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Real or Algo

  • #201
  • Apr 30, 2020 5:09am Apr 30, 2020 5:09am
Quoting Nikkoro
{quote} Hi, BubaYaga is right there. The thing is you can't use same lot sizes to create triangular hedge. Example: I took current rates in the morning: - EURUSD: 1.08593 - GBPUSD: 1.24682 - EURGBP: 0.87088 1. Buy 1 lot of EURUSD for 1.08593 -> you bought 108 593 EUR for 100 000 USD (+108 593€, -100 000$) 2. Sell 1 lot of GBPUSD for 1.24682 -> sold 124 682 GBP for 100 000 USD (-124 682£, +100 000$) 3. How many lots of EURGBP I need to balance hedge? From 1. and 2. we have on our account: (+108 593€, -124 682£) USD was balanced (-100 000$ + 100 000$...
ok,
part1.
ok, you are right with the size. as if they are never off temporarily, bcos all automatically hedge to the correct amount real time by algos...
ergo algos do run the market then!...i am not certain.
bcos once in a while there will be some large orders in 1 currency and not the other, so naturally some flows should be there to a perfect hedge idea time to time.
part2.
swap. as said, curious to see a triangle hedge resulting positive overall swap. if else a perfect hedge, just swap itself would deem it totally worthless.

ps. all from retail standpoints. banks dont pay the swap rates or commission retail does.
ps2. i am pretty sure there is direct exchange from EUR to GBP without involving a 3rd currency.
there is always, always another trade!!
  • #202
  • Apr 30, 2020 6:28am Apr 30, 2020 6:28am
Quoting pierre23
And one crystal-ball post.... AUDUSD bounce at 0.6558. Mark the line on the chart and scroll backwards.
...AUDUSD straight off 0.6558 (+20 / 0 draw down)
...USDJPY today picked the top 106.86 (+20 / 1.7 pip draw down). Mark the level on a 30min chart and look what happened 2 days ago.

Same setups, over and over again. If it is an algo, I want to thank it for being so predictable. If it is supply and demand, I want to thank it for being so predictable. If it is a bunch of banks colluding as market makers, I want to thank them for being so predictable. Whatever psychology works for you.
  • #203
  • Apr 30, 2020 7:41am Apr 30, 2020 7:41am
Interesting thread.
When u guys spot a good target (one with a nice line of support or resistance to be broken just before it), do u ever trade TOWARDS the target, or are you always looking for a reactionary trade away from the target? They are usually nice fast trades towards a target but determining which is the one that breaks through the support or resistance is the tricky part
  • #204
  • Apr 30, 2020 8:14am Apr 30, 2020 8:14am
Quoting Danger-Mouse
Interesting thread. When u guys spot a good target (one with a nice line of support or resistance to be broken just before it), do u ever trade TOWARDS the target, or are you always looking for a reactionary trade away from the target? They are usually nice fast trades towards a target but determining which is the one that breaks through the support or resistance is the tricky part
My understanding is those who believe that there's an algorithm controlling the market, they wait for psychological areas to be traded to before taking a trade (ie. one form would be waiting for stops to be taken out, above or below extremes). That's what I gather anyhow and correct me if I'm wrong.

Most of my own trades are a reactionary trades like you've put it, at the area I've marked. I don't usually trade towards an area because I don't know when the area will be hit... all I know is when price eventually reaches there, the odds are on my side. Like the AUDUSD call I made yesterday, price went 40pips opposite to the area I marked, but that's OK because I know once the price got to 0.6558 it was highly likely to give me a profitable trade.

