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Hedge Trading

  • #1
  • First Post: Jun 1, 2007 8:14pm Jun 1, 2007 8:14pm
I have experimented with a hedging system, very simple, doesn't require charts.
Here is what I do.
Buy 1 lot or multiple theroff of the EUR/USD
Buy 1.23 lots of the USD/CHF
No S/L or TP
use 50% of your account, ie 25% per leg
the reason for the different lot size is due that EUR/USD1 pip = $USD10 per standard lot
USD/CHF = $USD8.13
So we are just making our lots of approx. = dollar value, that is why the difference.

The system will constantly go to profit/loss throughout the day, as the CHF & the EUR approximately mirror each other. They are not exactly identical, hence we wait for a disparity to make us profits. It is like a sine wave, constantly moving from profit to loss throughout the day.
The key is to grab profits, which should be 0.5-1%, then re-invest by compounding, which can bring up to 7% daily.

Anyone familiar with this sort of thing? I have only been experimenting with it all last week. By manually trading I have been easily making 0.5% daily

Is there an EA which will auto trade this, ie grab a set profit & re-invest?

I read about this on a site which is more interested in Multi level marketing the system rather than the system itself.

Please add your thoughts, idea's & experiences with this system,
Thanks
  • #2
  • Jun 1, 2007 8:58pm Jun 1, 2007 8:58pm
Dude, are you kidding me?

We JUST went over this...

You CAN'T capture profit and then reinvest unless you wait for the price of the hedge to retreat. If you DO do this, you might as well buy and hold the EUR/CHF because you're buying an amplified version.

Trust me...you may be making money now, but you're not doing any better than those who are buying and holding...in fact, you're doing worse because you're paying the spread by reopening the position over and over again.

There's a thread here within the last few days that's still getting information posted to it. Doing virtually the same thing you're doing. Even the original poster admitted that he had to change his method to wait for a retreat in the price of the hedge.

Quoting bazza
I have experimented with a hedging system, very simple, doesn't require charts.
Here is what I do.
Buy 1 lot or multiple theroff of the EUR/USD
Buy 1.23 lots of the USD/CHF
No S/L or TP
use 50% of your account, ie 25% per leg
the reason for the different lot size is due that EUR/USD1 pip = $USD10 per standard lot
USD/CHF = $USD8.13
So we are just making our lots of approx. = dollar value, that is why the difference.

The system will constantly go to profit/loss throughout the day, as the CHF & the EUR approximately mirror each other. They are not exactly identical, hence we wait for a disparity to make us profits. It is like a sine wave, constantly moving from profit to loss throughout the day.
The key is to grab profits, which should be 0.5-1%, then re-invest by compounding, which can bring up to 7% daily.

Anyone familiar with this sort of thing? I have only been experimenting with it all last week. By manually trading I have been easily making 0.5% daily

Is there an EA which will auto trade this, ie grab a set profit & re-invest?

I read about this on a site which is more interested in Multi level marketing the system rather than the system itself.

Please add your thoughts, idea's & experiences with this system,
Thanks
  • #3
  • Jun 1, 2007 8:59pm Jun 1, 2007 8:59pm
Here's the link to the other topic:

http://www.forexfactory.com/showthread.php?t=29962
  • #4
  • Jun 1, 2007 9:03pm Jun 1, 2007 9:03pm
EUR/USD and USD/CHF or GBP/USD and USD/CHF doesnt' mirror as you said...
maybe sometime they are mirror, sometime not...
you can look at the history...
sometime EUR/USD jump up for 50 pips..but USD/CHF just about 20pips
  • #5
  • Jun 1, 2007 9:03pm Jun 1, 2007 9:03pm
Quoting mrmikal
We JUST went over this...
I thought is was a case of deja-vu...
  • #6
  • Jun 1, 2007 9:18pm Jun 1, 2007 9:18pm
This is like playing Whack-a-Mole.

It looks like hedge/grid/martingale is a sudden epidemic.

I picked up a clue where it may be coming from.

There is a grid/martingale thread going now in the beginners section.

Something was mentioned over there about FXCM promoting this. I can understand why FXCM would. I can't understand so many people falling for it.
  • #7
  • Jun 2, 2007 3:47am Jun 2, 2007 3:47am
Please use simple Maths, and compare performance from EURUSD + USDCHF
and simply EURCHF, you will realized how stupid it is.
  • #8
  • Jun 2, 2007 7:54am Jun 2, 2007 7:54am
I have always hated forums, I will never share my blessings on FF or any other forum again, F.O.
  • #9
  • Jun 2, 2007 8:11am Jun 2, 2007 8:11am
"You cannot reason a person out of a position he did not reason himself into in the first place"

Jonathan Swift
  • #10
  • Jun 2, 2007 8:47am Jun 2, 2007 8:47am
Quoting bazza
I have always hated forums, I will never share my blessings on FF or any other forum again, F.O.
Believe me, people say no about your strategy is trying to point out your backspot.

I spend real study on this stuff, if your strategy is good and potential, I will give my thumb..

You are here to ask people thoughts, right? Why not asking why people think this doesn't work? May be state with example.

Hope that you found out why people said about the shortage of your strategy before it is too late.
  • #11
  • Jun 2, 2007 8:53am Jun 2, 2007 8:53am
I honestly do not think people are speaking negativily of your idea, at least not yet. What they are saying is, by doing a simple search on the words grid and hedge we come up with many many threads on this exact style of hedge... If the author truely wants information, a simple bit of research would have been the best recourse.
  • #12
  • Edited 11:14am Jun 2, 2007 9:19am | Edited 11:14am
I was just wondering if it wouldn't be smart to use this hedge, take the profit when the position is winning and have in // on a demo account the same position.

When the position is in profit on the real account you close the positions and open the position from this point on the demo account.

