Day trading 1 min chart, hedging risk

tightening stop, rsi close to oversold, in the money

stopped out, 13 pips profit

still have 4 open positions riding out volatility, also looking for overbought level to enter short

entered short 1 mini lot, looking for more upside to enter another staggered short

twiddling thumbs, whistling, market is consolidating at 100 SMA

Market broke consolidation, almost tightened stop to 224.95 but wasn't quick enough on draw and missed it. Would have booked 10 pips. RSI was barely oversold. Waiting.

another short entered, RSI overbought, bollinger bands hit, stochastic overbought

tightened stop, hoping RSI would cross oversold, didn't quite, stopped out 3 pips profit.

This tight range is annoying, this method works much better when market is on the move in a downtrend, as you can see from my previous post with my chart. I was booking 30-40 pip moves then. This 3-10 pip buisness is annoying, but since I have a live audience I am playing it anyway. Hopefully volatility picks up again.

I am going to place some protective hedges and stops away from the market action and take a break. Hopefully (and likely) the market will break out of this range and continue with the down trend. I currently have 5 open positions, 1 is in the money and the other 4 are catching up from the correction (slightly in the negative).

Hopefully these posts of me trading live will help you understand how to use my method. You can look at the time on the posts and compare that with a 1 min chart of GBP/JPY. Here is my chart as of right now:

Just as I finished that last post volatility picked up a bit, closed 2 shorts, one 11 pips, the other 23 pips in the money. Still have open positions to ride out market action.

Set entry orders long around 50% (225.7) fibo to hedge so I can take a break. Set stops on long entries at 225.42, 32.8% fibo. Will keep computer on and monitor it as I do other things

Pips are calculated from individual positions, some trades are from more then one entry on the same market move. (Read my entry/exit strategy for details)

Trades not including breakeven recovery from last Fri correction (meaning, trades from today's trading), pips earned:

28
2.8
1.8
0.9
15.8
26
2.4
27.4
19.1
11.6
23.2
3.5
13
0
0.6
57.2
57.2
67
10.5

Total: 368

Negative trades: 0

The only one that could be considered negative in any way is the 1.8 and 0.9, I had to pay the Roll (3.14) because I closed after 5pm.

Current open positions: 0

See, if you watch it all day it can be low risk!

I watched off and on, with my computer always available displaying market data.

These were mini lots, think if I was waging more money!

Sorry people, I didn't realize there was a seperate room for live trading journals. Here I've been posting live trades in my strategy thread. My apologies, I am new to this forum and this is my first thread.

I'm very interested by your scalping technics, scaling in and hedging.
Thanks a lot.... but I must confess I didn't quite understand : how, when and for how much you hedge IN and you hedge OUT.

Could you, please, show us a detailed example ? TIA
BBF

Well, honestly it has been somewhat subjective, based on what the market is doing. Like I said, my strategy still needs tweaking. The purpose of it is to keep you in the market to ride out the volatility so that you don't have to take a loss necessarily. You lock in a pre-determined loss, an amount you are willing to risk. Worse case scenario is you would close all positions and take that loss. On the other hand, if the market goes back along with the trend you can close your hedges at breakeven and then ride the market down until it is in the money or at breakeven on your original bad trades.

What I use that helps with hedging is Fibo lines. You don't wan't to hedge if you don't have to, so, if the market reverses from it's trend I draw fibo lines from the recent high and low to estimate where the market will correct to. If it stalls or reverses at the .382 level, great, just ride it out and perhaps enter a position here as well. If it breaks past that I look at the 0.50 level. If it goes past this you may be in trouble and want to hedge.

This strategy works best during a trending market. It is not as effective during a rangebound market, unless the range is large on a larger time frame and on the 1 min it acts like mini trends. You are counting on the trend to save you from your bad trade, but hedging just in case it doesn't. You can ride out a bad trade for a long time with hedges in place and not loose any additional capital.

As far as how much to hedge, say 4 short mini lots went bad, you would go long 4 mini lots.

Be careful not to hedge right when the market reverses back to go along with the trend. I did this today with AUD/JPY and am still trying to recover. My original trades are now closed out with profits, but the hedges are in the negative and I am waiting for the market to ocillate back to close those positions to at least close them at breakeven.

Also, when a bad trade is hedged it is safe and you can continue trading and making profits. I have been booking pips despite my bad AUD/JPY trade.

Maybe I'll explain a little more later, busy now.

As an example of the fibo levels, here are the current ones for AUD/JPY. Notice 0.618 is acting as strong resistance. Notice before this there was a downtrend. If you had mistaken the bottom of the trend for a short position for some reason, you can draw the fibo lines to forcast where the market will retrace to before resuming the downtrend. In this case it got stuck in a range. It is possible it will resume in the downtrend passing the bad entry again, in which case you could close the position at breakeven.

This isn't the best example because it is 15 min chart and deals with more volatility then I am personally comforatable with before hedging. I would have hedged (went long) around the most recent high (the one that was around 20:00 yesterday) and would still be in the hedge.

Here is a trade I have hedged at the moment. For some reason I am long 4 mini lots at 98.14 (orange circles). Don't ask me why I don't remember the circumstances of how I got into this bad trade (I have made so many trades today). So, once I thought that the market was not going to immediately retrace (I think the blue 100 SMA was a hint) I hedged going short 4 mini lots (blue circle). The market seems to be stuck in a range, with that 0.618 fibo as resustance, so I will just wait for it to come back up and then exit my short positions around breakeven, ride the range up some more and then exit my long positions at breakeven. I have been making successfull trades in the meantime with a pre-determined amount of risk on the bad trade locked in.

This may be a wierd analogy, but I think of hedging like quaranteeing someone sick. You don't want the sickness to spread any further into your equity or account balance, but you don't wan't to just cut dispose of the sick situation either. You put it in a safe place until the conditions are right and the trade recovers.

Also, I noticed some brokers don't allow hedging. Mine does. I can go both long and short at the same time on the same pair.

Hi, Jared

Thanks a lot. I must say I studied Hedging technics for a while and it's the first time I get a full and detailed explanation !
Thank again and don't hesitate to show us more example TIA.... (but I don't wish you these occasions for sure !)

Best regards
BBF