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

hi TimeTells,

I appreciate you going to the effort to explore those 4 possibilities of hedging in such detail,
I have no issue with any of your scenarios.

In any situation where all 4 possibilities play out,
1: the non-hedger gains 60 points, (+30, +30, -30, +30), averaging 15 points per trade, and
2: the hedger gains 75 points, (+30, +25, -15, + 35). averaging 18.75 points per trade.

However, I maintain you are finessing your primary edge.
Your edge is the initial entry, hedging is managing that edge with an additional artistic flourish.

(You are scoring a goal, kicking the ball on target, whether you blast it into the net, or gently chip it over the goalie into the net.)
Quoting TimeTells
{quote} 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...
In your example 3 it is not a fair comparison, because you give the hedger a 15 pip stop while you give the non hedger a 30 pip stop, if you want to do a fair comparation, you need to have them both with the same stop loss.
Why is it that you assume that the hedger will always choose the best decision, why would the hedger have the capability to say 15 pips loss is enough and why doesnt the non hedger have that capability too.
38 pages... so hedge is good or not?
Observer effect
Quoting ryuryu
38 pages... so hedge is good or not?
If you have basic trading skills (eg, you understand the market, know when to be long, short, and flat, etc) then "hedging" is a technique that can be a helpful tool (see MZ). If you don't have basic trading skills, it won't help. If you fake your data, it doesn't matter.
Quoting ryuryu
38 pages... so hedge is good or not?
Yes, but only if you have a good win rate nearing 75% while keeping your current draw down to a figure under 0.25% of your equity before you decide to hedge.
Then your next trade must equal the sum of the open trades or the trading costs will kill you.
The idea is -

A good trader is often wrong once, really never wrong twice in a row, almost never wrong three times in a row.

So how many times in a row do you get it wrong?
Once you know this, you know whether you should be hedging or just cutting your losses.
Trading thin liquidity at the boundary of the charts
Quoting ryuryu
38 pages... so hedge is good or not?
Ha-ha!!
It's a bit like discussing the existence of God. Lots of ideas and philosophy, but no experiments.
I have got my hands on an EA that allows multiple trades, and am toying with seeing if I can open multiple positions, and see if the nett buys and nett sells result in a positive number or not! (using Stochastics and fast RSI, no less, on 1HR bars on GU, EU and EJ: will do over the weekend)

I dont know how anyone else tests, but I am doing experiments, and seeing if I can be pleasantly surprised.

Even if we took a simple idea, and just opened both a BUY and SELL, and closed a BUY/SELL, we make no money, assuming no slippage, no spread, no costs.
If you open a BUY/SELL, in order to make any money, you have to have an opinion on direction, I believe, to allow one side of the trade to continue at the expense of the other. At some point, you have to expose yourself to risk.
Hence my belief edge comes first, hedging is just accountancy / admin.

The only situation where a BUY/SELL potentially makes money is trading Options, where the rush of price in one direction does not result in Calls and Puts changing price symmetrically. But that's a completely different can of worms. We don't have the theta for that.
Hedging to me personally is no more than identifying 'a trend' the rest as you say is pure accountancy.
Quoting ryuryu
38 pages... so hedge is good or not?
Yes, hedging works but for me personaly, it's more practical on higher time frames.

I trade higher time frames because i don't like stearing at the charts.

With the use of stop loss and risk reward, one can set and forget until your stop or take profit is hit but with heading one needs to find a way of managing trades until the basket of orders are in profit.

I use an EA for that.

Instead of using a stop loss, i hedge or lock the trade if it does not go my way. I do this on the 4h or daily candle stick breakout.

If the trade does not go my way i hedge the next 4H or Daily candle stick after the close. If the candles range i don't place another trade until the market expands.

When the market begins to expand and the headge is in profit, i close at profit target or close of the day if in profit.

The key is to identify ranging markets and stay clear of them.

But if you get stuck in a range with multiple trades, you can close a few of the trades for a small profit or small loss until the market begins to trend for a bigger profit.

I am very new to hedging and i've manually backtested in strategy tester and forward tested in demo accounts - always resulting in account growth and profit.

