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Hedging/averaging trades without prediction

  • #1,521
  • Dec 11, 2022 6:14am Dec 11, 2022 6:14am
Quoting birdland
argo, you have summarised the process quite well and found the right words. you can only do that if you have experienced it yourself. for a theoretician it is all gibberish and he will not be able to decipher it. by the way, i have come to the conclusion that i need at least $1000, pound or euro to trade 0.01 microlots and be relaxed. or 100.000 for 1 lot. that means no leverage for the first positions. starting with $100 and trading 0.01 lots has a lot to do with luck.
Hey mate

I have also landed on 1:1 leverage as a comfortable level. Even then though, I feel a little uncomfortable when the price runs a long way against me and I don't get enough hedges on along the way. I think this comes from averaging too close and too frequently though. The way I combat this is by making my average positions further and further out as the price goes against me (obviously this has its drawbacks though). Maybe though my uncomfortableness also comes from many years of risking very small amounts compared to my balance. I think with this strategy you need to get comfortable with a large drawdown and the possibility that you may need to take a large loss at some point (this is ok as you will be winning most of the time, unlike pure directional stop-loss strategies where 55-75% win rate is phenomenal).

I reckon though you could trade this strategy at higher leverage. You would just have to design the averaging/hedging rules accordingly and be willing to close out all positions at a loss more frequently. I will be exploring this more in the future.

Do you still get flat at end-of-day? I do, but I find the time constraint adds complexity so find myself closing out my positions at sub-optimal levels. I don't really see a way around this atm though. I don't see the point of slapping on a complete hedge and starting in the same PL position the next day but having paid swaps on top (although I may be way wrong here). The only real way around it that I have thought of is to trade as a team and hand the entire basket of open positions off to the next person when your "shift" is finished. This would obviously require a lot of trust and shared mentality between team members though.
  • #1,522
  • Dec 11, 2022 6:35am Dec 11, 2022 6:35am
Quoting MJurban
{quote} Total agree with you. But I want to warn newbees. This is dangerous if you think yuo can avoid losses, you need God management and if yuo average down, bee sure to have enough money in your account.
Yes mate, I agree. I didn't want to get into it, but for the uninitiated this is a very very dangerous way to trade. Most will make money for months on end and get more and more confidence as all their averages pay off. Then poof, one day they will lose it all and then some.

I am not at all saying this strategy is doomed to fail, to the contrary I think this is one of the best strategies I have come across. But it is seductive in that you could easily continue on your merry way thinking "the market always comes back, all I have to do is average my losers". But this is so far from the truth. Many times I can recognize when we are in a one-way market because I have been playing this game for many many years. But still, other times my judgment will be clouded or we will be in a new situation that I have never seen and I could be vulnerable to the "poof, I just lost it all" phenomenon.

SO - to the newbies and the initiated that haven't gone through some serious pain yet, be aware that MJurban is looking out for you! If you don't know how to manage your risk, this strategy will DEFINATELY end in tears, sooner or later.
  • #1,523
  • Dec 11, 2022 7:18am Dec 11, 2022 7:18am
Quoting T4Trade
{quote} what these pink color arrows are and what time frame is it? what lot sizes u r taking as in hedge or what size was second sell to close both sells with BE or profit?thanks
Hello, pink arrows just show my entries for this example. Lot sizes are the same size. This one was a small profit (and not traded like wave has described), I hedged to protect against a failed trade and closing both sells covered the buy fail and costs. Hence the post about rolling off. Worth learning about.
  • #1,524
  • Dec 11, 2022 7:25am Dec 11, 2022 7:25am
Quoting clemmo17
{quote} What would you do if price had continued to rise after closing the hedge?
Hi Clemmo, I see wave has given you an answer as well which is great advice.
On this particular trade if price would have reversed I would have hedged a 2x buy at the high and waited. If price continued up I would close the buy at my next level of resistance and also close 50% of that profit on my first remaining sell order that is now in drawdown. I might then sell again or wait to see what happens at that level. Always have stones ready to throw at the beast.
  • #1,525
  • Dec 11, 2022 9:58am Dec 11, 2022 9:58am
Quoting Agro
{quote} Hey mate I have also landed on 1:1 leverage as a comfortable level. Even then though, I feel a little uncomfortable when the price runs a long way against me and I don't get enough hedges on along the way. I think this comes from averaging too close and too frequently though. The way I combat this is by making my average positions further and further out as the price goes against me (obviously this has its drawbacks though). Maybe though my uncomfortableness also comes from many years of risking very small amounts compared to my balance....