However, if for instance I've taken a short in an area of interest, I may have my profit target at the opposite area, where I think price will reach shortly. Target to target. I believe trading is discretionary, you have to trade what the charts show you and then you can start picking tops and bottoms with high accuracy.
  • #205
  • Apr 30, 2020 8:46am Apr 30, 2020 8:46am
Yes Pierre. Thanks for your thoughts, your posts are logical and all of my trading is reactionary too. I do like to wait for a strong reaction away from the stop zone first, otherwise I tend to get trapped in the old "catch a falling knife" problem....how do we know it's not going to be one of those days that slams through about 10 stop runs in one direction without any retraces. Do the other folk here "touch trading" a stop zone just set a really tight stop and accept the small loss if it continues through the first stop zone?
  • #206
  • Apr 30, 2020 9:18am Apr 30, 2020 9:18am
Quoting Danger-Mouse
Yes Pierre. Thanks for your thoughts, your posts are logical and all of my trading is reactionary too. I do like to wait for a strong reaction away from the stop zone first, otherwise I tend to get trapped in the old "catch a falling knife" problem....how do we know it's not going to be one of those days that slams through about 10 stop runs in one direction without any retraces. Do the other folk here "touch trading" a stop zone just set a really tight stop and accept the small loss if it continues through the first stop zone?
Sorry by reactionary trade I thought you meant strong price action previously at that area. I just mark the level and take the trade where I think it will reverse, I don't wait to see if it bounces first. I only trade high probability levels. There will be days the price will blow through the areas... that's what a stop is for or a mental stop if you don't like letting your broker know what you're up to. 70% win rate, with a minimum 1:2, 1:3 RR - it doesn't bother me if I get stopped out.

I could go the route of hedging and have a 98% win rate like some here claim, but until someone teaches me how to hedge properly with sound money management, I'll steer clear of it.

Interested to hear other thoughts on it, but may be veering away from OP's topic?
  • #207
  • Apr 30, 2020 9:21am Apr 30, 2020 9:21am
Quoting Danger-Mouse
Yes Pierre. Thanks for your thoughts, your posts are logical and all of my trading is reactionary too. I do like to wait for a strong reaction away from the stop zone first, otherwise I tend to get trapped in the old "catch a falling knife" problem....how do we know it's not going to be one of those days that slams through about 10 stop runs in one direction without any retraces. Do the other folk here "touch trading" a stop zone just set a really tight stop and accept the small loss if it continues through the first stop zone?
Hi Danger Mouse

Work that problem out and success in this game is guaranteed. I wait for signs of exhaustion when price hits a "stop zone" and trade back through thin liquidity. However if price just keeps on going, I hedge around 15 pips.
Then I perform a little trick I learned from the late Nih98 (RIP) where I bank the 15 pips as a credit on my books and don't take the loss.
Then I continue to trade any other pairs looking for a fail safe setup, then double up the next trade size.
When that trade is up say 16 pips, I close all (additional trading costs of course) and end up winning 16 pips and never have to record a decrease in equity.

That happen tonight with EURAUD. Hedged at 15 pips then took a trade on EURUSD one hour later at double the trade size. I then closed all with trade manager for 16 pips profit (minus trading costs).

