Just learned about hedging, does anyone use it for scalping?

Stupid and blind

@wingate -- your post followed mine. When you say "You are a LIAR", is that directed at me? I never posted any such thing that you accuse me of. On the other hand, my dog is very smart. It could that while I was napping she read your earlier posts and used my login and password to express her opinion. If that is the case, then I apologize on her behalf. We've raised her to not call humans stupid...

@wingate -- oh -- wait -- I get it. Silly, silly me... You're using "reverse psychology", like @OutThere suggested. You really are an anti-hedger and your postings are intended to give hedging a bad name. My apologies -- you are doing a bang-up job. Carry on, sir...

Really you can't be serious. I'm still in the same basket from earlier, refer to the basket now! BUY trades & Sell trades doh.

@wingate -- I'm going to stop here. Though I was making fun, it really isn't personal. I have no strong feelings one way or another about hedging.

What captured my attention was your stubborness and insistence that you have no need to reflect on your approach to trading. The fact you've been here almost a decade and are trading a $500 account and can't even post accurate charts should be a clue there is room for improvement. When you resort to using cartoons then you've lost the battle -- yet you seem to be oblivious to that. We all get embarrassed, but how we react makes a big difference. If your goal is to reverse the embarrassment by reacting defensively by posting cartoons, then continue. But I can assure you the embarrassment won't go away. A better response would be to acknowledge that maybe you need to think about this more deeply because you really wish to improve and trade a $5000 account, rather than the minimum.

I'm gone. Again -- nothing personal. I do admire you for posting. At least you are willing to step in the arena and take some blows, which is much more admirable than the timid souls who hide in the shadows...

He made 4$ so i guess we should all take his advice.
That is 10% of 623$, its really good for one day

Ups now 619$, there goes 10% of the account

Since you come in with some kind of moral upper hand, you should refrain from account size shaming participants. At least Wingate's account is a real account and the bunch of naggers that have nothing to add to this thread haven't exactly shown their 5K plus accounts or how they trade them. Why don't you go bitch at them for a while?

You admonish Wingate for resorting to cartoons but you talk about your cartoonish dog logging into your account. You've got a bad sense of judgement and humor as well.

No need to reply, do as you said: "I'm gone."

Anyone else noticed that the porcelain is always cold?

Hello everyone, despite all the tribulations and egos, I find this thread very interesting.
I have thought that maybe someone else is interested in the journal of the great Phil13: https://www.forexfactory.com/thread/...journal-phil13

regards
fex

Ok here goes...

1. robots4me I was referring to STrading being a Liar NOT you, hope that clears that up. You obviously have NOTHING constructive to add to this thread so do as you say and move on please, thank you.

2. STrading your posts 721 and especially 725 illustrate quite cleary that you are incapable of correctly reading the simplest chart along with it's explanation, the chart you are referring to was clearly explained in detail to robots4me in my posts to him 720 & 723. Based on your immature comments (and lack thereof) it should be clear for everyone to see that you simply do not understand the way I trade. Because you don't understand (frustration maybe) you merely attempt to ridicule instead.

I have given you numerous opportunities to add value to this thread but each time you have declined to do so. This forum should be a place where traders can come together and exchange ideas for the common good of all concerned. I believe I have posted in the spirit of this forum, and do not for a minute suggest other's should follow, I have simply offered up ideas for possible discussion if of interest.

I have wasted far to much time 'bickering' with you and will now permanently BLOCK you along with GEFX, Nubcakes and robots4me. I will however continue to post occasionally in the 'spirit' of this thread for anyone who may find any value in what I may have to say.

I have just discovered STrading joined this forum in July 2018 and has ONLY posted 5 Charts with regards to his trades, I rest my case!

Very, very , very stupid.

No idea what you have said because you are BLOCKED I have NO INTEREST in ANYTHING you have to say.

Hedging is "admin".
I think someone used the analogy of credit cards. Sooner or later, the hedge needs to be unravelled to crystalize a real gain or real loss sometime in the future,

The more interesting aspect is how people gravitate towards one particular style of trading over another.