IMO it's a wonderful tool to include in your asenal.
Give the market little, Aim to take a lot!
Quoting Calsimay
{quote} Yes, hedging works but for me personaly, it's more practical on higher time frames. I trade higher time frames because i don't like stearing at the charts. With the use of stop loss and risk reward, one can set and forget until your stop or take profit is hit but with heading one needs to find a way of managing trades until the basket of orders are in profit. I use an EA for that. Instead of using a stop loss, i hedge or lock the trade if it does not go my way. I do this on the 4h or daily candle stick breakout. If the trade does not go...
Simple and to the point, very similar to the way I trade
Quoting obiwandax
hi TimeTells, I appreciate you going to the effort to explore those 4 possibilities of hedging in such detail, I have no issue with any of your scenarios. In any situation where all 4 possibilities play out, 1: the non-hedger gains 60 points, (+30, +30, -30, +30), averaging 15 points per trade, and 2: the hedger gains 75 points, (+30, +25, -15, + 35). averaging 18.75 points per trade. However, I maintain you are finessing your primary edge. Your edge is the initial entry, hedging is managing that edge with an additional artistic flourish. (You are...
and

Quoting STrading
In your example 3 it is not a fair comparison, because you give the hedger a 15 pip stop while you give the non hedger a 30 pip stop, if you want to do a fair comparation, you need to have them both with the same stop loss. Why is it that you assume that the hedger will always choose the best decision, why would the hedger have the capability to say 15 pips loss is enough and why doesnt the non hedger have that capability too.


Hi,

Let me say right here that my example was a simplistic basic idea of a few scenarios that traders could run through their own simulations.

I do not agree, because of my post, that hedging has a static fiscal financial advantage over non-hedging.

STtrading is closer to understanding that my simple scenarios were chosen for their “simplicity”.


Every trading situation is different.

For example if a hedger ‘hedged” at minus 15 pips each time and the trade immediately reversed in their original direction (as if the MM was watching) then they would generally be worse off than the non-hedger.


Please folks this is a discussion thread for ideas (and simulations I guess).

Which was my only reason for playing the devils advocate here to the anti-hedgers.

I will not be a party that is recommending any one method over another.


The FX market is more complex than just … should I hedge or not hedge


Traders must consider each and every trade they contemplate for timing & potential accuracy.

My worst mistakes were when I thought I was smarter than this beast of a market.

Trade carefully & thoughtfully.
Quoting TimeTells
{quote} and {quote} Hi, Let me say right here that my example was a simplistic basic idea of a few scenarios that traders could run through their own simulations. I do not agree, because of my post, that hedging has a static fiscal financial advantage over non-hedging. STtrading is closer to understanding that my simple scenarios were chosen for their “simplicity”. Every trading situation is different. For example if a hedger ‘hedged” at minus 15 pips each time and the trade immediately reversed in their original direction (as if the MM was watching)...
As always Pete, great advice
Quoting TimeTells
The FX market is more complex than just … should I hedge or not hedge Traders must consider each and every trade they contemplate for timing & potential accuracy. My worst mistakes were when I thought I was smarter than this beast of a market. Trade carefully & thoughtfully.
This is correct and can only be learnt by years of experience with different market conditions.

Simple linear solution, aka KISS, is a mismatch for a complex and complicated market. The reason almost all the strategies on the systems section don't work.
Trade the value
Quoting BWilliam
{quote} This is correct and can only be learnt by years of experience with different market conditions. Simple linear solution, aka KISS, is a mismatch for a complex and complicated market. The reason almost all the strategies on the systems section don't work.

This is the reason they do fail. Complex. Complicated.

It is idiotic, after all these years already, to jump on the first signal that came in. These are Level 1 signals. With hedging, they can make money, if reduced to an insanely low volume, as otherwise, will simply destroy the account,. because of the hefty overtrading (too many signals). L1 signals are pure death. In the systems sec tons I have not seen any other system than L1 systems. One and only. With heavy lot volumes traded, as it did turn out...

Complex and Complicated should be used ONLY for creating or filtering signals to Level 2 or higher Levels. Level 2 signals do pass on H4 or higher (for me only). I could not go down lower than H4 with Level 2. Hedging can be applied to H1 or higher on L2 (for me). Everything below H1, requires a Central Bank account balance to get traded... Speaking of L2, you know... And L1? In this light? Pure suicide...