I will take the loss if I end up ahead of my daily trading goal.
Cheers Rick
Trading thin liquidity at the boundary of the charts
  • #208
  • Apr 30, 2020 1:06pm Apr 30, 2020 1:06pm
Quoting RickM
{quote} Hi Danger Mouse Work that problem out and success in this game is guaranteed. I wait for signs of exhaustion when price hits a "stop zone" and trade back through thin liquidity. However if price just keeps on going, I hedge around 15 pips. Then I perform a little trick I learned from the late Nih98 (RIP) where I bank the 15 pips as a credit on my books and don't take the loss. Then I continue to trade any other pairs looking for a fail safe setup, then double up the next trade size. When that trade is up say 16 pips, I close all (additional...
My stupid brain is having trouble visualising this!
So, if for example price falls to a stop zone you enter long... then if price keeps falling you take a hedge at 15 pips below (ie. open an equal short position) ? I don't understand the bit about banking the 15 pips as a credit. Sorry if it's obvious and I'm being blind
  • #209
  • Apr 30, 2020 3:20pm Apr 30, 2020 3:20pm
Quoting Danger-Mouse
Interesting thread. When u guys spot a good target (one with a nice line of support or resistance to be broken just before it), do u ever trade TOWARDS the target, or are you always looking for a reactionary trade away from the target? They are usually nice fast trades towards a target but determining which is the one that breaks through the support or resistance is the tricky part
Some will trade to or away...perhaps both directions.
I prefer to wait for a reaction at a given level and allow momentum (Algo) to show its hand.
GJ....classic example, when price reached the first target, I had no idea if it was going to stop/reverse or keep going.
Minor reversal then classic trap of heading long again taking out the sellers.. buyers again now on board..
So I wait to see if the next level (Herd Mentality)...gets tagged then wait for price to show its hand.
If a level or herd mentality has been tagged several times with another level close by, I know within reason as to how I think price will subsequently play out.
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  • #210
  • Edited 5:29pm Apr 30, 2020 5:16pm | Edited 5:29pm
Quoting Danger-Mouse
{quote} My stupid brain is having trouble visualising this! So, if for example price falls to a stop zone you enter long... then if price keeps falling you take a hedge at 15 pips below (ie. open an equal short position) ? I don't understand the bit about banking the 15 pips as a credit. Sorry if it's obvious and I'm being blind
If there was one thing Nih98 said to me was place the hedge and leave the bloody thing alone, don't touch it. So now I am 15 pips in draw down but the equity balance still remains fixed. My goal now is to find another trade that I believe offers a high percentage win of at least 15 pips and enter at double the trade size of that first trade. When I enter a great trade and are 15 pips in green, I get my trade manager to close All trades on account at ONCE so my Balance goes up 15 pips and the hedge is never recorded in the balance.
Yes I did go into draw down but so does every single trade we enter because of spread.
I would probably win 9 out of 10 trades I enter, that 10th trade I would hedge around 15 pips till i can get it DISSOLVED.

I my goal is to increase my equity every single night by 1% with NO open trades on the books. I will do what ever is required to achieve that target, sometimes that means I may have to machine gun a dozen 3 pip winners to hit my target for the night. So that's 20% equity rise a month and which means if you are trading a $50K account, you have a reliable wage.

Cheers
Trading thin liquidity at the boundary of the charts
  • #211
  • Apr 30, 2020 5:25pm Apr 30, 2020 5:25pm
Quoting RickM
{quote} If there was one thing Nih98 said to me was place the hedge and leave the bloody thing alone, don't touch it. So now I am 15 pips in draw down but the equity balance still remains fixed. My goal now is to find another trade that I believe offers a high percentage win of at least 15 pips and enter at double the trade size of that first trade. When I enter a great trade and are 15 pips in green, I get my trade manager to close All trades on account at ONCE so my Balance goes up 15 pips and the hedge is never recorded in the balance. Yes I...
RickM I have been trying to figure out that hedging strategy you are talking about , but i don't see the difference between say, taking the 15pip losing hedge , and just closing out the trade at a loss, the end result would be the same, not sure what you gain with the hedging? I suppose it makes your account history look better if you wanted to show someone how good you are, but what else?
  • #212
  • Apr 30, 2020 6:17pm Apr 30, 2020 6:17pm
Quoting Profitgrowth
{quote} RickM I have been trying to figure out that hedging strategy you are talking about , but i don't see the difference between say, taking the 15pip losing hedge , and just closing out the trade at a loss, the end result would be the same, not sure what you gain with the hedging? I suppose it makes your account history look better if you wanted to show someone how good you are, but what else?
I guess it's just a personal preference. I think they're messy, I prefer netting accounts. Move onto the next trade without any baggage.
  • #213
  • Apr 30, 2020 7:20pm Apr 30, 2020 7:20pm
Quoting RickM
{quote} Hi Danger Mouse Work that problem out and success in this game is guaranteed. I wait for signs of exhaustion when price hits a "stop zone" and trade back through thin liquidity. However if price just keeps on going, I hedge around 15 pips. Then I perform a little trick I learned from the late Nih98 (RIP) where I bank the 15 pips as a credit on my books and don't take the loss. Then I continue to trade any other pairs looking for a fail safe setup, then double up the next trade size. When that trade is up say 16 pips, I close all (additional...
This is not correct
"However if price just keeps on going, I hedge around 15 pips. Then I perform a little trick I learned from the late Nih98 (RIP) where I bank the 15 pips as a credit on my books and don't take the loss" you just lost 15 pips, you can tell whatever you want regarding this, your equity will prove you wrong it will show that you lost 15 pips it never lies.
"I close all (additional trading costs of course) and end up winning 16 pips and never have to record a decrease in equity." Your equity decreased (15pips doh).
You just placed a stop loss and needed a paragraph to explain it.
  • #214
  • Apr 30, 2020 7:56pm Apr 30, 2020 7:56pm
I knew as soon as the word hedge was mentioned it would open a can of worms...for and against..
Can a hedge be closed without incurring cost such as how Rick may use a Hedge?
  • #215
  • Apr 30, 2020 8:12pm Apr 30, 2020 8:12pm
Quoting Profitgrowth
{quote} RickM I have been trying to figure out that hedging strategy you are talking about , but i don't see the difference between say, taking the 15pip losing hedge , and just closing out the trade at a loss, the end result would be the same, not sure what you gain with the hedging? I suppose it makes your account history look better if you wanted to show someone how good you are, but what else?
The purpose is solely for psychology reasons to obtain a winning BASKET on every single position I ever take. It enables me to be aggressive knowing I will never lose when I exit the market.
Most times I will just attack the same hedge with additional trades, be in 4 four pip quick scalps or 1 full 15 pip scalp on the same pair but normally at twice the original trade size.

