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Hedging/averaging trades without prediction

  • #1,061
  • Nov 5, 2022 2:22pm Nov 5, 2022 2:22pm
Quoting Waveskierrob
{quote} Thanks for posting, but if indicators worked then we wouldn't need to hedge/average, remember this is just a tool not a strategy, you can use charts if that's what you like but I choose not to as I trade my positions not the markets ...
So the focus is much more on position trading. Of course you know your craft and there's some 'feel' factor involved. But there's so much freedom when trading like this that it can get overwhelming sometimes (due to lack of experience mainly).

This one is a broader question, but any tips or tricks to try when handling a heavy run against? Like switching to taking some scalps while waiting for price to turn? Because adding and adding without end seems dangerous. Just looking for some ideas to test in handling those scenarios
  • #1,062
  • Nov 5, 2022 2:49pm Nov 5, 2022 2:49pm
Quoting Rfs199
{quote} So the focus is much more on position trading. Of course you know your craft and there's some 'feel' factor involved. But there's so much freedom when trading like this that it can get overwhelming sometimes (due to lack of experience mainly). This one is a broader question, but any tips or tricks to try when handling a heavy run against? Like switching to taking some scalps while waiting for price to turn? Because adding and adding without end seems dangerous. Just looking for some ideas to test in handling those scenarios...
If it's dangerous to average down, then it must be safe to average up.
1.02^200
  • #1,063
  • Nov 5, 2022 8:27pm Nov 5, 2022 8:27pm
Quoting Rfs199
Because adding and adding without end seems dangerous.
Because it is. Don’t worry, they all trade Pennie’s a Pip or demo, ask for a 2 years track record trading a large account like that and you will only see silence!
  • #1,064
  • Nov 5, 2022 8:44pm Nov 5, 2022 8:44pm
So far, this is the most comprehensive, useful, and truly interesting trading method and tools for quick trading strategy that I have found.

What I've learned so far from this thread.

Trade is always 50/50 and don't over stay.
For instance, assume that GBP/USD exhibits an average price movement of 180 pips each and every daily session, beginning with the London hours.
If you are only going after 10-20 pips profit on each trade, should not your probability of winning be much higher than if you were shooting for 200 pips profit on each trade?

Additionally, inexperience (a.k.a. greed) often causes traders to overstay their welcome, turning otherwise profitable entries into net losses.

Most important lesson is, we should strive for are not necessarily targets for highest win/loss and R:R, but steady growth of our account equity, the equity curve.
I come from the future.
Karen X Mas Bonus 2025 All Time Profit: $15,104
  • #1,065
  • Edited Nov 6, 2022 12:20am Nov 5, 2022 11:32pm | Edited Nov 6, 2022 12:20am
Quoting Waveskierrob
{quote} Thanks for posting...so what are you saying is that I should stop hedging and start using Stop losses because you failed at hedging...
Just sharing...

In my case, just because I hedge, doesn't mean I don't cut loss. I just take a very big loss afterwards.

Though that loss is mitigated by money managing techniques (one is betting the least amount at first or in the succeeding bets) while hedging in other entry points, which lessens how much I cut loss in the early trades. Of course this assumes I can still have the opportunity to close the later trades at break-even cost.

Currently, the most loss I CL'd was at 300 pips. But I also manage to lessen its impact on the whole fund through active trading in between the period that I was hedging the original position and closing it. So when the final accounting comes, say that 300 pips translate to a $300 loss, I may have recovered $200 of the loss --- this is particularly so when intraday trades are very choppy.

That is why I say indicators are important as well as chart reading skills.

