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Mathematical hedging strategy without a stop loss 22 replies

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Attachments: Hedging/averaging trades without prediction
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Hedging/averaging trades without prediction

Quoting LazyTrades
All joking aside I used to tie myself up in knots thinking trading required some higher levels of intellect, coupled with hours of intense chart staring and a masters in advanced mathematics but these days I’m just banging on trades and waiting for the fish to bite. The skill for me is emotional management aka Stoicism.
agreed, let's face facts it's just a two horse race...
Quoting lddd
{quote} Maybe it is also profitable to generally buy when the market opens on the Ex Div date and get out sometime/where before the day's close. So regardless of a gap fill and regardless of how high the number of the dividend adjustment is.
Hi,
I just want to prompt a reminder to you based on your comment "Maybe it is also profitable to ..........", .vs. my previous mail

My past points:
"There are always better options in hindsight, but if you are consistently grabbing a set of pips each month with minimal input is this not what you were after?

If you keep the mindset of 'there could always be something better' you will never settle
--
My opinion for you to take as you wish, and my final input on this is:
1 not relevant anymore as you are in the market and building experience that does more for you than you will ever realise
2 STOP looking for ways to improve it and judge the output for yourself after a month.
3 After a month if you are in profit, repeat - DO NOT try to improve it until you've got your psychology sorted.
--
At some point you'll need to step off the analysis, fear and overthinking platform and 'just do', then experience and the feedback loop of results kick in and you start to see the ah-ha moments through all the noise.
"
The feedback loop I'm referring to will start kicking in once you start making consistent profit from something as simple as this, and that you are not over thinking, and then, as surprising as it may be, ways to improve the process start to fall as obvious as if they were neon lights in front of you.

That might sound counter intuitive, but once you are doing it then it all becomes obvious, but until you are doing it it is near impossible as there are always so many other options that could have been taken to make it better / more profitable / .... if only i tweak this or that then....

Trying to help here buddy. When you are the other side of the profit curve you'll start getting it all and want to share the ah-ha moments (and oh how simple it all seems then) and you can't believe you never got it before.

Summary - Keep It Simple and learn (then teach) from experience.

My wishes of good luck remain, but I'd rather wish you success from what you've learnt.

G
always learning
Quoting griffc
{quote} Hi, I just want to prompt a reminder to you based on your comment "Maybe it is also profitable to ..........", .vs. my previous mail My past points: "There are always better options in hindsight, but if you are consistently grabbing a set of pips each month with minimal input is this not what you were after? If you keep the mindset of 'there could always be something better' you will never settle -- My opinion for you to take as you wish, and my final input on this is: 1 not relevant anymore as you are in the market and building experience...
I'm guessing this and the other posts made by the others are to someone on my ignore list.

I'm also going to guess he's 1. Pissed people off 1st with his arrogance. 2. Negged everyone out with his attitude. And now he's now on 3. Crying for sympathy so he can manipulate you all for attention and start the cycle again.

There are others more deserving of help and 100 times more genuine than this person.

Sorry I'll crawl back under my rock again.

