways to turn the obvious (the infinite process of SL collection) into his/her own favor.

3. Doing 2 is possible only by combining trend and range strategies into one bundle strategy, which in reality is nothing, but pure hedging.

How you must hedge?

Just place the stop orders of the trend strategy to be facing with the limit orders of the range strategy, head to head. They should be facing against each other. With some distance in between. It is impossible to predict which part of the bundle will perform better.

Usually the trend is the better performer, but not always. Trading only a trend strategy during 80% of time when the rate stays in range will mean only bad news for your account balance and size. The same is valid for the range strategy, as part of the whole bundle.

Here are two examples of the recent closures I did on my two TEs, which use a 50% hedge approach. Sometimes the master (the trend) takes over, other times the slave (the range) takes over... I care not which one does what. What is important it is the net result, which is positive.

Please keep in mind that what you will see on these images is something I have already abandoned. For me, there are far better ways to hedge. On the top of that, this information is insanely expensive. For example, a London based hedge fund is paying 45M for a system with 5% DD and 30% annual return. So far I have achieved 1.2% of DD with 3.8% monthly return. So, sometime in 2017, I am planning to show them my hedge babies...

Attached Image (click to enlarge)
Click to Enlarge Name: USD Pairs I 50% Hedge.png Size: 492 KB


Attached Image (click to enlarge)
Click to Enlarge Name: USD Pairs II 50% Hedge.png Size: 445 KB
Maadik Hugiis. IQ 69.
  • #87
  • Apr 26, 2016 3:17pm Apr 26, 2016 3:17pm
Quoting MoneyZilla
Hedging is one of the most powerful ways to trade the markets. For me, it is the most powerful approach. The other part I have paid for the lessons I had to learn the very hard way - by live trading experience. Briefly put: 1. Forex is a game of stop losses, not profits. Only the fools expect profits.
I agree 100%. I've been messing around for a few years now, and every further statistical approach always gets me to this end. Pure hedge / correlation hedge and bilateral strategies is the way you can make whatever the market says.
You'll always miss 100% of the shots you don't take.
  • #88
  • Apr 20, 2017 10:14am Apr 20, 2017 10:14am
Quoting MoneyZilla
Hedging is one of the most powerful ways to trade the markets. For me, it is the most powerful approach. It took me two full years and about 150k to understand how to do it. Fortunately for me, at least half of these 150k is gone on EA developments. The other part I have paid for the lessons I had to learn the very hard way - by live trading experience. Briefly put: 1. Forex is a game of stop losses, not profits. Only the fools expect profits. That is why about 99.99% of all retail traders are net losers. 2. Knowing 1, one should look for ways to...
Damn Money Zilla. That's impressive!!!
  • #89
  • Apr 21, 2017 10:24am Apr 21, 2017 10:24am
Quoting aaven
{quote} Damn Money Zilla. That's impressive!!!
It scared the shit out of me when I saw it's April 27 (moneyzilla's post), only to realize you replied to a year old post.
  • #90
  • Apr 21, 2017 1:58pm Apr 21, 2017 1:58pm
Quoting FxLapozi
{quote} It scared the shit out of me when I saw it's April 27 (moneyzilla's post), only to realize you replied to a year old post.
I know. I realize I should have included a Waking the Frankenstein Warning...
  • #91
  • May 12, 2017 10:45am May 12, 2017 10:45am
Hi there guys, I love this thread! For me it's all about determining how close will your 200% hedge will be from the initial position you should pay close attention to price action and avoid ranging markets some pairs are very ideal like gbp and jpy crosses they tend to trend more than others. The philosopher's stone of trading how to never lose or close every week in profit.. well if you have no family and or a day job because if you do you'll lose them both while on it lets say you don't lets say you're a freak that's gonna stay awake for 24 hours when needed to watch it over lets say you are capable of closing your hedges and re-hedging on every price bounce back or holding for as long as it takes in order for your positions to be in profit or even killing your hedge when its still early it is really achievable guys and it can work all the time it is just soo hard and the physical fatigue can be immense but it can be done if risk per trade is kept below 25% or even lower you could end up making 25-50% a week that is every week you would need to sacrifice everything for it though it is the only way it can be beaten. you're welcome
  • #92
  • Jun 4, 2017 6:14am Jun 4, 2017 6:14am
Hedging can be a profitable approach by some traders, but according to me it is the process to lost equity again, instead of hedging it would be better to close the order. And practically by and large regulated trading brokers don’t allow hedging as well scalping.
  • #93
  • Jun 4, 2017 8:46am Jun 4, 2017 8:46am
Not bad for a hit and run i guess as long as you would kill the trade on the losing account at some point and let your winner run otherwise it wouldn't make sense it could work but at some point you would have to stop as the losing account would be blown up i'd prefer something that would work indefinitely forever and ever or until doomsday lol the abovementioned strategy does work if risk per trade is low but then fatigue comes into play and or wrong judgement as far as not killing your 2x hedge in time on breakouts etc.. but it sure can work
  • #94
  • Jun 4, 2017 10:33am Jun 4, 2017 10:33am
The post i actually replied to has been removed my above reply goes to the scenario of having two accounts on differents brokerages and going long and short on each at the same time.
  • #95
  • Apr 3, 2018 8:15am Apr 3, 2018 8:15am
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  • #96
  • Apr 3, 2018 8:44am Apr 3, 2018 8:44am
Quoting forexmnstr
I found another simple profitable hedging ... buy spot EUR/USD ... sell future EUR ... that would never be a lossing hand ... and here you are paying one way swap ... assuming that your using a non free swap account ... please correct me if iam wrong
  • #97
  • Apr 3, 2018 1:13pm Apr 3, 2018 1:13pm
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  • #98
  • Apr 3, 2018 2:04pm Apr 3, 2018 2:04pm
Quoting kourmouls
The post i actually replied to has been removed my above reply goes to the scenario of having two accounts on differents brokerages and going long and short on each at the same time.
Then, what was the ultimate result? I got your strategy, maybe it’s a profitable system in the trendy market but not in the rangy market.
  • #99
  • Apr 3, 2018 2:24pm Apr 3, 2018 2:24pm
Quoting LuizGuilher
{quote} Then, what was the ultimate result? I got your strategy, maybe it’s a profitable system in the trendy market but not in the rangy market.
Opposite; hedging is for ranging markets not trending markets.

Also, to the OP, two brokerages isn't necessary. Just two accounts.
"The fun is in the hunt. Not the kill."
  • #100
  • Apr 9, 2018 1:25pm Apr 9, 2018 1:25pm
Hi all,
Is it possible to have an EA for this:

1.Given Pair A and Pair B
2.Place order at 00:00 UTC:

Buy A
Sell A

BuyB
Sell B

3.Close trade at BuyA +BuyB= N pips ;Close trade at SellA +SellB= N pips;N>0

Close all trades at 23:55 UTC
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