Also, I try to keep an outlook that even if cut a losing bet, all is not lost if I gain some knowledge in return which I can use in succeeding trades... So far, so good. I just hope this leads me to the mythical pot of gold at the end of the rainbow.
"No trade is still a trade." - Peter Borish
  • #1,066
  • Edited Nov 6, 2022 12:30am Nov 5, 2022 11:36pm | Edited Nov 6, 2022 12:30am
Quoting Rfs199
{quote} So the focus is much more on position trading. Of course you know your craft and there's some 'feel' factor involved. But there's so much freedom when trading like this that it can get overwhelming sometimes (due to lack of experience mainly). This one is a broader question, but any tips or tricks to try when handling a heavy run against? Like switching to taking some scalps while waiting for price to turn? Because adding and adding without end seems dangerous. Just looking for some ideas to test in handling those scenarios...
Yep!

But you have to be experienced enough in handling such approach since it can get overwhelming when you have numerous open trades in conflicting directions... It gets more stressful if you start to doubt if you really did get your first bet right. (So you really have to be confident that you have the right trade when you got in in the first place.)

Been there, done that. At the time, I opted to close all trades just to keep my sanity in place.

Took a huge loss but it helped me refine my approach.

Also, this is where your knowledge of indicators becomes crucially important. Placing a counter bet on your original bet requires precision so that you limit your counter trade and can quickly take profit at some point.
"No trade is still a trade." - Peter Borish
  • #1,067
  • Nov 6, 2022 2:25am Nov 6, 2022 2:25am
Quoting lddd
{quote} Because it is. Don’t worry, they all trade Pennie’s a Pip or demo, ask for a 2 years track record trading a large account like that and you will only see silence!
Yes exactly right I have always said from the start DEMO first then big bank with smallest lots (pennies), if you have a system or a tool that you can start with big lots, please share we would all love to see...thanks for reiterating my posts...hopefully you will respond to this post and not only silence...
  • #1,068
  • Nov 6, 2022 2:56am Nov 6, 2022 2:56am
Quoting lddd
Is this the new Grid Trading Billionaire‘s Hangout?. Oh man, I did it all wrong. So you just have to place some random trades, „hedge“ if things go wrong and financial freedom here we go. Brilliant!
Thought I would go back and see other posts you've made on this thread, to see what sort of poster/trader you are and see that you want a guru to tell you what and when you should trade for no risk and no work, well good luck with that. please people if you are going to post on this thread have the decency to at least read the first page of this thread...here it is again...enjoy

1. Nothing is set in stone
2. I'm not a guru but I do have some tools and ideas that may help
3. Please no predictions there are other threads for this
4. Try these ideas on DEMO for at least a month
5. BIG bank and trade the smallest lots you can
6. I work on average price and hedging
7. I don't use stoploss but do use target price
8. Market can move in any direction at anytime
9. Don't blame market or news, it is what it is
10. Concentrate on your equity as you bank profits early and let losses run, so profit and loss will mainly be in the red (something to get use to)
11. This is not for everyone and it's not easy
12. Open trades can go on for months
13. Patience is the key
14. Please add your ideas they will probably be better than mine
15. Anyone I find repeatedly inappropriate will be removed (sorry my thread my decision)
16. Happy to post your trades on here but must be live trading only, within a couple of minutes of placing or closing a trade. (Charts are welcome)
  • #1,069
  • Nov 6, 2022 7:54am Nov 6, 2022 7:54am
[quote=Waveskierrob;14211806]{quote} Thought I would go back and see other posts you've made on this thread, to see what sort of poster/trader you are and see that you want a guru to tell you what and when you should trade for no risk and no work, well good luck with that. please people if you are going to post on this thread have the decency to at least read the first page of this thread...here it is again...enjoy 1. Nothing is set in stone 2. I'm not a guru but I do have some tools and ideas that may help 3. Please no predictions there are other threads for this 4. Try these ideas on DEMO for at least a month 5. BIG bank and trade the smallest lots you can 6. I