When the demo account goes in loss, you close the position and open a position on the real account and wait for profit...

And so on...

edit : of course, you start to open the position on the demo account and wait for the loosing wave to open position on the real account. Having an alert indicator warning you about the loosing position on the demo account would be great.
  • #13
  • Jun 2, 2007 10:31am Jun 2, 2007 10:31am
Mel,

Interesting idea...technically what you'd be doing is waiting for a pullback.
  • #14
  • Jun 2, 2007 10:41am Jun 2, 2007 10:41am
Isn't this original idea the same as what Freedom rocks system talks about? Or Am i completely off here!! (sorry saturday morning u know...which invariably come after Friday nite!!!!)
  • #15
  • Jun 2, 2007 10:46am Jun 2, 2007 10:46am
Quoting melpheos
I was just wondering if it wouldn't be smart to use this hedge, take the profit when the position is winning and have in // on a demo account the same position.

When the position is in profit on the real account you close the positions and open the position from this point on the demo account.

When the demo account goes in loss, you close the position on the real account and wait for profit...

And so on...

edit : of course, you start to open the position on the demo account and wait for the loosing wave to open position on the real account. Having an alert indicator warning you about the loosing position on the demo account would be great.
Why the hedge?
Why not just trade the EUR/CHF?- Its essentially the same thing.

Actually, why either one?

If you want to stake out a long position on a pair and trade the pull backs, why not a pair that you might collect SWAPS on like the GBP/JPY? Or one with a low spread like EUR/USD?
  • #16
  • Jun 2, 2007 11:09am Jun 2, 2007 11:09am
Quoting billbss
Why the hedge?
Why not just trade the EUR/CHF?- Its essentially the same thing.

Actually, why either one?

If you want to stake out a long position on a pair and trade the pull backs, why not a pair that you might collect SWAPS on like the GBP/JPY? Or one with a low spread like EUR/USD?
because EURCHF and USDCHF is known to be one of the most correlated pair in the forex market (i think this is totaly stupid as Europe and Swiss have different business, size, central bank rate etc... )

Also about the pull back, on one currency alone you cant be sure as when the pull back is actually finished... With the hedge you are protected is the pullback is not finished. But of course, if you can find a hedge with winning swap and temporary decorelation that even greater

Quoting mrmikal
Mel,

Interesting idea...technically what you'd be doing is waiting for a pullback.
Next week i will put this hedge on a test account and send report to a FTP to follow the waves. We will see during the week if it is potentialy winning - BE or losing
  • #17
  • Jun 3, 2007 9:03am Jun 3, 2007 9:03am
Quoting melpheos
because EURCHF and USDCHF is known to be one of the most correlated pair in the forex market (i think this is totaly stupid as Europe and Swiss have different business, size, central bank rate etc... )

Also about the pull back, on one currency alone you cant be sure as when the pull back is actually finished... With the hedge you are protected is the pullback is not finished. But of course, if you can find a hedge with winning swap and temporary decorelation that even greater



Next week i will put this hedge on a test account and send report to a FTP to follow the waves. We will see during the week if it is potentialy winning - BE or losing
Try to pick up some high and low point in the year of for calculation. you will find that this cannot protect you from the Swing at all.

The most important is, you are getting less swaps but higher holding cost.
  • #18
  • Jun 3, 2007 2:28pm Jun 3, 2007 2:28pm
Mel,

The EUR/CHF and USDCHF have a high correlation? It's actually a very low correlation.

Quoting melpheos
because EURCHF and USDCHF is known to be one of the most correlated pair in the forex market (i think this is totaly stupid as Europe and Swiss have different business, size, central bank rate etc... )

Also about the pull back, on one currency alone you cant be sure as when the pull back is actually finished... With the hedge you are protected is the pullback is not finished. But of course, if you can find a hedge with winning swap and temporary decorelation that even greater



Next week i will put this hedge on a test account and send report to a FTP to follow the waves. We will see during the week if it is potentialy winning - BE or losing
  • #19
  • Edited 10:16pm Jun 6, 2007 10:15pm | Edited 10:16pm
Quoting bazza
I have experimented with a hedging system, very simple, doesn't require charts.
Here is what I do.
Buy 1 lot or multiple theroff of the EUR/USD
Buy 1.23 lots of the USD/CHF
No S/L or TP
use 50% of your account, ie 25% per leg
the reason for the different lot size is due that EUR/USD1 pip = $USD10 per standard lot
USD/CHF = $USD8.13
So we are just making our lots of approx. = dollar value, that is why the difference.

The system will constantly go to profit/loss throughout the day, as the CHF & the EUR approximately mirror each other. They are not exactly identical, hence we wait for a disparity to make us profits. It is like a sine wave, constantly moving from profit to loss throughout the day.
The key is to grab profits, which should be 0.5-1%, then re-invest by compounding, which can bring up to 7% daily.

Anyone familiar with this sort of thing? I have only been experimenting with it all last week. By manually trading I have been easily making 0.5% daily

Is there an EA which will auto trade this, ie grab a set profit & re-invest?

I read about this on a site which is more interested in Multi level marketing the system rather than the system itself.

Please add your thoughts, idea's & experiences with this system,
Thanks
At the moment, the position has gone 60 pips against me (-110 on CHF, +50) on EUR, so, as of now it is a position carry trade. It may take a few weeks, however, it will go positve
  • #20
  • Jun 6, 2007 10:43pm Jun 6, 2007 10:43pm
Quoting bazza
At the moment, the position has gone 60 pips against me (-110 on CHF, +50) on EUR, so, as of now it is a position carry trade. It may take a few weeks, however, it will go positve
I see.
If you know it will go positive after a 60 pip dip, why did you enter when you did?
Why not wait and only enter on 60 pip retraces?
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