I maintain that hedging is an admin function, and can only work when you have a quantifiable edge.
(spreads, costs, swaps, notwithstanding)
Hedging is just a specific route to reach profit from that edge.

PS: Moneyzilla is an outlier here for me. I find his posts intriguing, but for the life of me, cannot fathom what the heck he does.

Hi obi,

Hedging might also work for the trader’s equity benefit in a LOSING trade (see #3 below).
And to their benefit in a larger DD situation (see #4)
No real trading edge situation.


NH & H (Non Hedger and hedger)

NH sets a 30p TP and 30p SL (just for the example here).
H will work on the same principle for the exercise.

This is merely a basic single hedge example (other more complex hedging methods have also been shown on the thread)


1. trade goes straight to win
NH +30p *
H +30p *


2. trade goes halfway down into a 15p DD, then to 30p winner
NH utilises wait & see what happens.
H hedges at -15p

trade then goes to 30p winner
H reaction time to unlocking hedge costs them a -5p loser on the hedge

NH +30p * (full trade is a winner)
H +25p (hedge-basket is a winner)



3. trade goes down to a -30p loser
H hedges at -15p, successfully ‘freezing’ net loss at -15p
NH -30p (the set loss)
H -15p * (the hedged loser is 15p better off)



4. trade goes to a -15p DD (where H hedges) then a -10p drop further, then hits the 30p winner
trade then goes down a further -10p to total -25pDD but DOESN’T hit the -30p SL for H
now trade resumes in the desired direction and hits +30p winner
hedge trader has slow reaction time and misses 5p finally unlocking the hedge at -20DD but
since they hedged at -15pDD they are +5p in profit on the hedge trade

NH +30p
H +35p * (+30p on the original winner and +5p on the ‘slow to unlock’ hedge winner)


So in these very basic single-hedge scenarios if a trader always gets their trade on at the best entry and doesn’t suffer a 50% drawdown ever towards their stop loss then they are slightly better off than the hedger with both being a trade (or basket) winner.

If a trader has experienced their trade going further against them than 50% to SL, before correcting to a winner, then the hedger is slightly better off than the non-hedger.

If a trader has ever had their SL hit, then the hedger is around 50% better off (in losses) if they hedged in the example above.


To hedge or not to hedge is simply a traders’ prerogative if the function is available.

In the basic examples above the non-hedger is better off in example #2.

The hedger is better off in examples #3 and #4.

There are many other variations on this theme. Traders can play these out in their own simulation.



If hedging is an option, then hedging is just another tool at the traders’ disposal where they might mitigate losses in a SL situation, and maximise profits in a DD situation.

The anti-hedgers might provide their own simulation examples where the (edit) NON-hedger is always better off than the (edit) hedger.


Each to their own imo.

Best jump into your bunker Pete...you'll be expecting some incoming...

@OutThere -- below is screen shot of what I actually wrote -- here is a link to post #604:
https://www.forexfactory.com/thread/...0#post13171760

It has no resemblence to what you claim I said.



You hedgers really do your cause a big disservice between posting cartoons and lies.

@OutThere -- you're the genius who suggested "reverse psychology" was at work here, right? So -- perhaps no surprise that wacky ideas and lying are your primary skills.

@TimeTells is a very wise man and smart trader. Regardless of your view on hedging, it is certainly worth your time to read and understand his posts. If nothing else, you'll come away more knowledgeable and, if you are lucky, enlightened...

I have a small account with an Aussi broker and was trying different strategies this month. Ended up with 0.26 lots buy and same sell on GBP/US. let them run to see what would happen. In mean time did other trades winning and closing out for about $30 profit from Friday to today. I expected that the other trades would stay at about same net P/l but they didn't and took all the closed profit. Swap fess were very small. What am I missing? I expected the volume of buy = sell trades to be net pip stable bar spread changes so net profit/loss would stay same less swap fees.

Two charts below, hopefully self explanatory. Chart 1 shows basket open on Monday evening this week (post 723). Chart 2 shows basket closure this morning 23/9. Starting account balance £619 Closing balance £672. Constructive comments only (good or bad) ONLY if deemed worthy of discussion. Everyone trades differently there is no right OR wrong way in my book.