Hi Wave, you will be far better removing Idd from here. He is the only person I have ever barred from my room. I don't mind constructive criticism but he totally denies anything and everything. Just wanting to place a trade and walk away, and on return have a pot full of $$$$
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #1,070
  • Nov 6, 2022 8:04am Nov 6, 2022 8:04am
Quoting billytt
Quoting Waveskierrob
{quote} Thought I would go back and see other posts you've made on this thread, to see what sort of poster/trader you are and see that you want a guru to tell you what and when you should trade for no risk and no work, well good luck with that. please people if you are going to post on this thread have the decency to at least read the first page of this thread...here it is again...enjoy 1. Nothing is set in stone 2. I'm not a guru but I do have some tools and ideas that may help 3. Please no predictions there
...
Yes I will if carrys on, but like to give him/her the chance to reply and embarrassing themselves, loves how trying to mock or belittle demo or penny pips but trades demo his/herself for all to see, classic, comedy gold
  • #1,071
  • Edited 9:20am Nov 6, 2022 9:01am | Edited 9:20am
Hello dear mates, happy Sunday !!!!!
Quoting Pat Chiko
So far, this is the most comprehensive, useful, and truly interesting trading method and tools for quick trading strategy that I have found. What I've learned so far from this thread. Trade is always 50/50 and don't over stay. For instance, assume that GBP/USD exhibits an average price movement of 180 pips each and every daily session, beginning with the London hours. If you are only going after 10-20 pips profit on each trade, should not your probability of winning be much higher than if you were shooting for 200 pips profit on each...
Quoting Pat Chiko
.. Most important lesson is, we should strive for are not necessarily targets for highest win/loss and R:R, but steady growth of our account equity, the equity curve.
Good points! Especially the last! What you say there in your first part is evidently true, IF you are expecting to hit your target that same day or closely enough to it... And I know you all know this, but I did not want the learner to get the wrong idea, so here goes a bit of rambling. Apologies in advance. One can have just as higher probability in swing trading or positional trading, or even slippery banana peel trading(I just made that up). But win ratio is irrelevant when taken alone. At extremes, take one 99% win ratio strat with 1% going in drawdown till the account is emptied...More important are relations between at least two important factors, like return/drawdown, along with its consistency across the varying cycle sizes. Evidently, probability of winning any given trade depends on all of the given strategy's specs: entry and exit criteria, etc. And a strategy going for 10-20pips does not generally have a higher or lower probability of winning than one with a 200pips target. Entry/exit relation throughout time is just too important and most failures I have come across is because of it being ignored. And with that, a funny image.

Its Sunday mates, so I EXTRA Hope that you find ways to laugh with as much as me and my buddy here:
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If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #1,072
  • Nov 6, 2022 9:26am Nov 6, 2022 9:26am
Quoting mtako
Hello dear mates, happy Sunday !!!!! {quote} Good points! Especially the last! What you say there in your first part is evidently true, IF you are expecting to hit your target that same day or closely enough to it... And I know you all know this, but I did not want the learner to get the wrong idea, so here goes a bit of rambling. Apologies in advance. One can have just as higher probability in swing trading or positional trading, or even slippery banana peel trading(I just made that up). But win ratio is irrelevant when taken alone. At extremes,...
Thanks for posting....its all about probabilities and time, the probability of hitting a 20 pip tp is far greater than hitting a 200 pip tp in the same time frame if, I'm wrong please explain again sorry but not too sure what you're getting at and thanks again for posting I encourage it...
  • #1,073
  • Nov 6, 2022 9:56am Nov 6, 2022 9:56am
Quoting Waveskierrob
{quote} Thanks for posting....its all about probabilities and time, the probability of hitting a 20 pip tp is far greater than hitting a 200 pip tp in the same time frame if, I'm wrong please explain again sorry but not too sure what you're getting at and thanks again for posting I encourage it...
My pleasure mate! I always enjoy your unique and colorful presence here on FF so you are like a magnet to me! Yes, of course you are right, that was what I called the "evident" part of Pat's message. Even though it is less relevant in the context of this thread, I just thought I would put some emphasis about what I thought of the second part of Pat's message, which I find even more important. Sorry if my message wasnt clear enough. Please forgive my Sunday brain Always a pleasure to miscommunicate !
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If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #1,074
  • Nov 6, 2022 10:04am Nov 6, 2022 10:04am
Quoting mtako
{quote} My pleasure mate! I always enjoy your unique and colorful presence here on FF so you are like a magnet to me! Yes, of course you are right, that was what I called the "evident" part of Pat's message. Even though it is less relevant in the context of this thread, I just thought I would put some emphasis about what I thought of the second part of Pat's message, which I find even more important. Sorry if my message wasnt clear enough. Please forgive my Sunday brain Always a pleasure to miscommunicate ! {image}
Thanks for kind words, please keep posting, more than likely me not smart enough to understand ...very hard to put views across using text in a very complicated subject ...ps love the pics never stop posting them
  • #1,075
  • Nov 6, 2022 12:05pm Nov 6, 2022 12:05pm
Hi Folks,