You avging in a market that has not found a bottom is by far the most counter productive trade one could partake in. Being "Confortable with a trade going against you a long way is the confirmation that you should start working on a better way if identying price action.
Threesome Daddy
  • #1,526
  • Dec 11, 2022 10:26am Dec 11, 2022 10:26am
Quoting SingaRich
{quote} You avging in a market that has not found a bottom is by far the most counter productive trade one could partake in. Being "Confortable with a trade going against you a long way is the confirmation that you should start working on a better way if identying price action.
Yes. This is how I used to think about things. But now I am comfortable when a trade goes against me. To be honest I even welcome it. I can make money either way, but if my position goes against me and I am still confident in the initial direction then the bucks roll in. If not and I change my view then I don't make so much but still profit much of the time. Sometimes I have to take a loss, but not nearly so much as stoploss trading demands.

Btw I have worked on better ways of identifying price action for many many years. I haven't managed to get it down though. I have a pretty good idea but my timing and sometimes level is normally off. This way it doesn't matter if I am off. I would love to be able to identify when I should buy and sell, but I will leave that to you for now. Good luck
  • #1,527
  • Dec 11, 2022 10:27am Dec 11, 2022 10:27am
Quoting SingaRich
{quote} You avging in a market that has not found a bottom is by far the most counter productive trade one could partake in. Being "Confortable with a trade going against you a long way is the confirmation that you should start working on a better way if identying price action.
If averaging why find the bottom and also, how do we know when the market has hit a bottom?, thanks for your reply in advance...
  • #1,528
  • Dec 11, 2022 10:34am Dec 11, 2022 10:34am
Quoting Fardeen1209
{quote} Bro, if uk cpi > consensus, is there any possibility for a BOE 75 bps hike?
Rate hike doesn't matter, Market will find way to move what ever direction it wants. For example last time BOE increased rates GBP/USD fall 200-300 pips with speculation that growth will go down. Just trade what you see on charts fundamentals are always grey line no body knows much.
  • #1,529
  • Dec 11, 2022 10:56am Dec 11, 2022 10:56am
Quoting Waveskierrob
{quote} If averaging why find the bottom and also, how do we know when the market has hit a bottom?, thanks for your reply in advance...
We don't, until price has moved faaaaar away..

And in the spirit of this thread's main subject, It's typically not the greatest idea to hedge at the low or at the high(to be precise - while price is making new low or new high, right at that moment...). Best is in the middle, when enough averages converge and flatten like I'm trying to do with my belly . But of course, there are many reasons to hedge depending on the approach. Sometimes I hedge just to take a break (only trend setups of course).
If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #1,530
  • Dec 11, 2022 11:13am Dec 11, 2022 11:13am
Quoting SingaRich
{quote} You avging in a market that has not found a bottom is by far the most counter productive trade one could partake in. Being "Confortable with a trade going against you a long way is the confirmation that you should start working on a better way if identying price action.
Trading in this thread has absolutely nothing to do with any kind of price action or whatever. That's why it's title says "with no prediction"
  • #1,531
  • Dec 11, 2022 11:23am Dec 11, 2022 11:23am
Quoting Mr.Moe
{quote} Trading in this thread has absolutely nothing to do with any kind of price action or whatever. That's why it's title says "with no prediction"
Interesting. If you "don't use price action or whatever", what do you use ? Thanks!
If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #1,532
  • Dec 11, 2022 11:40am Dec 11, 2022 11:40am
Quoting sampat
{quote} Rate hike doesn't matter, Market will find way to move what ever direction it wants. For example last time BOE increased rates GBP/USD fall 200-300 pips with speculation that growth will go down. Just trade what you see on charts fundamentals are always grey line no body knows much.
Yup, a higher UK interest rate = a deeper recession.

But I think the focus is more on US CPI and US rate, given the minor trend is upward (confirmation: last Friday's good US PPI was a clear rejection to go lower), which means (IMO) the market is expecting a lower than forecast US CPI (GU might go up if US CPI data < consensus) while on the following day FED might deliver as expected- the 50bps hike, which might make GU retrace decently(Buy the rumor, sell the fact)

Since the market is more US data-driven, I think this FED rate will be the most important key fundaments, because it will dictate whether the trend for Dollar have really changed!

From a Weekly Technical perspective, I'm expecting a minor push to north, then a decent retracement after some weekly green candles, could be wrong!

Anyway, as you mentioned, better be reactive than predictive!

