Bump!
I do three leg hedge and can offer some newbie help as to how it works.
A hedge is expected to be neutral. Minor profit or drawdown is incidental to the intention. A hedge ought to be entered to preserve an existing substantial position, then exited when no longer required. Example: Your NAV is evaporating in a trade, so you hedge the trade until funds can land in your account in two days time, then exit the hedge and let the market ravish your account again until the trade turns around. This allows you to commit to your analysis or gives you time out to rethink instead of pulling the pin.
If using lots to make money, you are stuck with determining BBS or SSB. This is because lot sizes are not equal. Because they are not equal the pairs each have small exposures. The individual small exposures will collectively generate either a profit or drawdown depending on which direction the hedge is entered. Unfortunately it is essentially an expensive way of profiting from a tiny exposure. The profitable pair exposed in the hedge could be better utilised as a stand alone traded lot. A greater profit with less cost.
Using $ units instead of lot sizes offers a lot more flexibility and utility. Another post.
Cheerio chaps.
I do three leg hedge and can offer some newbie help as to how it works.
A hedge is expected to be neutral. Minor profit or drawdown is incidental to the intention. A hedge ought to be entered to preserve an existing substantial position, then exited when no longer required. Example: Your NAV is evaporating in a trade, so you hedge the trade until funds can land in your account in two days time, then exit the hedge and let the market ravish your account again until the trade turns around. This allows you to commit to your analysis or gives you time out to rethink instead of pulling the pin.
If using lots to make money, you are stuck with determining BBS or SSB. This is because lot sizes are not equal. Because they are not equal the pairs each have small exposures. The individual small exposures will collectively generate either a profit or drawdown depending on which direction the hedge is entered. Unfortunately it is essentially an expensive way of profiting from a tiny exposure. The profitable pair exposed in the hedge could be better utilised as a stand alone traded lot. A greater profit with less cost.
Using $ units instead of lot sizes offers a lot more flexibility and utility. Another post.
Cheerio chaps.
I have decided to settle for a bit under 1000% growth per anum.