Why should we ever have to accept a loss when we hit the close button on our trade manager?
Trading thin liquidity at the boundary of the charts
  • #216
  • Apr 30, 2020 8:12pm Apr 30, 2020 8:12pm
Quoting moodybot
I knew as soon as the word hedge was mentioned it would open a can of worms...for and against.. Can a hedge be closed without incurring cost such as how Rick may use a Hedge?
I am not for or against hedging, people should do as they like. The problem is people that hedge and then say that this and that happens, when the reality is that they have no positions in the market and their equity isnt moving and nothing is happening. They try to turn nothing into something special.
  • #217
  • Apr 30, 2020 8:20pm Apr 30, 2020 8:20pm
Quoting STrading
{quote} I am not for or against hedging, people should do as they like. The problem is people that hedge and then say that this and that happens, when the reality is that they have no positions in the market and their equity isnt moving and nothing is happening. They try to turn nothing into something special.
What’s wrong with turning a losing position into a winning any not taking any loss?
I think this strategy only works well if the original hedge is less than 20 pips and you can clear it the same trading day. I think hedges that roll over to the next day do need to be written off.
Trading thin liquidity at the boundary of the charts
  • #218
  • Apr 30, 2020 8:35pm Apr 30, 2020 8:35pm
Quoting RickM
{quote} What’s wrong with turning a losing position into a winning any not taking any loss? I think this strategy only works well if the original hedge is less than 20 pips and you can clear it the same trading day. I think hedges that roll over to the next day do need to be written off.
There is no problem doing that. The point is that you take a loss, even if temporary you do take a loss. thats why i said you where incorrect, And all you are doing is losing a trade and then recover it next.
  • #219
  • Apr 30, 2020 9:31pm Apr 30, 2020 9:31pm
Quoting STrading
There is no problem doing that. The point is that you take a loss, even if temporary you do take a loss. thats why i said you where incorrect, And all you are doing is losing a trade and then recover it next.
Basket trading inflates the win count for a single trade set up.

Hedge does not register losses.

Combined they both create an illusion of high winrate of precision trading.

Catch a falling knife trade as in buy in falling market or sell in rising market is not a laudable skill.
Neither is this a contrarian strategy.
Know what you trade
  • #220
  • Apr 30, 2020 10:07pm Apr 30, 2020 10:07pm
Quoting BWilliam
{quote} Basket trading inflates the win count for a single trade set up. Hedge does not register losses. Combined they both create an illusion of high winrate of precision trading. Catch a falling knife trade as in buy in falling market or sell in rising market is not a laudable skill. Neither is this a contrarian strategy.
If you can win 90% of every trade that you enter, attempting to save those losing 10% seems very smart to me. Why are traders so quick to take the loss.
It seems discussions on hedging provokes strong opinions amongst traders, probably deserves another thread in itself.
Trading thin liquidity at the boundary of the charts
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