Disliked{quote}Some People confuse this type of trading with the "Martingale method" a system of gambling mathematically proven to lose you all your money in the long run.Ignored
- #404
- Edited 8:14pm Nov 15, 2016 7:45pm | Edited 8:14pm
- Joined May 2008 | Status: Trader | 1,158 Posts
to hedge or not to hedge depends on your system imo.
I try to pick tops and bottoms in index futures like Nasdaq100, Nikkei225 and ASX200.
at the bottom of the swings I buy and at the top of the swing I sell.
BUT the last swing might not be finished yet and I could be buying at the wrong time.
and that is where my hedge comes in, because I really don't know how far price might still go down.
was long last week in Nasdaq with the hedge in place.
made a boat load of money with the election jitters in the US because of the hedge and more buy trades on the way back up.
thank you Mr. Trump!
I try to pick tops and bottoms in index futures like Nasdaq100, Nikkei225 and ASX200.
at the bottom of the swings I buy and at the top of the swing I sell.
BUT the last swing might not be finished yet and I could be buying at the wrong time.
and that is where my hedge comes in, because I really don't know how far price might still go down.
was long last week in Nasdaq with the hedge in place.
made a boat load of money with the election jitters in the US because of the hedge and more buy trades on the way back up.
thank you Mr. Trump!
It is not the tool that is faulty it is how it is used. ------------------------------------------------------------------------------------------------------------------------------------------------------------------- In Summary: This is an argument of cost of SWAPS & SPREADS + SL vs. cost of STOP LOSS only. The person who pays the extra costs of swaps and spreads gets the added option of determining his/her exit. The person who decides NOT to pay agrees to leave her/his exit under certain conditions entirely to market forces. This cost can only...
- #409
- May 5, 2018 1:05am May 5, 2018 1:05am
the argument about the spread, commission swap costs is completely nonsense!
if your hedge is so small, where the spread matters and the position is so small that the commission make a difference you clearly doing somethings very wrong !
swap is a different story. as this is just to be seen as a type of interest for holding the money you not own (leverage)
so with that put in the Trash, there are 3 major factors that speak for Hedging.
1. Psycology: once the hedge is on, your pressure is gone, nothing can happen anymore that makes you lose more money, you can wait basically forever finding a better setup while your countertrade makes sure you not losing more. in short: you not have to make a fast-pace decision (which is usually wrong)
2. Math: the cost of the stop loss is far greater than the cost of the cover trade. I put an example here https://swingfish.trade/blog/library...oploss/?ref=ff
3. function of hedges: in my own trading, hedges are also a change of strategy.
if i enter a trade, and my EA hedges me, my strategy changes from "make money" to "damage control"
so if i exit the hedge-set with 1$ less loss than what the stop had cost me, it's already a "win"
here is a typical example of a hedge i made on a daily basis.
the target was the pivot originally) however i had the hedge .. so the mission is changed to damage control and i exit the whole set the moment the trade paid for the loss.
the broker made money, i prevented a loss, so everyone happy.
if your hedge is so small, where the spread matters and the position is so small that the commission make a difference you clearly doing somethings very wrong !
swap is a different story. as this is just to be seen as a type of interest for holding the money you not own (leverage)
so with that put in the Trash, there are 3 major factors that speak for Hedging.
1. Psycology: once the hedge is on, your pressure is gone, nothing can happen anymore that makes you lose more money, you can wait basically forever finding a better setup while your countertrade makes sure you not losing more. in short: you not have to make a fast-pace decision (which is usually wrong)
2. Math: the cost of the stop loss is far greater than the cost of the cover trade. I put an example here https://swingfish.trade/blog/library...oploss/?ref=ff
3. function of hedges: in my own trading, hedges are also a change of strategy.
if i enter a trade, and my EA hedges me, my strategy changes from "make money" to "damage control"
so if i exit the hedge-set with 1$ less loss than what the stop had cost me, it's already a "win"
here is a typical example of a hedge i made on a daily basis.
the target was the pivot originally) however i had the hedge .. so the mission is changed to damage control and i exit the whole set the moment the trade paid for the loss.
the broker made money, i prevented a loss, so everyone happy.
- #414
- May 27, 2018 7:36am May 27, 2018 7:36am
Hedging is not only psychological tool - it is a maneuverability tool, so you can steer the risk/money management.
finally someone speaking my language, I almost lost faith
bottom line is about the maneuverability tool combined with leverage, you can maintain a relatively small risk but have far larger positions on,
at least this is what i do basically every day. but instead of spreadsheets, itch secretaries and calculators, i use a Algo/Ea that does the job for me ..
so i can scale-in multiple times while the machine watches the drawdown and relative risks.
Still learning. Telegram @TraderJaya
divergence scalping All Time Return:
-99.8%
- #420
- May 21, 2019 12:18pm May 21, 2019 12:18pm
- Joined Nov 2015 | Status: Trader | 2,525 Posts
Practice makes a person perfect