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All about Hedging in Forex

  • #21
  • Jul 9, 2019 1:39pm Jul 9, 2019 1:39pm
Quoting DavidRP
{quote} 20k to million in 2.5 years, yes , trading phenomenons do exist https://youtu.be/_nl6-JaVc6U
it's amazing how he did it. when I watched that interview weeks ago; I went through all of his tweats; and he is legit. He did infact post daily PNL for months.
  • #22
  • Jul 9, 2019 8:37pm Jul 9, 2019 8:37pm
i found this post by dancingphil RIP explains hedging in detail:
https://www.forexfactory.com/showthr...61#post7756061

it is worth testing this method of hedging.
  • #23
  • Sep 29, 2019 8:56am Sep 29, 2019 8:56am
I have done tons of research in recent weeks; and done lots of experiments on hedging. I reviewed many styles of hedging; and tested them.

Here is my conclusion:

Hedging is for Idiots !!!


If anybody in FF, or in Forex forums; tells you he is hedging losses; yawn for a bit; then take a 180" turn and RUN for your life! You have spotted an idiot.

Hanover is the most who have spoken about hedging; and I agree with him 100%. If you would like to know more about hedging; and why it is for idiots; read all Hanover posts.
  • #24
  • Sep 29, 2019 10:51am Sep 29, 2019 10:51am
Quoting alphadude
I have done tons of research in recent weeks; and done lots of experiments on hedging. I reviewed many styles of hedging; and tested them. Here is my conclusion: Hedging is for Idiots !!! If anybody in FF, or in Forex forums; tells you he is hedging losses; yawn for a bit; then take a 180" turn and RUN for your life! You have spotted an idiot. Hanover is the most who have spoken about hedging; and I agree with him 100%. If you would like to know more about hedging; and why it is for idiots; read all Hanover posts.
We had this discussion with other forum members multiple times years ago, you can find it in the forum..... and it was obvious from the start that "hedging" on the same pair is completely useless.

Now that you know this for sure, be careful not to go too deep into your research. Because if you are not careful you will go to the next level of truth discovery and that next level will ruin your trading adventure forever.
  • #25
  • Sep 29, 2019 11:14am Sep 29, 2019 11:14am
Quoting alphadude
I have done tons of research in recent weeks; and done lots of experiments on hedging. I reviewed many styles of hedging; and tested them. Here is my conclusion: Hedging is for Idiots !!! If anybody in FF, or in Forex forums; tells you he is hedging losses; yawn for a bit; then take a 180" turn and RUN for your life! You have spotted an idiot. Hanover is the most who have spoken about hedging; and I agree with him 100%. If you would like to know more about hedging; and why it is for idiots; read all Hanover posts.
What is your view on counter trading???
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #26
  • Sep 29, 2019 11:20am Sep 29, 2019 11:20am
Quoting billytt
{quote} What is your view on counter trading???
its a money maker. i am a CT trader most of the time.

CT edge tends to persist more often than Trending edge.

most CT strategies i backtest, tends to produce the same result in forward testing for a some time.

most Trend strategies with good backtest result, fail immediately after launch
  • #27
  • Sep 29, 2019 11:25am Sep 29, 2019 11:25am
Quoting alphaomega
{quote} We had this discussion with other forum members multiple times years ago, you can find it in the forum..... and it was obvious from the start that "hedging" on the same pair is completely useless. Now that you know this for sure, be careful not to go too deep into your research. Because if you are not careful you will go to the next level of truth discovery and that next level will ruin your trading adventure forever.
i always held the belief that hedging on the same currency pairs is dud from mathematical perspective. you can achieve the same result by simply taking the loss, and reenter in next trade setup. it is simple and let you move ahead with your life.

it just that recently i have seen few forum members *with cult following* mentioned that they use it to curb trades that gone bad. i wanted to put the issue to rest once and for all.

what do you mean by dwelling deaper into the hedging?
  • #28
  • Sep 29, 2019 1:12pm Sep 29, 2019 1:12pm
Quoting alphadude
{quote} i always held the belief that hedging on the same currency pairs is dud from mathematical perspective. you can achieve the same result by simply taking the loss, and reenter in next trade setup. it is simple and let you move ahead with your life. it just that recently i have seen few forum members *with cult following* mentioned that they use it to curb trades that gone bad. i wanted to put the issue to rest once and for all. what do you mean by dwelling deaper into the hedging?
Hi A, i tend to agree with your posts.
Not Hedging ,,,but,, I counter and i acknowledge it is still the same as using a stop. But with my method and trading personality it works.
It is possible to Hedge in horse racing as is using a hedge bet if you have an accumulator bet with a final bet coming up.
I am sure you know this.
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #29
  • Sep 29, 2019 5:00pm Sep 29, 2019 5:00pm
Quoting billytt
{quote} Hi A, i tend to agree with your posts. Not Hedging ,,,but,, I counter and i acknowledge it is still the same as using a stop. But with my method and trading personality it works. It is possible to Hedge in horse racing as is using a hedge bet if you have an accumulator bet with a final bet coming up. I am sure you know this.
no idea about horse racing bets, never done it.

