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Hedging/averaging trades without prediction

  • #1,581
  • Dec 13, 2022 3:16am Dec 13, 2022 3:16am
Not too shabby.
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Leave the Gun, Take the Armani
  • #1,582
  • Dec 13, 2022 3:30am Dec 13, 2022 3:30am
Quoting cliffjaded
Not exactly random. But it's still Hedging and Averaging both Pro-Trend and Counter-Trend. {image}
Doesn't have to be random, it's just my way of showing it can work without prediction, thanks for posting
  • #1,583
  • Dec 13, 2022 4:13am Dec 13, 2022 4:13am
Hello to everyone, thread is very nice. However I wanted to ask, did you guys ever tried sentiment with this way of trading? You could knew where price will move when you know sentiment.

Anyone tried this or you just don't care?

Thanks for info

SF
  • #1,584
  • Dec 13, 2022 5:04am Dec 13, 2022 5:04am
Quoting SilentFather
Hello to everyone, thread is very nice. However I wanted to ask, did you guys ever tried sentiment with this way of trading? You could knew where price will move when you know sentiment. Anyone tried this or you just don't care? Thanks for info SF
no, i have never done this before. which sentiment are you looking for?

the term is so broad and everyone understands sentiment differently. thx
trading is like dancing, don't think and just listen to the music!
  • #1,585
  • Dec 13, 2022 6:03am Dec 13, 2022 6:03am
Quoting birdland
{quote} no, i have never done this before. which sentiment are you looking for? the term is so broad and everyone understands sentiment differently. thx
Sorry my friend. Contrarian way of trading sentiment. For example 70% people sell, we'll go buy. This way we should eliminate when hedging blowing up the account. Let's say 70% people sell, we will open buy trades. When we are in loss, we will open sell and close the sell on support. Then we will close buy in profit after reversal. That's the easy explanation. Of course we could open more trades, not just two.

We need to bear in mind that when sentiment is changing from sell to buy, people are on the good side. So we will see they buy, so we buy too. Careful on this. Picture should explain better. (30M chart) Vise versa when we had more buys than sells.

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SF.
  • #1,586
  • Dec 13, 2022 6:05am Dec 13, 2022 6:05am
Quoting SilentFather
Hello to everyone, thread is very nice. However I wanted to ask, did you guys ever tried sentiment with this way of trading? You could knew where price will move when you know sentiment. Anyone tried this or you just don't care? Thanks for info SF
Simply look at BTC the last 12 months. Had a person DCA'ed hedging every drop of 5% awaiting accumulation of 24 hrs without low breaking out, the reality is you would still be under water by well over 50%.

Hedging does not give you any advantage at all. It just feeds into a bias which you have that locks the available balance. Infact, you pay more in commission compared to simply closing the profit or loss.

Hedging is away to avoid taxes
Threesome Daddy
  • #1,587
  • Dec 13, 2022 6:34am Dec 13, 2022 6:34am
Quoting SilentFather
{quote} Sorry my friend. Contrarian way of trading sentiment. For example 70% people sell, we'll go buy. This way we should eliminate when hedging blowing up the account. Let's say 70% people sell, we will open buy trades. When we are in loss, we will open sell and close the sell on support. Then we will close buy in profit after reversal. That's the easy explanation. Of course we could open more trades, not just two. We need to bear in mind that when sentiment is changing from sell to buy, people are on the good side. So we will see they buy, so...
ok that i understand now and i thought it was that.

BUT the question is how can i get clean&good sentiment numbers? where are yours from?
trading is like dancing, don't think and just listen to the music!
  • #1,588
  • Dec 13, 2022 6:39am Dec 13, 2022 6:39am
Quoting SingaRich
{quote} Simply look at BTC the last 12 months. Had a person DCA'ed hedging every drop of 5% awaiting accumulation of 24 hrs without low breaking out, the reality is you would still be under water by well over 50%. Hedging does not give you any advantage at all. It just feeds into a bias which you have that locks the available balance. Infact, you pay more in commission compared to simply closing the profit or loss. Hedging is away to avoid taxes
Don't really think you know what we are trying to achieve here...but thanks for your posts...
  • #1,589
  • Dec 13, 2022 6:46am Dec 13, 2022 6:46am
Quoting Waveskierrob
{quote} Don't really think you know what we are trying to achieve here...but thanks for your posts...
she just needs to demo for a while;-)
trading is like dancing, don't think and just listen to the music!
  • #1,590
  • Dec 13, 2022 6:53am Dec 13, 2022 6:53am
Quoting birdland
{quote} she just needs to demo for a while;-)
Yes people need to demo live, not look back at what has happened because you'll never know how you would have reacted
  • #1,591
  • Dec 13, 2022 7:46am Dec 13, 2022 7:46am
Quoting SilentFather
{quote} Sorry my friend. Contrarian way of trading sentiment. For example 70% people sell, we'll go buy. This way we should eliminate when hedging blowing up the account. Let's say 70% people sell, we will open buy trades. When we are in loss, we will open sell and close the sell on support. Then we will close buy in profit after reversal. That's the easy explanation. Of course we could open more trades, not just two. We need to bear in mind that when sentiment is changing from sell to buy, people are on the good side. So we will see they buy, so...
If i may
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  • #1,592
  • Dec 13, 2022 8:09am Dec 13, 2022 8:09am
Quoting Bainbrito
....
I.e take long and short simultaneously, let price move 100 pips or so either way and wait for a reversal to begin, take profit first, then let price retrace and take the loss. For example take profit first +100 pips then take a loss -90 pips = 10 pip profit. If price can retrace more, to 50% or so then even better. If the reversal fails open another position continuing on until the next reversal opportunity, try again, take profit first then deal with the loss. This isn’t as easy as it sounds as you have to judge the reversal, when to take...

