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Hedging/averaging trades without prediction

  • #2,941
  • Apr 26, 2024 8:34am Apr 26, 2024 8:34am
Quoting Kodzhamanov
Hi guys, a question regarding trimming the losing position. How do you manage the action? You have a profitable trade and trim the loss immediately or if they are in opposite directions you wait for corrections so you can get a "discount" It was a real rodeo for me this week and I managed somehow to trim 1/4 of my losing position but of course in the end the price action was on my side so this also helped me a lot.
How did they manage a losing position?
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  • #2,942
  • Apr 26, 2024 9:12am Apr 26, 2024 9:12am
Quoting Kodzhamanov
Hi guys, a question regarding trimming the losing position. How do you manage the action? You have a profitable trade and trim the loss immediately or if they are in opposite directions you wait for corrections so you can get a "discount" It was a real rodeo for me this week and I managed somehow to trim 1/4 of my losing position but of course in the end the price action was on my side so this also helped me a lot.
I calculate the pip value per 0.01 position. Here is a live example I'm working now on EURGBP, I have 6 positions open, they all start at 0.05 size according to my risk profile on this pair and max number of positions I will allow to open. I TP every 5 pips and collect this money, when I have 2x the cash value of 0.01 size of the largest loser lets say the last one on this chart in red was -75 pips so it is 75 x 0.10p = £7.50 loss, I will take this loss and close 0.01 of the original 0.05 position leaving 0.04 only after I have accrued £15 in profit.

You might need to read this a few times but you will get it.

Chart below shows all the 5 pip "wins" at 0.05 and the trims are in red at 0.01

Goes without saying you need to exactly work out your max drawdown, max risk, trade volumes etc.

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  • #2,943
  • Apr 26, 2024 9:17am Apr 26, 2024 9:17am
Here is a sample of EU it's a lot busier:

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  • #2,944
  • Apr 26, 2024 9:24am Apr 26, 2024 9:24am
Eventually you can clean your dragging trades and the rotation speeds up typically with the market cycle if you've calibrated your average daily ranges or whatever you are using...

So you might take a rough ride if you are fading a trend but if you've been doing your job you will be making money when it goes into consolidation, it's an endless cycle, just going up and down, up and down. No one knows.
  • #2,945
  • Apr 26, 2024 9:30am Apr 26, 2024 9:30am
Quoting Fagin
{quote} I calculate the pip value per 0.01 position. Here is a live example I'm working now on EURGBP, I have 6 positions open, they all start at 0.05 size according to my risk profile on this pair and max number of positions I will allow to open. I TP every 5 pips and collect this money, when I have 2x the cash value of 0.01 size of the largest loser lets say the last one on this chart in red was -75 pips so it is 75 x 0.10p = £7.50 loss, I will take this loss and close 0.01 of the original 0.05 position leaving 0.04 only after I have accrued £15...
I'm sorry I thought this was wild wild west, but you seem to come from the future
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  • #2,946
  • Apr 26, 2024 9:43am Apr 26, 2024 9:43am
Quoting d5400
{quote} I'm sorry I thought this was wild wild west, but you seem to come from the future
Lol only in my own mind
  • #2,947
  • Apr 26, 2024 9:46am Apr 26, 2024 9:46am
Quoting Fagin
{quote} Lol only in my own mind
  • #2,948
  • Apr 26, 2024 9:59am Apr 26, 2024 9:59am
Quoting d5400
{quote} How did they manage a losing position? {image}
I'm not sure I got this
Dreams don't work unless you do
RealDeal All Time Return: -73.9%
  • #2,949
  • Apr 26, 2024 10:05am Apr 26, 2024 10:05am
Quoting Kodzhamanov
{quote} I'm not sure I got this
They are taking a picture in front of the wagon. But where's the horse?
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  • #2,950
  • Apr 26, 2024 10:07am Apr 26, 2024 10:07am
Quoting d5400
{quote} They are taking a picture in front of the wagon. But where's the horse?
Well obviously he's holding the camera?
  • #2,951
  • Apr 26, 2024 10:12am Apr 26, 2024 10:12am
Quoting Fagin
{quote} I calculate the pip value per 0.01 position. Here is a live example I'm working now on EURGBP, I have 6 positions open, they all start at 0.05 size according to my risk profile on this pair and max number of positions I will allow to open. I TP every 5 pips and collect this money, when I have 2x the cash value of 0.01 size of the largest loser lets say the last one on this chart in red was -75 pips so it is 75 x 0.10p = £7.50 loss, I will take this loss and close 0.01 of the original 0.05 position leaving 0.04 only after I have accrued £15...
Thank you very much for this know-how just shared.
Sounds like you have real structure.

My approach is almost similar. I started to trim 0.01 when I was sure I had doubled in profit for each order. The problem was that I got to a very huge position in the wrong direction which is a mistake I believe I will learn from.

So basically when you are going to trim is based on how bad the losing trade looks like and when you are going to double the 0.01 from the losing trade?