for next week I give you one secret from me: Counter Trend or Hedging is always a bit advanced in odds like trend trading. The reason behind that is, that the slippage works for you and not against you.

I can give you one of my trade examples with the GBP/USD long in 2012 (I think). The Numbers are not correct but that happened:

My Entry Criteria was like: "Buy every 2 pips on a new low".

Plan was to buy:
1.4725
1.4723
1.4721 ... etc.

Well, In Real trading that happened:
2:20 pm: 1.4725
2:21 pm: 1.4723
2:22 pm: 1.4721
2:22 pm (1 second later): 1.4715

The Market just slipped 6 pips. My theroretical entry would be: (1.4725+1.4723+1.4721+1.4719+1.4717+1.4715)/6=1.4720 with 6 Lots
But what I got was that: (1.4725+1.4723+1.4721+1.4715*3)/6=1.4719 with 6 lots

So I got almost my spread costs out. Due to market is almost always perfect that is a huge advantage for a trader. I finally had to close the trade with a small loss and I only entered one more position on the slip to 1.4715 but on paper my loss should be double.

I know there are people out there who only earn on slippage. It is not easy because you have to be firm. It goes a bit like that: You lose 1000 x 5 pips and win 1000 x 5 pips but because of slippage you earn 200-300 pips... (so Ratio would be 5300 to 5000 including spread costs).
  • #1,076
  • Nov 6, 2022 1:02pm Nov 6, 2022 1:02pm
Quoting Waveskierrob
{quote} Thanks for posting....its all about probabilities and time, the probability of hitting a 20 pip tp is far greater than hitting a 200 pip tp in the same time frame if, I'm wrong please explain again sorry but not too sure what you're getting at and thanks again for posting I encourage it...
Every 200 gain contains a 20 gain.
Working with Frequency Distribution Stats, a 200 gain would include many 20 point gains, bring in compounding with the 20 and bingo. That why I trade like I do.
Yes,,, I know we can add on to the 200 trade. But stats are stats. Trade well all.
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #1,077
  • Nov 6, 2022 1:14pm Nov 6, 2022 1:14pm
In the spirit of the thread subject : count the times a price has been visited and you will already have an edge when scalpin' hedgin' .

shhhhhhhhhhhhhh but this has to stay between YOU AND ME or it won't work shhhhhhhh
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If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #1,078
  • Nov 6, 2022 1:35pm Nov 6, 2022 1:35pm
Why you don't need charts to trade.

1) No matter what you do, you will only win if you're on the winning side.
2) There's only one indicator of winning or losing: your wallet.
3) You enter a trade and set a target for your time frame. TP is hit: good.
4) TP is not hit: the question: are you still on the winning side.
5) You think you're still on the winning side, just getting a better price: average down.
6) Question: are you still on the winning side? Yes, but expect "better" prices. Hedge with TP.
7) Question: who's winning now? "Them" ? Time to switch, perhaps? Average up.

