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Hedging/averaging trades without prediction

  • #3,361
  • May 20, 2024 10:37pm May 20, 2024 10:37pm
Hi all, I'm returning to trading after several years out. I've been studying your dividend / gap filling strategy behind the scenes.

Could those who trade it live please take the time to share:
- thoughts on why Monday's CAC trade appears for price to have nil inclination to close the gap?
- what are you doing with your open longs? How are you treating them? Scaling in? Already closed out? What was your trigger for closing out and drawing a line under the trade?

Thanks in advance.
  • #3,362
  • May 20, 2024 10:39pm May 20, 2024 10:39pm
Quoting d5400
{quote} Is there a description of this strategy?
Good morning,
he has given pieces in the thread. The thread isn't big and at page 10 is the link of the original system.
He has been posting one year all trades live. No bust, max drawdon around 20%. Earnings above 150%.

Best
Chriss
  • #3,363
  • May 20, 2024 11:00pm May 20, 2024 11:00pm
Quoting chrissfx
{quote} Good morning, he has given pieces in the thread. The thread isn't big and at page 10 is the link of the original system. He has been posting one year all trades live. No bust, max drawdon around 20%. Earnings above 150%. Best Chriss
That thread is just a collection of after-the-fact PNL records plus the promotion of themarketstructuretrader website.
1.02^200
  • #3,364
  • May 21, 2024 12:27am May 21, 2024 12:27am
Quoting samgribbles
Hi all, I'm returning to trading after several years out. I've been studying your dividend / gap filling strategy behind the scenes. Could those who trade it live please take the time to share: - thoughts on why Monday's CAC trade appears for price to have nil inclination to close the gap? - what are you doing with your open longs? How are you treating them? Scaling in? Already closed out? What was your trigger for closing out and drawing a line under the trade? Thanks in advance.
too early to say yet, as with all trades need to exercise a little patience....
  • #3,365
  • May 21, 2024 12:37am May 21, 2024 12:37am
Quoting WallFlower
{quote} Hey birdland love your posts. I also believe the edge is in money management but in a slightly different way, for example a roulette table at a casino is a losers game no matter the money management strategy implemented you cannot beat the house in the long run ever. trading is similar in that regard that the up and down movement is almost completely random (in my opinion) but our edge comes from the fact that price cannot go in one direction forever and unlike a roulette wheel where every individual spin is a 50/50 chance of red or black...

thank you...so yes, averaging is actually an edge in itself and something different from red/black probabilities in the casino.

but it has to be done smart and you have to know where to stop or hedge or close everything with a loss.
trading is like dancing, don't think and just listen to the music!
  • #3,366
  • May 21, 2024 2:14am May 21, 2024 2:14am
Hope to see the CAC gap filled in the next hour
Mai na gioia
  • #3,367
  • May 21, 2024 2:23am May 21, 2024 2:23am
Quoting Carabas
Hope to see the CAC gap filled in the next hour
No pressure, I think the French generally take their time with things...?
  • #3,368
  • May 21, 2024 2:55am May 21, 2024 2:55am
I’m guessing the div gap created each time by the adjustment is then closed as price reverts back to the mean, which in turn suits our averaging-in practices. The danger would be a gap followed by some bad news on the Euro or baguettes for example. As long as we prepare for a worse case scenario then all good, anyone managed to find any useful gap history yet, I suspect it has always closed as long as you are not over exposed and patient enough?
Sounds like a lot of screen time to me.
  • #3,369
  • May 21, 2024 3:00am May 21, 2024 3:00am
Quoting Waveskierrob
{quote} too early to say yet, as with all trades need to exercise a little patience....
Thanks. My mistake, got my time zone conversions wrong (I'm in Perth, Aust and trading on SYD time).
  • #3,370
  • May 21, 2024 3:01am May 21, 2024 3:01am
Quoting LazyTrades
I’m guessing the div gap created each time by the adjustment is then closed as price reverts back to the mean, which in turn suits our averaging-in practices. The danger would be a gap followed by some bad news on the Euro or baguettes for example. As long as we prepare for a worse case scenario then all good, anyone managed to find any useful gap history yet, I suspect it has always closed as long as you are not over exposed and patient enough?
Pretty much think so, at least for FTSE. If it wasn't for the high margin requirements it would be no sweat at all. Even adding on the next FTSE div adj and adjusting for forward interest over X days is credible.

Not sure about CAC or others yet, just winging it for now with a few K in reserve to feed the ESMA margin machine. Feels great to take my money out of my secure bank account and pass over to my broker to look after instead. That's really protecting us dumb traders from ourselves... thanks!
  • #3,371
  • May 21, 2024 3:06am May 21, 2024 3:06am
Seems the "gap nearly always fills" descriptor should be changed to: "subject to their being no stocks-adverse news and market movement overnight, the gap nearly always fills".

