This thread still alive since 2006, great.
I tried hedging couple weeks ago in the paper trade, I don't remember if I bought or sold both of them. Anyways, after few days, the profit was kind of example $400 and the loss on the other one was -$300.
I thought about using hedging for one purpose only is, I don't like STOP LOSS. It makes me feel uncomfortable. But when using hedging it will help to keep you neutral about the direction of the market, and it will give you an advantage of the direction of both position at the time, which psychologically wont freeze your mind an narrow your vision when you only open one trade and it goes against you while you can't do nothing about it because you're losing money and you think the market will reverse anytime. By the time you lose 10 or 20 % you close your position , your head clears up then you'll see that you rode the losing market while you could just reverse it and go with the direction of the current trend.
So, when you hedge at the beginning of the trade, you will be with clear vision and you will identify the direction of both positions while one makes profit and the other one loses. Then you close the losing position and you ride the trend. Now as we know, the market always pulls back it depends Fib%, you can always place your hedging again to protect your winning position until the pullback is done, then you close the hedging position and ride the direction of the winning position again.
Hedging is only there to help clear your mind and make you become disciplined and see the direction of your position. This way you're there only with the winning position because lately the market doesn't respect bad news from good news.
I trade futures mini S&P500 and when it goes up so is the EUR USD. S&P burned plenty of people thinking it's gonna go down with the bad economy news, instead it kept going up.
Cheers
I tried hedging couple weeks ago in the paper trade, I don't remember if I bought or sold both of them. Anyways, after few days, the profit was kind of example $400 and the loss on the other one was -$300.
I thought about using hedging for one purpose only is, I don't like STOP LOSS. It makes me feel uncomfortable. But when using hedging it will help to keep you neutral about the direction of the market, and it will give you an advantage of the direction of both position at the time, which psychologically wont freeze your mind an narrow your vision when you only open one trade and it goes against you while you can't do nothing about it because you're losing money and you think the market will reverse anytime. By the time you lose 10 or 20 % you close your position , your head clears up then you'll see that you rode the losing market while you could just reverse it and go with the direction of the current trend.
So, when you hedge at the beginning of the trade, you will be with clear vision and you will identify the direction of both positions while one makes profit and the other one loses. Then you close the losing position and you ride the trend. Now as we know, the market always pulls back it depends Fib%, you can always place your hedging again to protect your winning position until the pullback is done, then you close the hedging position and ride the direction of the winning position again.
Hedging is only there to help clear your mind and make you become disciplined and see the direction of your position. This way you're there only with the winning position because lately the market doesn't respect bad news from good news.
I trade futures mini S&P500 and when it goes up so is the EUR USD. S&P burned plenty of people thinking it's gonna go down with the bad economy news, instead it kept going up.
Cheers