Charts can help to show who won and lost in the past at which price levels, they also show who's holding profit and losses currently.
The reason not get greedy and take TP soon is because market works hard to erase all profits.
1.02^200
  • #1,079
  • Edited 2:35pm Nov 6, 2022 2:22pm | Edited 2:35pm
Quoting Rfs199
{quote} So the focus is much more on position trading. Of course you know your craft and there's some 'feel' factor involved. But there's so much freedom when trading like this that it can get overwhelming sometimes (due to lack of experience mainly). This one is a broader question, but any tips or tricks to try when handling a heavy run against? Like switching to taking some scalps while waiting for price to turn? Because adding and adding without end seems dangerous. Just looking for some ideas to test in handling those scenarios...
My approach is basically this: identify a stable trend and try to hitch a ride with it. If that fails, hedge. I think this may give you some ideas on how to keep hedging simple and avoid being caught on the wrong side of the market, at least most of the time.

identify a stable trend:
Every trend has four stages -
1 the end of the previous trend
2 the breakout / beginning of the new trend
3 the trend
4 the decline of trend

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Of the four stages, only 3 is safe to enter. 1,2 and 4 are best avoided entirely.

This is a structural perspective however what is equally important is the character of the trend in stage 3 - for this the guppy mma groups are useful. The trend ought to have a steady and stable character, what this looks like is the short and long term groups are separated and pullbacks of the short term group (blue) do not push into the long term group (red). In short I am looking at the structure of the trend and also the character before taking a position, structure and character are like two sides of the same coin that must work together. The structure is predictive (a steady trend is likely to keep going) but more importantly the character tells me how easy the trade will be to manage. The less management supervision required and the less the entry price matters to the success of the trade the better. When we cannot easily define the trend structure or it’s character we tend to be indecisive about important trading decisions.

Trading decisions:
When to enter
When to hedge or exit

If I am satisfied that the trend is strong and even in character then I will enter the first position.
If all goes well I won’t need to hedge at all, I will simply exit in profit when the structure or character changes in such a way that infers the trend may be about to collapse - stages 4 or 1 - the guppy mma’s are helpful here also.

Recovery and money management:
Whatever the largest position I can trade is I will then split it into 20. For example, if it was 1 lot I would use 0.05 lot positions. After entry this gives me 19 positions to play with for recovery or adding to a winner, in practice I rarely use more than 5.
If price moves against me yet the trend is still stable and intact I average and enter a second position at a minimum interval of 20-50 pips depending on which timeframe I am trading.
If trend changes I will take a hedge trade, and when the trade goes back to the original direction I will close the opposite hedge trade and enter a new position with trend direction.

The main thing is to keep it simple and tune out anything that is too hard - for clarity of thought. Making money is the objective, trying to predict or otherwise outsmart the market is disorienting and can lead to bad mistakes.

“Confucius said that real knowledge is knowing the extent of one’s ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome. Some people are extraordinarily good at knowing the limits of their knowledge, because they have to be. Think of somebody who’s been a professional tightrope walker for 20 years—and has survived. He couldn’t survive as a tightrope walker for 20 years unless he knows exactly what he knows and what he doesn’t know. He’s worked so hard at it, because he knows if he gets it wrong he won’t survive. The survivors know.” —CHARLIE MUNGER, JASON ZWEIG INTERVIEW, 2014
  • #1,080
  • Nov 6, 2022 2:46pm Nov 6, 2022 2:46pm
Quoting Bainbrito
{quote} My approach is basically this: identify a stable trend and try to hitch a ride with it. If that fails, hedge. I think this may give you some ideas on how to keep hedging simple and avoid being caught on the wrong side of the market, at least most of the time. identify a stable trend: Every trend has four stages - 1 the end of the previous trend 2 the breakout / beginning of the new trend 3 the trend 4 the decline of trend {image} Of the four stages, only 3 is safe to enter. 1,2 and 4 are best avoided entirely. This is a structural perspective...
Great Post...many thanks ...gotta love Charlie Munger...
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