hedging may work for, the point is that it is the same as taking the loss then reentrr again.

some call it position trading. once you are in a bmdirectional position, you can get ou and in multiple times to make some extra quid, or maybe lose quids.

the point is you can achieve the same thing by keeping it simple. imagine where you have to hedge the hedge, then rehedge, etc

as Hanover argued few times, the excercise of hedging can be misleading to the trader. he is trying to rescue a bad trade with more trades.

i guess if it work for you that way, so be it.

dancingphil had a good way of using it. when a position goes against him by 11 pips, he enters a hedge (so he is net now). takes time off, and trade next day, waits for next signal then releases the hedge and tries to recover the 11 pips. his secret really lies in taking the time off for a day when a stop is hit.

how do you use hedging exactly?
  • #30
  • Sep 29, 2019 5:12pm Sep 29, 2019 5:12pm
There are some examples here on FF where an account applies hedging on the same pair (Gold).

This account grew over 100% in equity in less than 12 months.

Although hedging is applied so too are losses taken due to risk per trade applied.

The Equity curve is whipsawish (far from smooth) but with max DD less than 30% I'd tend to say that the trader is doing ok thus far.

Remember guys it makes a difference as to how a hedge on the same pair is executed over time.

Certainly this guy is far from being an idiot ...

Hint for account: Post 1 trader in GamblerPro thread.

Good trading,

Masterrmind.........
Master your Mind then Master your Trades
  • #31
  • Edited Sep 30, 2019 2:12am Sep 29, 2019 6:59pm | Edited Sep 30, 2019 2:12am
Quoting Masterrmind
There are some examples here on FF where an account applies hedging on the same pair (Gold). This account grew over 100% in equity in less than 12 months. Although hedging is applied so too are losses taken due to risk per trade applied. The Equity curve is whipsawish (far from smooth) but with max DD less than 30% I'd tend to say that the trader is doing ok thus far. Remember guys it makes a difference as to how a hedge on the same pair is executed over time. Certainly this guy is far from being an idiot ... Hint for account: Post 1 trader...
will check it out.

how does he(you) use hedging?
  • #32
  • Sep 30, 2019 3:57am Sep 30, 2019 3:57am
Quoting alphadude
{quote} will check it out. how does he(you) use hedging?
If you check out Post 1 of that thread and look for trader TxxxxMxxxM you will be able to quickly locate his public TE.

Due to some links in his profile FF Admin has recently deemed him a commercial member however, he has started his own thread where he discusses his hedge approach.

I hope that gets you started in the right direction ... he primarily trades Gold.

Good trading,

Masterrmind.........
Master your Mind then Master your Trades
  • #33
  • Sep 30, 2019 4:03am Sep 30, 2019 4:03am
Hedging does not provide any statistical edge whatsoever. However for some people it does help psychologically. Fear of trading is a big issue when trading big lots so if someone uses (in your eyes useless) tricks, it does not make them an idiot..
  • #34
  • Sep 30, 2019 4:23am Sep 30, 2019 4:23am
Quoting Batuvisser
Hedging does not provide any statistical edge whatsoever. However for some people it does help psychologically. Fear of trading is a big issue when trading big lots so if someone uses (in your eyes useless) tricks, it does not make them an idiot..
lol, true.

perhaps my point was not understood.

I wanted to say that; doing hedging; is similar to taking a loss, and entering later at the next signal.

it does not mean doing hedign does not work.

However; in most cases the trader is being having the illusion that he is saving the day by hedging. Where he is really taking a loss. From broker perspective; his position is net.

My concept of "idiot" refers to the fact the trader does not realize the above point.

I find many trading educators talking about hedging; but they have no clue about the above.

IMHO; the illusion of hedging; is a losing proposition. It does impact psychology negatively; and NOT positively.

That is because the trader is trying to rescue a losing position. They get into complex scenarios; of hedging a hedge, and sometimes even hedging a hedging hedge; and so on.

Having a losign position is part of doing business. You just need to take the loss and move on.
  • #35
  • Sep 30, 2019 4:47am Sep 30, 2019 4:47am
Stopping an unrealized loss from becoming a realized loss is not idiotic. 'Freezing' an equity drawdown until a murky situation clarifies itself (news release, election result) is not idiotic. Would I use hedging as a strategy by itself? Not in the 'forex' definition of having opposite trades on the same pair, but hedging risk in one trade by taking a smaller position in another instrument is not idiotic.