I would say this is a good way to approach the Forex market. I trade the Futures in a slightly similar way but Forex gives you more flexibility when you're trying to turn the losing side of the hedge around. Being 50% correct when you trade in 1 direction is pretty good. The hedge, even though it's not a perfect hedge eats away part of the the losing side, so even being 40% correct, your account could still grow at a decent rate.


It does require patience. The winning side could be closed in under an hour, but the losing side could take a day or even 2 before the overall hedge becomes profitable. Even the strongest trend can blast upwards like the Cable today after the inflation numbers, but it's almost certain it'll pull back and revert, that's the opportunity to chip away at the losing part of the hedge.

As long as you don't size the trades too large, even with these pseudo hedges you could realistically keep draw downs under 10% even as low as 5%. I hate systems with huge drawdowns, even if the profit potentially is big. I'd rather have the lower drawdowns and consistent profits.
  • #1,593
  • Dec 13, 2022 9:06am Dec 13, 2022 9:06am
As with any skill, it gets better with practice. I get new insights and learn new tricks every time.
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1.02^200
  • #1,594
  • Dec 13, 2022 10:54am Dec 13, 2022 10:54am
Quoting SingaRich
{quote} Simply look at BTC the last 12 months. Had a person DCA'ed hedging every drop of 5% awaiting accumulation of 24 hrs without low breaking out, the reality is you would still be under water by well over 50%. Hedging does not give you any advantage at all. It just feeds into a bias which you have that locks the available balance. Infact, you pay more in commission compared to simply closing the profit or loss. Hedging is away to avoid taxes
The problem with retail trader is not picking up direction (as per FXCM it was around 70% traders) are good in predicting direction, It is to stick with the trade and cutting losses. How many times I have traded pairs and get out with 50 pips and currency rallied 500 pips? If you have traded long enough every body observed same.

Hedging is not holy grail but it prevents bleeding and gives trader room for breathing space. Again in your example if trader started buying BTC from 30 or 40K hedging would have helped him as BTC is in range of 4-5K for last 4 months and weekly going up and down 3-4K by that calculation he/she would have been in profit with in one month.
  • #1,595
  • Dec 13, 2022 11:37am Dec 13, 2022 11:37am
Quoting birdland
{quote} ok that i understand now and i thought it was that. BUT the question is how can i get clean&good sentiment numbers? where are yours from?
That's the problem since forex is not centralized. Good one from years ago was oanda. They now want account from you to show open positions. I remember that they had cool chart with something like heat map. Probably where people had positions or SL's.

I'm mostly trading with cTrader, there is sentiment from all brokers that use cTrader. Or at least from people using cTrader. Picture I have shown is from myfxbook tho. Anyway if we look at myfxbook and cTrader, we will see that the sentiment is kinda the same.

Ctrader
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myfxbook
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Right now it's a bit different, but it doesn't matter much. What's better about myfxbook is the chart with change over time. It's like indicator. Updated every hour. Ctrader on the other way is updated more often. Honestly I do think that myfxbook sentiment is more than enough, to be on the profitable side.

As I said in other thread, price very often like to reverse on 50% retracement. We need to know few things, I'll explain.

 

  1. We need to understand that when sentiment is changing, people are on the good side for a while. (Trend was down, price touches support = more people starts to buy. We will buy, TOO..preferably on low.. second touch will do)
  2. When this happens, and we are in profit, people will start selling. (We on the other hand, will HOLD our buy position)
  3. This way we could get much more profit since we could catch long-term trend.
  4. Please also understand that price will have to change its direction. This means that price & sentiment could do all of above, but then price will go down. For example we will see order - Price going down, people starts buying. We will buy too. When price touches high, people will start selling. They will be on good side too. But! Trend will still be down.
  5. So bear in mind that trend is changing all the time.

Hope you guys got it. This happens mostly in choppy market(!!)


Also.....
Price often move under last low before going up. (Or vice versa). People will get crazy because they do expect breakout down.

You can see it on this picture.

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I know 90% people try to pick low & high. They never get it right. You can... Hope I explained it more than enough. :o)

SF
  • #1,596
  • Dec 13, 2022 12:19pm Dec 13, 2022 12:19pm
It's ok. Don't panic.
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1.02^200
  • #1,597
  • Dec 13, 2022 12:28pm Dec 13, 2022 12:28pm
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RedcaT 3003
25k Return This Week: na
  • #1,598
  • Dec 13, 2022 12:36pm Dec 13, 2022 12:36pm
Quoting d5400
It's ok. Don't panic. {image}
What I'm doing here: I average down and begin to hedge on the third level. After that I try to maintain 30% position hedged. Also you can see that I can use same level several times to hedge.
1.02^200
  • #1,599
  • Dec 13, 2022 1:36pm Dec 13, 2022 1:36pm
Quoting redcat3003
{image}{image}
HI redcat what are you trying to say here....
  • #1,600
  • Dec 13, 2022 3:13pm Dec 13, 2022 3:13pm
What comes up must come down....
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