Have a good weekend. Tyson for the win
Quoting griffc
{quote} Hi, I just want to prompt a reminder to you based on your comment "Maybe it is also profitable to ..........", .vs. my previous mail My past points: "There are always better options in hindsight, but if you are consistently grabbing a set of pips each month with minimal input is this not what you were after? If you keep the mindset of 'there could always be something better' you will never settle -- My opinion for you to take as you wish, and my final input on this is: 1 not relevant anymore as you are in the market and building experience...
If you keep the mindset of 'there could always be something better' you will never settle
Quoting griffc
{quote} Hi, I just want to prompt a reminder to you based on your comment "Maybe it is also profitable to ..........", .vs. my previous mail My past points: "There are always better options in hindsight, but if you are consistently grabbing a set of pips each month with minimal input is this not what you were after? If you keep the mindset of 'there could always be something better' you will never settle -- My opinion for you to take as you wish, and my final input on this is: 1 not relevant anymore as you are in the market and building experience...
2 STOP looking for ways to improve it and judge the output for yourself after a month.
3 After a month if you are in profit, repeat - DO NOT try to improve it until you've got your psychology sorted.
Quoting griffc
{quote} Hi, I just want to prompt a reminder to you based on your comment "Maybe it is also
Thanks for the reminder. Yes, you’re absolutely correct.
Quoting T721
{quote} DO NOT try to improve it until you've got your psychology sorted.
I want to thank you again for blessing us (me) with the dividend knowledge and i'd like to ask a question: have you noticed if all index are equally good to trade (in terms on gap-filling probabilities), or maybe it's safer to stick with just a couple of them (lets say, FTSE and CAC for example)?
Mai na gioia
Quoting Carabas
{quote} I want to thank you again for blessing us (me) with the dividend knowledge and i'd like to ask a question: have you noticed if all index are equally good to trade (in terms on gap-filling probabilities), or maybe it's safer to stick with just a couple of them (lets say, FTSE and CAC for example)?
Stick with ftse and cac till you fully getta grip of it, then skies the limit pal Hope you are doing well with it
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  • #3,310
  • Quote
  • Edited 11:11am May 18, 2024 10:58am | Edited 11:11am
I think you know you've turned the corner when you stop expecting to lose, but I do believe you need to trade with real money to get there.
Sounds like a lot of screen time to me.
  • #3,311
  • Quote
  • Edited May 19, 2024 7:28am May 18, 2024 4:01pm | Edited May 19, 2024 7:28am
Quoting LazyTrades
I think you know you've turned the corner when you stop expecting to lose, but I do believe you need to trade with real money to get there.
but I do believe you need to trade with real money to get there.

Damn straight ---- demo dont cut it - teaches you nothing
  • #3,312
  • Quote
  • May 19, 2024 10:20am May 19, 2024 10:20am
Unfortunately, so far I have not been able to find a broker other than IG that prices the dividend adjustment at least approximately similarly to the forecast figure.

IG - 08/05/24

Forecast (FTSE): 19.59
Actual Gap: 19.20

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ICM - 09/05/24

Forecast (FTSE): 19.57
Actual Gap: 14,80

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IG - 15/05/24

Forecast (FTSE): 20.80
Actual Gap: 20.70

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ICM - 16/05/24

Forecast (FTSE): 20.75
Actual Gap: 13,40

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  • #3,313
  • Quote
  • Edited 5:15am May 20, 2024 3:20am | Edited 5:15am
if you trade without a prediction, then you can only have the edge from money management.

1. a positive swap fee as already mentioned by lazy trader.
2. a market that favours one direction and you trade in this direction.
3. a market that gives gifts such as divis.

points 2 and 3 apply to terry's divi trades.

the FTSE, like most equity indices, has a growth component because they tend to go up over the long term and economies are growing. so long FTSE is an edge.

and when it rains gifts, in the form of swap fees or divis, that is also an edge.

if i were to trade without predition, i would only trade with these advantages.
trading is like dancing, don't think and just listen to the music!
and once again the shitty bureaucratic EU has struck and has - in order to protect its citizens - limited the leverage on CFD products to 1:10-1:20.

I spent the whole weekend looking for a suitable broker who also pays out the divis, but couldn't find a good one.

AXI was mentioned, but the spreads there are very high. if anyone has a tip, please pm me, thanks.
trading is like dancing, don't think and just listen to the music!
Quoting birdland
f you trade without a prediction, then you can only have the edge from money management. 1. a positive swap fee as already mentioned by lazy trader. 2. a market that favours one direction and you trade in this direction. 3. a market that gives gifts such as divis. points 2 and 3 apply to terry's divi trades. the FTSE, like most equity indices, has a growth component because they tend to go up over the long term and economies are growing. so long FTSE is an edge. and when it rains gifts, in the form of swap fees or divis, that is also an edge. if...
Hey Bird, good points, I would agree that any endeavour must be based on some sort of assumptions (predictions), I personally assume/predict that prices go up and down, quite randomly to all intents and purposes, but based on the perceived value of any particular currency in relation to another. For buyers to profit they must initiate sells and vice versa so I'm assuming all prices are somewhat correlated.