If you do trade counter-trend (I'd need to know your trading horizon to really know what this means) then you have been taken by surprise by a trend that reversed at some point. That's normal, and sure, taking a loss and moving on is a good way to handle it. But if you have a reason to believe that the trend isn't over, and that things will blow over in a time span that you can measure and handle, depending on your account size relative to your position size, there's no reason not to profit CT and with the trend by having trades going both ways. The costs are higher than being right about the trend, but if you could always be 100% right about that you'd only need to make a few dozen trades before joining the Forbes list.
  • #36
  • Sep 30, 2019 5:11am Sep 30, 2019 5:11am
""My aim is to learn more about it, and see if I can use it to my advantage "" well i use a method called swap trading , when caught with a trade you need to see if is a positive swap or negative swap it the swap is positive like i have on gold sells i have been benefiting from those sell trades on the fall , some say you should cut your loses i do not subscribe to that

but i would not hedge for the sake of hedging
people leave, but this thread will go on for ever
  • #37
  • Sep 30, 2019 5:12am Sep 30, 2019 5:12am
Quoting alphadude
{quote} lol, true. perhaps my point was not understood. I wanted to say that; doing hedging; is similar to taking a loss, and entering later at the next signal. it does not mean doing hedign does not work. However; in most cases the trader is being having the illusion that he is saving the day by hedging. Where he is really taking a loss. From broker perspective; his position is net. My concept of "idiot" refers to the fact the trader does not realize the above point. I find many trading educators talking about hedging; but they have no clue about...
You have hit the nail on the head.

Indeed getting into a complex scenario can definitely happen.

Having a 'robust' hedging plan in place when required is a must or otherwise the trader can fall into a downward psychological spiral making them feel helpless.

The example I provided above or at least a means to getting to that account's trading data and then his thread might offer some gems and a few rocks but I hope it is useful.

I have not studied it in great detail although I do know the basic strategy.

Masterrmind.........
Master your Mind then Master your Trades
  • #38
  • Sep 30, 2019 6:02am Sep 30, 2019 6:02am
Quoting alphadude
{quote} no idea about horse racing bets, never done it. hedging may work for, the point is that it is the same as taking the loss then reentrr again. some call it position trading. once you are in a bmdirectional position, you can get ou and in multiple times to make some extra quid, or maybe lose quids. the point is you can achieve the same thing by keeping it simple. imagine where you have to hedge the hedge, then rehedge, etc as Hanover argued few times, the excercise of hedging can be misleading to the trader. he is trying to rescue a bad trade...
Hi A,
I trade something similar to D Phil I guess.i primarily trade off Frequency Distribution Stats and have a good strike rate. Should my bar/ candle Fail I counter. I do not actually say this is hedging ( or true hedging).
I counter and then move onto my rescue Trade/s.
You could use a stop but I find it far easier to counter.
trade well.
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #39
  • Edited Oct 1, 2019 5:11am Sep 30, 2019 6:23am | Edited Oct 1, 2019 5:11am
Quoting Aussi
""My aim is to learn more about it, and see if I can use it to my advantage "" well i use a method called swap trading , when caught with a trade you need to see if is a positive swap or negative swap it the swap is positive like i have on gold sells i have been benefiting from those sell trades on the fall , some say you should cut your loses i do not subscribe to that but i would not hedge for the sake of hedging
I think Master @NIH98 once posted some priceless knowledge about Hedging <3. You may wanna find his post ... sory I read it long time ago & dont really remember which thead it is in
...want it most but use it worst!
  • #40
  • Edited 7:28am Sep 30, 2019 7:09am | Edited 7:28am
Quoting Aussi
""My aim is to learn more about it, and see if I can use it to my advantage "" well i use a method called swap trading , when caught with a trade you need to see if is a positive swap or negative swap it the swap is positive like i have on gold sells i have been benefiting from those sell trades on the fall , some say you should cut your loses i do not subscribe to that but i would not hedge for the sake of hedging
I did personally have a strategy in the past; where I use hedging (effectively being net with my broker account) while I had a long term AUDUSD position.

The hedge trade enters at 16:55 NYT, and exits around 18:00 NYT or after once the spread is back to normal.

The hedge was done by an EA; and the purpose is to avoid paying swaps on a long term position (was short AUDUSD when AUD interest rate was bit high); while keeping my main long term strategy thinking the position is still on.

Technically speaking; I used the hedge EA to avoid messing around with the long term strategy logic.
I could have made the main strategy exit and re-enters; but I could not bother messing around with the code; and wanted to keep it clean.
Imagine if you have multiple EAs; doing long term stuff; you don't want to handle the swaps on every EA. Just let the hedging EA run at specific time of day.

I run this hedging EA for over 4 months; and surprisingly it made some money (eventhough I was going against carry trade crowd). The daily distribution of returns of the hedge trades was a normal distribution.

Important to note though that I trade with a broker using FIX API; which means MT4 hedging BS is not present. From broker perspective; I don't have two positions; I simply have no position at all. Unlike some MT4 brokers so called they enable hedging; they charge you twice on each leg; eventhough you are literally net. the original reason why NFA banned hedging on retail brokers; is because they played tricks of charging you spread and swaps on each leg.
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