Watching the CAC now in the context of: Nikkei down 0.3%, Hang Seng down 2.0%.

May be challenging to get a 0.3% gap filled today in Europe?
  • #3,372
  • May 21, 2024 3:06am May 21, 2024 3:06am
Brokers, AI, politicians and large corporates always have our best interest at heart so you can sleep easy now Fagin
Sounds like a lot of screen time to me.
  • #3,373
  • May 21, 2024 3:12am May 21, 2024 3:12am
Re Cac40 trade discussed above; On my broker - gap from last candle before the gap -to- close of 1st bullish candle after it, was circa 30pips. If you were holding from before the gap per T721's original play, you would be currently circa -40pips in dd, and the entry on 1st bullish candle after the gap would be circa -10pips in dd right now. From a R:R perspective, on the pre-gap 1st entry - holding for a 40pip dd would make no sense unless you held for at least a +40pip gain. On the 2nd post-gap entry, currently -10pips in dd, for a potential gap fill gain of +30pips, the stop would be around -30pips or smaller? Of course I don't know the large historical sample win rate so it may make sense if the win rate is up in the 90's %?

1min Cac40 below
Attached Image (click to enlarge)
Click to Enlarge Name: screenshot.png Size: 18 KB
Trader with an Edge.
  • #3,374
  • May 21, 2024 3:17am May 21, 2024 3:17am
Quoting birdland
{quote} thank you...so yes, averaging is actually an edge in itself and something different from red/black probabilities in the casino. but it has to be done smart and you have to know where to stop or hedge or close everything with a loss.
Yes exactly, this is what I was trying to explain. Also didnt mean to dislike a bunch of posts, clicked the wrong thumbs button, still learning FF
  • #3,375
  • May 21, 2024 3:19am May 21, 2024 3:19am
Quoting LazyTrades
Brokers, AI, politicians and large corporates always have our best interest at heart so you can sleep easy now Fagin
Like a baby me. Don't give a rats ass anymore
  • #3,376
  • May 21, 2024 3:21am May 21, 2024 3:21am
Quoting Headland
Re Cac40 trade discussed above; On my broke,r gap from last candle before the gap -to- close of 1st bullish candle after it, was circa 30pips. If you were holding from before the gap per T721's original play, you would be currently circa -40pips in dd, and the entry on 1st bullish candle after the gap would be circa -10pips in dd right now. From a R:R perspective, on the pre-gap 1st entry - holding for a 40pip dd would make no sense unless you held for at least a +40pip gain. On the 2nd post-gap entry currently -10pips in dd, for a potential; gap...
The edge is in acquiring a dividend adjustment so when it gaps you are still cash neutral give or take a few pips.
  • #3,377
  • May 21, 2024 3:23am May 21, 2024 3:23am
Quoting WallFlower
{quote} Yes exactly, this is what I was trying to explain. Also didnt mean to dislike a bunch of posts, clicked the wrong thumbs button, still learning FF
Don’t worry about it too much, from what I can see it’s mostly grown-ups on this thread, the more sensitive types lurk elsewhere.
Sounds like a lot of screen time to me.
  • #3,378
  • May 21, 2024 3:36am May 21, 2024 3:36am
... Firstly thanks to T721 for sharing this. Just on my general point alluded to in my above post, and not wanting to put a dampener on things;

I think everyone is trading these so-called 'dividend gaps' a bit blind in that no one really knows, or have at least not published here;

1. The long-term large historical sample win rate % and other stats.
2. The optimum R:R tactic that can be derived from stats that can be calculated from such a large historical sample.

Like others have expressed, until such a time as you have a representative back or forward sample, I would exercise caution.
Trader with an Edge.
  • #3,379
  • May 21, 2024 3:38am May 21, 2024 3:38am
Quoting Fagin
{quote} The edge is in acquiring a dividend adjustment so when it gaps you are still cash neutral give or take a few pips.
Hi. Oh ok, thanks I hadn't understood that. If I am understanding correctly then- by having the 1st immediate pre-gap trade open, the broker credits you the effective dividend so that that 1st pre-gap trade is effectively at b/e immediately after the gap, give or take a few pips? Thanks, regards.
Trader with an Edge.
  • #3,380
  • May 21, 2024 3:43am May 21, 2024 3:43am
Quoting Headland
{quote} Hi. Oh ok, thanks I hadn't understood that. If I am understanding correctly then- by having the 1st immediate pre-gap trade open, the broker credits you the effective dividend so that that 1st pre-gap trade is effectively at b/e immediately after the gap, give or take a few pips? Thanks, regards.
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