Please to all cynics and destrustive critics that reads dis post, please bear it min mind that i personnaly hedge when the market directions appears ambiguos. Whenever i am 70-100% sure of the market direction and how far it will go, then i dont hedge. However, if not and mty hands are feeling to place a trade, THEN I HEDGE. IF HEDGING WAS TOTALLY USELESS, THEN SUCH TERMINOLOGY COULD NOT HAVE EXISTED AND KEPT RESOUNDING ENDLESSLY.
Many traders do not see any sense in hedging. Even i myself did not see any sense in it until i did some study myself and saw that there is a good sense in it especially in this silly kind of market where fundamentals come up to disrupt teknical conclusions one might have made. i however have been applying it in my tradings frequently and with my teknical know how, i have used it many times to make net profits. As i am writing this, i have a hedged trade on, on gbpusd, the last one i closed gave me a net profit of 200 pips. My own type of hedging is placing both buy and sell using pending orders at a “CAREFULLY SELECTED” market price and waiting until the market reaches that area, not necessarily at the same price, but at a price when the bid and ask are both attained at the same time e.g i can place a pending order to sell gbpusd at 1.9750 and buy at 1.9753 if my brokers spread is 3 pips for it. I don’t hedge all d times, my trading activities are such that swing carries 55%, day trades carry 30%, hedging carries 10% and scalping carries 5%, and well , all dis are making me succesfull cos i see my account always growing fatter. Though, scalping is a form of day trading and hedging could also be depending on whether the trade is opened and closed dat same day.
Firstly, I have my personal rules when hedging.
1. I ensure the price I am opening both is always “AROUND” a passage way. Market either goes up or down , it must pass dat area. OR that the market is ranging between an extreme high and low as seen from higher time frames like 4hr, daily E.g check ur 4hr and daily chart on usdcad 1.000-1.0050 is a passage way, gbpusd has been betwn 1.9400 and 2.0000 for the past few months , so I could choose 1.9700 area for it.besides for the past 1 year gbpusd has always passed thru 2.0000 area.
2. I don’t hedge volatile pairs like the yen pairs etc that can face north for 4 months and not turn back. In other words I hedge pairs not exttremely volatile and can range between an extreme high and low. However, u shuld know that there could be a problem when it breaks away from the ranging area.
Secondly, I have two approaches when hedging ,
1. Placing both trades and waitng after a major move had been made and completed. This move must give me nothing less than 150-250pips profit and loss. Then I close d profitabu one and later place another trade in the direction of the one reading hell of losses so that when the new one gains some pips e.g 50 – 100, then I close both and not waiting necessarily that the other neutralises. You need to be teknically sound to be effective with this e.g last 2 weeks or so I hedged gbpusd at 1.9700 area, when it got to dat great resistanse area of 1.9840’s-50’s I was still sure the move up had not been completed because of the way I saw it powerfully still moving up i.e the upward momentum then was still much hence , d move had not been completed.Fortunately I followed it until I closed d buy at 1.9960, placed another sell there, of course I was almost accurate with the dat new entry though it rose to 2.0005 or so but I was very good at it cos I closed and entered another towards the end of the major move which lasted for days really. And when it came down I closed both left at 1.9860 using take profit and giving me 200 pips net profit on the three gbpusd. U chek ur chart, u’ll see it even came down further to 1.9640’s. So the summarry here is dat u need to be teknicaaly sound to discern the end area of that major move or else the hedging effort becomes worthless and may even result into net loss.
2. Placing both and after which studying the direction towards where they will make a major move. Studying how reluctant they are to move up or down can help u discern where dey will actually want to go and make a major move to . then u close the wrong one and leave the right trade on until it gives u as much pips as u are satsfied with
WELL I DO HOPE I MADE A LITTLE SENSE HERE.
Many traders do not see any sense in hedging. Even i myself did not see any sense in it until i did some study myself and saw that there is a good sense in it especially in this silly kind of market where fundamentals come up to disrupt teknical conclusions one might have made. i however have been applying it in my tradings frequently and with my teknical know how, i have used it many times to make net profits. As i am writing this, i have a hedged trade on, on gbpusd, the last one i closed gave me a net profit of 200 pips. My own type of hedging is placing both buy and sell using pending orders at a “CAREFULLY SELECTED” market price and waiting until the market reaches that area, not necessarily at the same price, but at a price when the bid and ask are both attained at the same time e.g i can place a pending order to sell gbpusd at 1.9750 and buy at 1.9753 if my brokers spread is 3 pips for it. I don’t hedge all d times, my trading activities are such that swing carries 55%, day trades carry 30%, hedging carries 10% and scalping carries 5%, and well , all dis are making me succesfull cos i see my account always growing fatter. Though, scalping is a form of day trading and hedging could also be depending on whether the trade is opened and closed dat same day.
Firstly, I have my personal rules when hedging.
1. I ensure the price I am opening both is always “AROUND” a passage way. Market either goes up or down , it must pass dat area. OR that the market is ranging between an extreme high and low as seen from higher time frames like 4hr, daily E.g check ur 4hr and daily chart on usdcad 1.000-1.0050 is a passage way, gbpusd has been betwn 1.9400 and 2.0000 for the past few months , so I could choose 1.9700 area for it.besides for the past 1 year gbpusd has always passed thru 2.0000 area.
2. I don’t hedge volatile pairs like the yen pairs etc that can face north for 4 months and not turn back. In other words I hedge pairs not exttremely volatile and can range between an extreme high and low. However, u shuld know that there could be a problem when it breaks away from the ranging area.
Secondly, I have two approaches when hedging ,
1. Placing both trades and waitng after a major move had been made and completed. This move must give me nothing less than 150-250pips profit and loss. Then I close d profitabu one and later place another trade in the direction of the one reading hell of losses so that when the new one gains some pips e.g 50 – 100, then I close both and not waiting necessarily that the other neutralises. You need to be teknically sound to be effective with this e.g last 2 weeks or so I hedged gbpusd at 1.9700 area, when it got to dat great resistanse area of 1.9840’s-50’s I was still sure the move up had not been completed because of the way I saw it powerfully still moving up i.e the upward momentum then was still much hence , d move had not been completed.Fortunately I followed it until I closed d buy at 1.9960, placed another sell there, of course I was almost accurate with the dat new entry though it rose to 2.0005 or so but I was very good at it cos I closed and entered another towards the end of the major move which lasted for days really. And when it came down I closed both left at 1.9860 using take profit and giving me 200 pips net profit on the three gbpusd. U chek ur chart, u’ll see it even came down further to 1.9640’s. So the summarry here is dat u need to be teknicaaly sound to discern the end area of that major move or else the hedging effort becomes worthless and may even result into net loss.
2. Placing both and after which studying the direction towards where they will make a major move. Studying how reluctant they are to move up or down can help u discern where dey will actually want to go and make a major move to . then u close the wrong one and leave the right trade on until it gives u as much pips as u are satsfied with
WELL I DO HOPE I MADE A LITTLE SENSE HERE.
know thy edge and abide by it ! 4 in it shall thou be successful !