This way of trading is not for everyone but it is for me.

I haven't personally tried it, sounds a bit chaotic haha. My concern would be how it affects your RR. Figure that you're saying you're risking 2% per trade, which is split 1% on the upside and 1% on the downside. If let's say you hit 5 pips into the upside, which closes out your short hedge, and then you hit the other 5 pips to your target, clearing a net 1%. Without even mentioning spreads (best case scenario, you're trading something like EURUSD with like as low as a .4 pip spread or something like that) or commissions (which if you're scalping, you're likely going to go for a commission based account so as to avoid larger spreads), it would be incredibly hard to execute this in a timely fashion I'd imagine, and not only that, you're more or less risking a possible 2% for 1% profit. that would give you naturally an abysmal RR, in the sense that winning 2 trades (again, not factoring in spreads or commissions) could be washed out by 1 loss. On the other hand, if you made it in a way that once the first hedge gets stopped, you move your other position's SL to break even, then I guess you're only risking 1%. Still, I would imagine a 1:1 RR to be less than optimal in this type of scenario. Not only that, but I know for myself and the way I trade, the smallest stop loss I'll take is 5 pips myself. assuming I had a 5 pip stop loss on EURUSD and looking at my current broker spread and commissions, at the time of writing this I'm seeing a 0.7 pip spread with an 8.29 dollar two way commission.

If you had a 5000 dollar account and were risking 1%, or 50 bucks on both the upside and the downside, you would need to both long and short one lot on each side at a stop loss of 5 pips. So let's take this scenario where you're taking 1 standard lot on each side of a 5000 dollar account, assuming perfect entry conditions on both ends, you'd have to pay $16.58 in commissions, and $14.00 in spreads. Right out the gate, you're more or less out $30.58. Let's add onto the fact that you're intending to lose one of the two trades as a hedge, so that's an additional $50.00 dollars you're out, bringing your total up to -$80.58. Then let's say that after your short side trade goes belly up, you DO hit your long target of 10 pips, so you're net 5 pips when all is said and done. Since I already factored in spreads and commissions, I will consider that trade to have made $100. Taking your loss alongside your gain would give you a whopping net profit of... $19.42 :/

So let's say you even won four scalps in a row. All it would take is one singular loss to be net negative (-$2.90). From a trader perspective, that would be TERRIBLE odds. you quite literally would be better off playing roulette or black jack at that point. Now I would say that you could always scale down your risk, and thus your position, but that really wouldn't change much in the end. All it would do is really scale down losses/gains, but the scenarios would always exist as such. You could also use larger stop losses, but again, doesn't really change much because you would just want to make your targets larger, and it's far more difficult to scalp for 20 pips than it is 10 I would imagine. The only benefit that would really have is reduce your necessary position size by half, which would at least help cut down on commissions and spreads. In fact, I suppose in theory this would help a decent bit. It would change the loss per trade from the previous paragraph to -$65.29, with a resulting net profit of $34.71. A bit better, but the point still stands that a loss can still destroy you. At that point, it becomes a coin flip, except it's a coin flip where it's doubly weighted against you.

The only way I could imagine such a scenario playing out well is IF you consistently find that you can hold your targets beyond 10 pips. If you happen to win pretty consistently and only lose so often, you could stand a chance of staying at break even hitting your target. However, if for example you could consistently take your 10 pip target and let it run for 20-40 pips based on analysis, well then you're going to be a happy camper. In such a scenario if you were to hit 40 pips, you could walk away with a nice net profit of 319.62 on a risk of 80.38. Then it ends up becoming worth your time, but you would simply have to ensure that this happens on a consistent enough basis.

I'm honestly just speaking from an outsiders perspective here by the way, and I have no intention of telling you you're wrong or that this method doesn't work. I'm sure this method works for people, but logistically speaking, it sounds incredibly difficult to execute with profitability. Everything I discussed above would also be assuming perfect entry conditions, and I know for myself that I almost NEVER am able to get into a trade exact when i'd like to, namely because human error is a thing. I didn't read through this whole thread, so I don't know where you're at with your strat, but I hope what I said at least can be of some help to you!