And there is completely different level, lets call it Level n. For the net signals... These can be taken out of L1 signals. L1 here is the King, when speaking of Ln...

The whole process of hedging, if described directly, won't take more than 2 paragraphs of text. Maybe even just one paragraph... Many useless words are used, just to avoid that uber simple description. That one simple hedging paragraph, just kneels any chart given... This means, the content of the paragraph to be... just SIMPLE.
Maadik Hugiis. IQ 69.
Here is a visual example of hedging, done right...
Maadik Hugiis. IQ 69.
Quoting MoneyZilla
Here is a visual example of hedging, done right...
WOW.

That fellow could probably solve the cubes individually in under a minute.
Luckily they've got robots for everything nowadays:

The slow robot:
Inserted Video


Medium fast:
Inserted Video


And then it gets even better:
Inserted Video


Next version solves it before you think of how to scramble it.


One more. I like the levitating self solving cube.
Inserted Video




Fun fact: It's estimated that less than 5.8% of the world’s population can solve the Rubik’s Cube. https://www.ontheclock.com/Blog/Busi...biks-Cube.aspx
similar to the 5% vs 95% in FX.
Quoting OutThere
{quote} ps. LDFX is a buddy of mine and I like the dude. Not trying to degrade or discredit him. All I am saying is everyone eventually finds what works for them and what is right for them and we are all different with different needs and wants and the way to go about it. https://cdn-resources.faireconomy.me....png?v=1.0.0.3
Thanks to pointing that out to the fellow readers. Of course we are long time buddies, with strong diverging opinions, and we love to fight about it 😁.Regarding the emotions you keep out of it because you are trading with EA, you are right, I really wish I could trade fully automated. But is it really fully ? Who created the rules for this robot ? Who is gonna «adjust», «improve», «change» the parameters if not your own discretion ? So entries are mechanical because automated but rules are still discretionary and your emotions are then still in play.Cheers my friend,
LDFX Trading Ltd
Quoting MoneyZilla
{quote} This is the reason they do fail. Complex. Complicated. It is idiotic, after all these years already, to jump on the first signal that came in. These are Level 1 signals. With hedging, they can make money, if reduced to an insanely low volume, as otherwise, will simply destroy the account,. because of the hefty overtrading (too many signals). L1 signals are pure death. In the systems sec tons I have not seen any other system than L1 systems. One and only. With heavy lot volumes traded, as it did turn out... Complex and Complicated should...
This paragraph is filled with helpful hints
I found level n on accident and it changed everything. Such a simple concept, i didn't even believe it myself except for the fact it simply works

Still confused on how to filter level 1 signals. Do you filter using price or time? is there something else you consider?

Hope your day is blessed
every bar counts
Quoting Dzap
{quote} This paragraph is filled with helpful hints I found level n on accident and it changed everything. Such a simple concept, i didn't even believe it myself except for the fact it simply works Still confused on how to filter level 1 signals. Do you filter using price or time? is there something else you consider? Hope your day is blessed

Ln is an absolute King. It works on short, medium and large trends. Basically, it is the chart we all see, but represented in numbers we can trust. And some things we see on the chart, are not confirmed by the numbers we collect in Ln, from the very same chart. That is how we know they are ranging or consolidating the price at the moment... before the serious trend starts. And we know the trend's direction even before the trend starts, as they show it in the consolidation moments. It is always like that...



Not a word about Ln anymore... Wish you more findings. Use your imagination. There are so many different ways, to answer your question. Just start researching. I have found almost all if not just all ways to filter false signals, to be working like a sunshine...
Most filters, one way or another, include both price and time, even if you are not aiming at time, as time is always a mystery...
Maadik Hugiis. IQ 69.
Quoting MoneyZilla
{quote} Ln is an absolute King. It works on short, medium and large trends. Basically, it is the chart we all see, but represented in numbers we can trust. And some things we see on the chart, are not confirmed by the numbers we collect in Ln, from the very same chart. That is how we know they are ranging or consolidating the price at the moment... before the serious trend starts. And we know the trend's direction even before the trend starts, as they show it in the consolidation moments. It is always like that... ...

you just confirmed everything I had suspected

I will continue my journey within
cya around
every bar counts
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