Hedging issues

When talking about hedging there are many different methods to hedge the market. Some of these methods use two different currency pairs that usually go in same directions or oppisit of each other.
My questions to you have you ever seen pairs that go in same direction change direction so they might go oppisit of each other with huge numbers of pips?
I mean let us take gbpnzd and gbpaud. They always if the first go up the secund follow it up, and if down then the secund also down.
yes, they might sometimes respond slower but they always end up going same direction. So is this correct, or this is just my newbeginner observations that have reached this conclusion?
I mean have you ever seen that when the gbpnzd have went 600 or 900 pips up, that the gbpaud have went down 400 pips or 500 pips?

I am of course not talking about these two only, but generally. So eurnzd and euraud and so on.

For example in the last two days the gbpnzd moved up and down in between 2-250 pips. The gbpaud moved with it in same direction. And also euraud and eurnzd.

So my question have you ever experienced that when gbpnzd move 250 pips up the gbpaud move 250 or something similar down? Or do they almost move together in same direction with some delays in some cases?

This info is important for me since I have created with this approach a strategy that have hold on without blowing the account even with all this war that is between russia and the west and the us federal bank issuing the interest rate and all of this, and the accounts is holding on and get growing slowly and consistently

I have so far survived for months using this hedging techneek, but since I am just approaching the Market without well defined strategy I cannot trust this demo testing that I am running. So I still hope you will read my first post and try to understand what I am asking and provide me with your useful inputs.

Hedging has always been a highly preferred strategy by a certain class of people. Even though there remains a huge uncertainty of making profit, it is their top-priority. I always recommend traders to avoid this for their self fund protection. But, they have become used to it. However, if plans can be properly executed, profits from hedging can be made.

Hi aal,

I dont trade any of those pairs sorry.

Regarding GBPNZD and GBPAUD for example, you might look up the common pair AUDNZD on a clean daily chart
and see if they always run close to each other or if they separate by large margins at times.

Not sure if that is what you're asking, but good fortunes with your endeavours.

What you are describing sounds more like pairs trading vs actual hedging.

It sounds like you are trying to capture the difference between GBPAUD and GBPNZD so you are technically hedged on your GBP position. Tracking this spread would essentially draw the AUDNZD chart as shown in the screenshot, so to be truly hedges or delta neutral on all 3 currencies, you would need to trade all 3 pairs.

What I was thinking is to trade gbpaud long, and gbpnzd short. So what will happen in my opinion is that if I trade a strict lot-size, then I will never be margincalled since these two pairs will most times trades against each other, but since they are not same trading-instrument, some times they will trade against each other with same number of pips, so you have same hedging approach we are use to. But some time they are slowly responding to each other, so some times you are in a loss, and some times you are in profit. So what you do is to wait until you are in profit, then you close these two pairs, and trade them again in oppisit direction. Or you find another two pairs to trade. You keep doing this all time.
Is this a trading strategy or just a random boom-boom with the market?

I have so far managed to get about 90 percent profit in 70 days in one account.
Another account I managed to get about 90 percent in just 45 days.
Those was demo account where I was not so afraid of losing the capital, so I traded agressively and got sometimes more than 50 percent drodown.
But I have a real account that I started for about 45 days where I was more caushes so I have so far only acheaved 22 percent of profit. And still this too much if we have to trust many experienced pro traders. They always talk about that if you acheave 40-60 percent every year without losing your capital, then you are a genious.

So the question is do you think I am doing a trading strategy here, or just another idea that will crash one day?
Only one think is driving me forward and that is in all these high tentions that is going on right now in the world, and I am still there in the market. Remember those two demo accounts is started from March.

Sorry, it took me so long time to think about your suggestion. What do you mean by I have to trade also the audnzd with those two pairs? I mean in such situation will never be able to get out with profit or loss?
I trade the gbpnzd and gbpaud because I wait until they respond slowly to each other so I have profit that I can take and close those two trades. And start over in the opposit direction. How will I be able to do that if I have the audnzd added?

You understand, the main thing I can tell you is that this is the market and anything can actually happen here.
I mean, if we take a currency pair, we take a collision of two economies and two different currencies which can tug at the situation like a rope.
Accordingly you can see such moments and you can make money on the opposite movements, provided the volatility is high.
This happens periodically, usually when there is a strong report or news or something like that. Fundamental analysis clearly shows this. So if you still notice such moments - try to use it, of course I recommend to do it on demo to begin with. Security is important.

I think your question may have been answered. But let me put it this way based on what I've seen.

I'm not sure there are any brokers that allow you to hedge using two separate pairs. For an example - and something I did on my own account with a different pair - you can open LONG on GBPAUD for example - realize it's a wrong analysis - then open a larger lot in the correct direction. So....

0.02 lots LONG.

Realized it's wrong.

0.04 lots SHORT.

The SHORT position will earn more than the LONG can go negative. Depends on how far it is and how much your account can handle. Lot sizing and such. You could also open 0.10 SHORT to quickly cover the 0.02 LONG which is going in negative. Then you close both and be ahead - or do a partial close (close by) and leave the winning position running.

You could also determine the overall profit/loss by setting the SL for the losing smaller position at the TP for the winning larger one. That way they'll both close at the same price point and your losses will be covered - or you'll be ahead.

In the situation you mentioned - you could do something similar. If you realize one trade is bad, set the SL at a point where the TP on the other pair would cover the loss or put you ahead. The issue with this is your available equity will be less on separate pairs. At least on the same pair when you open opposing positions - they cancel out the loss of the position. I don't think I explained that well but...

0.02 LONG = -$2.00
0.04 SHORT = +$3.80

Your position will be +$1.80 and the -$2.00 will be fixed. Your equity / margin will have locked in that amount and you won't lose any more. On the same pair that is. On different pairs...not sure how that would go. It MIGHT work. MAYBE.