Do you have also entry rules or you place random orders long and short?
Dreams don't work unless you do
RealDeal All Time Return: -73.9%
  • #2,952
  • Apr 26, 2024 10:24am Apr 26, 2024 10:24am
Quoting Kodzhamanov
{quote} Thank you very much for this know-how just shared. Sounds like you have real structure. My approach is almost similar. I started to trim 0.01 when I was sure I had doubled in profit for each order. The problem was that I got to a very huge position in the wrong direction which is a mistake I believe I will learn from. So basically when you are going to trim is based on how bad the losing trade looks like and when you are going to double the 0.01 from the losing trade? Do you have also entry rules or you place random orders long and short?...
Everyone is different and you'll just find a way hopefully.

I have different approaches depending on what I'm working on so I can't give you a simple answer I'm afraid.

If you are struggling maybe try and trim when you go over a 2x value and see how it works out for you. Just keep closing until your biggest losing trade in pip value gets wiped out.

I do have an entry criteria but it's largely random as nearly all entries are random in a large sample size in reality (we just like to kid ourselves).

I've learned that making sure your gaps are sized according to the market and your risk tolerances matched to margin requirements. This is crucial in this type of trading. You are making a market in your own very tiny way.

Oh how I wish to have millions, direct market access and some good programmers
  • #2,953
  • Apr 26, 2024 10:30am Apr 26, 2024 10:30am
Quoting Fagin
{quote} Everyone is different and you'll just find a way hopefully. I have different approaches depending on what I'm working on so I can't give you a simple answer I'm afraid. If you are struggling maybe try and trim when you go over a 2x value and see how it works out for you. Just keep closing until your biggest losing trade in pip value gets wiped out. I do have an entry criteria but it's largely random as nearly all entries are random in a large sample size in reality (we just like to kid ourselves). I've learned that making sure your gaps...
I would also add I take profit both long and short. I don't have any rules about closing the dragging trade based on if it is long or short. Simply the biggest one in pips gets stripped. Sometimes it actually rotates and I'll be closing a sell and it was a long the day before. Doesn't matter as along as it's the one furthest away from current price as this one will eat margin and swap costs. Kill it.
  • #2,954
  • Apr 26, 2024 10:38am Apr 26, 2024 10:38am
Quoting Fagin
{quote} Oh how I wish to have millions, direct market access and some good programmers
Lol. You can only have 2 out of 3.
1.02^200
  • #2,955
  • Apr 26, 2024 10:42am Apr 26, 2024 10:42am
Quoting Fagin
{quote} Everyone is different and you'll just find a way hopefully. I have different approaches depending on what I'm working on so I can't give you a simple answer I'm afraid. If you are struggling maybe try and trim when you go over a 2x value and see how it works out for you. Just keep closing until your biggest losing trade in pip value gets wiped out. I do have an entry criteria but it's largely random as nearly all entries are random in a large sample size in reality (we just like to kid ourselves). I've learned that making sure your gaps...
Absolutely, I agree with everything you said. I like hedging and tried a lot of different approaches, but I think in my case the trimming was the missing point. By the way, I have a few EAs created and I think your system can be automated. I don't have much time these days, but next month I can play a little. We can be in touch
Dreams don't work unless you do
RealDeal All Time Return: -73.9%
  • #2,956
  • Apr 26, 2024 11:16am Apr 26, 2024 11:16am
Had a good week and will post updates later/tomorrow, might also have some info that Kodz may or may not find helpful.
Sounds like a lot of screen time to me.
  • #2,957
  • Apr 26, 2024 11:25am Apr 26, 2024 11:25am
Quoting Kodzhamanov
{quote} I'm not sure I got this
Back to the horse question. The thing is we don't know where it is. Nobody cared to write that down, and nobody remembers. All we can do is take the average of our knowledge about that era (Wild West) and apply it to this situation.

The horse wouldn't stand still for the camera, so they led it away. (As we know it took a few minutes to take a picture back then). This answer is ok!

But in markets it's the opposite. Averages work poorly. Using averages you won't come out ok in the long run. Rather, need to find something unusual and use it to advantage. So what is unusual with this hedging approach? Besides the fact that you spend your life in drawdown, probably the only thing is that market is willing to drag you out of the hole that you dig yourself in.

Let's see... I'm sorry, but Average Joe averages down. (Why not up as well? Wouldn't that be really average? He even failed at averaging, go figure.)

Don't be satisfied with average answers:

 

  1. Cameraman told them to hold still so they did, while his friend stole the horse.
  2. They wanted to take a picture but didn't have money to pay for it, so cameraman agreed to take the horse. He told them to stand still, took the picture and rode away, and developed the picture later.
  3. They ate the horse and now are raising funds for a new one. That's why they are taking the picture.


Do continue to find unusual answers

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  • #2,958
  • Apr 26, 2024 11:48am Apr 26, 2024 11:48am
It's clearly an image of Dawson City FC's ambition to own a team bus to take them to away matches, the Indian lady works for the dealership. Or maybe Rob's holiday pic (he's 3rd from the left).
Sounds like a lot of screen time to me.
  • #2,959
  • Apr 26, 2024 12:03pm Apr 26, 2024 12:03pm
EA had a flat week, here's how he's doing after 26 weeks:
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Sounds like a lot of screen time to me.
  • #2,960
  • Apr 26, 2024 12:06pm Apr 26, 2024 12:06pm
Live trading now thru +10% (in 13 weeks, +4% in last 2 weeks), slowly compounding up on this one.
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Sounds like a lot of screen time to me.
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