Cheers
More time in the market, does not mean you trade better!
  • #1,533
  • Dec 11, 2022 11:45am Dec 11, 2022 11:45am
Quoting mtako
{quote}We don't, until price has moved faaaaar away.. And in the spirit of this thread's main subject, It's typically not the greatest idea to hedge at the low or at the high(to be precise - while price is making new low or new high, right at that moment...). Best is in the middle, when enough averages converge and flatten like I'm trying to do with my belly . But of course, there are many reasons to hedge depending on the approach. Sometimes I hedge just to take a break (only trend setups of course).
For me there is no high no low and no middle, I believe price can go in any direction at any time and the market has no memory, I not saying I know for sure I may be wrong but that's how I trade.....cheers for the post ...
  • #1,534
  • Dec 11, 2022 12:05pm Dec 11, 2022 12:05pm
Is there anyone actually making consistent profits with this style itt? I’m sure it’s possible. I have an idea I want to try on demo which involves hedging…. The problems is, at some point you have to pull the trigger: bite the bullet and close one.
At that moment you are in effect entering a trade so I think to myself maybe the whole idea is redundant because I am still ultimately choosing a direction.
  • #1,535
  • Dec 11, 2022 12:08pm Dec 11, 2022 12:08pm
Quoting Waveskierrob
{quote} For me there is no high no low and no middle, I believe price can go in any direction at any time and the market has no memory, I not saying I know for sure I may be wrong but that's how I trade.....cheers for the post ...
That is also very interesting ! I guess I wasn't clear enough. When I say "high" or "low", I don't mean a "predictive " high or low...

So if you believe price can go in any direction at any time, then by default, there are highs and lows and middles.... it's price's present value relative to time, put simply... The only for it to not exist, would be for price to not move.

More importantly, you choosing to not use price/time relation is fine, and gives a glimpse into your unique perspective, which is fresh! And if it helps you focus in a way that makes you consistently enough successful for you, that's all that matters. Whatever works is what I say, and one of the reasons that I have come to love this forum.
If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #1,536
  • Dec 11, 2022 12:23pm Dec 11, 2022 12:23pm
Quoting mtako
{quote} That is also very interesting ! I guess I wasn't clear enough. When I say "high" or "low", I don't mean a "predictive " high or low... So if you believe price can go in any direction at any time, then by default, there are highs and lows and middles.... it's price's present value relative to time, put simply... The only for it to not exist, would be for price to not move. More importantly, you choosing to not use price/time relation is fine, and gives a glimpse into your unique perspective, which is fresh! And if it helps you focus in a...
I think see where you are coming from, as I don't use charts I don't know what's high or low and don't want to know as it will give me bias which I steer away from, eg if on a roulette table it comes up black 20 times in a row how many would think it's got to be red this time but it has the same chance of being red as it is black, that's my thinking ...
  • #1,537
  • Dec 11, 2022 12:28pm Dec 11, 2022 12:28pm
Quoting Waveskierrob
{quote} I think see where you are coming from, as I don't use charts I don't know what's high or low and don't want to know as it will give me bias which I steer away from, eg if on a roulette table it comes up black 20 times in a row how many would think it's got to be red this time but it has the same chance of being red as it is black, that's my thinking ...
Oh sweet semantics

Kidding aside. Sounds like you are a 100% probabilistic trader? If so, rare beautiful bird!
If I don't mention SL and/or TP = longer-term setup possibly in the works!
  • #1,538
  • Dec 11, 2022 12:31pm Dec 11, 2022 12:31pm
Quoting PippityPips
Is there anyone actually making consistent profits with this style itt? I’m sure it’s possible. I have an idea I want to try on demo which involves hedging…. The problems is, at some point you have to pull the trigger: bite the bullet and close one. At that moment you are in effect entering a trade so I think to myself maybe the whole idea is redundant because I am still ultimately choosing a direction.
Yes although I don't post all my trades as at work and only have phone, I can tell you of great riches but that's just hearsay I could post after the event profits but then not post loses, hence why I post live, as for choosing a direction you're not, your position is, but please try out on demo and let us know your results ...
  • #1,539
  • Dec 11, 2022 12:34pm Dec 11, 2022 12:34pm
Quoting mtako
{quote} Interesting. If you "don't use price action or whatever", what do you use ? Thanks!
Check my earlier posts. With this style of trading I start woth random entries! One buy and one sell at the same time and then off we go.
And Iam bot the obly one who is doin it this way.
  • #1,540
  • Dec 11, 2022 12:38pm Dec 11, 2022 12:38pm
Quoting Mr.Moe
{quote} Check my earlier posts. With this style of trading I start woth random entries! One buy and one sell at the same time and then off we go. And Iam bot the obly one who is doin it this way.
Birdland and myself open with LONG and SHORT, although Ithink Bird is now using a different style ...
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