I use this, together with a positive swap, and patience, as my three pronged edge but my assumptions/predictions could be wrong.
Sounds like a lot of screen time to me.
Quoting birdland
and once again the shitty bureaucratic EU has struck and has - in order to protect its citizens - limited the leverage on CFD products to 1:10-1:20. I spent the whole weekend looking for a suitable broker who also pays out the divis, but couldn't find a good one. AXI was mentioned, but the spreads there are very high. if anyone has a tip, please pm me, thanks.
Same here. But it‘s not only the EU. Australia (ASIC) also limits retail trading leverage to 30:1. It‘s pretty standard now all over the world.

Try AfterPrime (100:1) and IC Trading (500:1). They are regulated under FSA (Seychelles). Both accept clients from the EU/EAU. The conditions are good. I have accounts with them too and they seem to account for dividend adjustments. However the price action and size of the gaps seem to differ quite a lot when compared to IG.

Spread on GBP/USD most of the time is between 0 and 0.3 Pips. Most indices are less than a Point.
Some more information a about dividend adjustments with ICM.

—

Thank you for reaching out with your concern. It's important to clarify how dividend adjustments impact stock indices and their subsequent price adjustments.

The dividend adjustment figures published on our blog are designed to provide a general indication of the impact that dividends might have on an index. However, these figures are not precise forecasts of the actual price adjustments that will occur. The discrepancy you observed between the published figure (20.75 points) and the actual close/open difference (3.4 points) for the UK100 index highlights the complexity of this process.

Firstly to better understand the discrepancy you must understand that the factors that cause the discrepancy such as the methodology differences and the Market Dynamicis.

The figures we publish are based on a model that estimates the cumulative effect of dividends from all constituent stocks on the index. This estimation can vary based on several factors including the timing of dividend announcements and the weighting of individual stocks within the index.

The actual price adjustment observed in the market can be influenced by real-time trading activity, investor sentiment, and other market dynamics that are not captured by a straightforward dividend calculation.

The actual opening and closing prices of an index are influenced by more than just dividend adjustments. They reflect the broader market sentiment, economic news, and other events that affect trading behavior. Sometimes, the market's reaction to dividends might be muted or exaggerated due to other prevailing market conditions.

Unfortunately we cannot comment on IG methodology, however having two different outcomes or methodologies for the pricing and the Dividend calculation thereafter does not imply that either of the CFD providers are incorrect in their process, they are simply using different approaches.

Your Profit & Loss (P&L) will indeed be adjusted to reflect the dividend credits or debits, which helps to ensure that your account balance accurately represents your financial position. The actual price feed adjustment may vary, leading to potential price gaps that are either smaller or larger than expected. This is due to the factors mentioned above, including trading activity and broader market dynamics.

In conclusion, the discrepancy you observed is a result of the inherent complexities in forecasting dividend impacts and the dynamic nature of financial markets. While our published figures aim to provide a useful estimate, they cannot account for all real-time market variables.

—
Differences for CAC today (20/05/24)

IG = 24.7
ICM = 7.3

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I am probably overthinking it again but feels like the ex-div trade isn’t as straightforward as said.

The only thing that seems to be certain in advance is the ex-dividend date. But I have no idea how to trade this as standardized as possible process with repeatable rules. Just buy on any Ex-Div date at X:X RR at a specific time?

Will try the EA on CAC today with broker ICM.
Quoting birdland
and once again the shitty bureaucratic EU has struck and has - in order to protect its citizens - limited the leverage on CFD products to 1:10-1:20. I spent the whole weekend looking for a suitable broker who also pays out the divis, but couldn't find a good one. AXI was mentioned, but the spreads there are very high. if anyone has a tip, please pm me, thanks.
Same here Mr Bird, will let you know if I find something useful.
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