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hedging - A new flavour of trading

  • #21
  • Dec 16, 2007 8:56am Dec 16, 2007 8:56am
Quoting philmcgrew
If you were skilled enough to buy low and sell high you wouldn't need to hedge.
you're right. I AM in fact NOT skilled enough to consistently earn pips without a hedge. Hence, I put myself in a hedge so that I would at least earn some interest everyday while I continue to buy low and sell high in small amounts of lots. The sum of all lots will not exceed 6% of my account.

Although I know that I can potentially earn soooooo much more if I was skilled enough to just profit from entering and exiting trades without a hedge, this method allows me a little more grace if I muck up. And trust me... I've MUCKED UP too many times!!!
the pips made a monkey outta me
  • #22
  • Dec 16, 2007 11:51am Dec 16, 2007 11:51am
How much u earn per day on the basis of interest ?
Quote
you're right. I AM in fact NOT skilled enough to consistently earn pips without a hedge
Again what strategy u used ?
Let's trade together.
  • #23
  • Dec 17, 2007 3:24am Dec 17, 2007 3:24am
Quoting FXBaby
How much u earn per day on the basis of interest ?

Again what strategy u used ?
I earn less than 50cents of interest a day :. That's because I have such a tiny account. I don't have much capital and I only started out with a mini account with $500. My account is now $950 and it has been slightly more than two months now. I know its very little money but I'm trying to look at the long term where the compounding kicks in .

I got my concept for this kind of hedging from a software which I found off the internet (I don't think I can disclose it here, it would seem like I'm selling it.) However, I only use it to calculate the percentage of my margin that I'm using so that my risks on margin call will be significantly reduced. The entry and exit of my buy low sell high trades lies in the fate of my itchy fingers.

As for strategy, I only use barriers and the fibo.
the pips made a monkey outta me
  • #24
  • Dec 17, 2007 10:04am Dec 17, 2007 10:04am
Quoting mrxit
There is a benefit to the opposite direction brokers offer. It's this scenario; say you have a small account and you find yourself in a severely losing trade, for whatever reason. By hedging the same currency you've essentially stopped all losses that could wipe out your account. Once the trend is determined you can cut the opposing trade and hopefully regain you losses. Of course getting back to breakeven could take awhile, depending how far out of the money you are if it ever returns..but usually it does. Also, say you are short on gbp/jpy. Holding this pair for any extended length of time could become quite expensive. Hedging would also reduce the swap otherwise. Not an ideal method, but desperate situations call for desperate actions sometimes.
I still don't see the benefit to hedging this way. It's sort of like cheating at solitaire--nothing to be gained (except additional spreads for the broker). True hedging minimizes risk while producing a profit.

If you are in a bad trade, no matter how bad, you can simply close it and re-enter if and when your analysis calls for it. There is a benefit to doing it this way; You'll be building the habit of admitting when you are wrong and conditioning yourself to exit bad trades. The ability to do that is characteristic of successful traders.
  • #25
  • Dec 17, 2007 6:26pm Dec 17, 2007 6:26pm
Quoting FXBaby
It reduce loss and maximize your profit.
It artificially reduces your losses, however your wins could be much greater by killing losses instead of paying spread + interest to hedge. Keep in mind that booking a profit may look good on your actual "balance" however the "equity" line on your account is the actual money you have right now. This holds true for simply never using a stop loss as well.


Quoting FXBaby
Iam learner and want to get knowledge more and more. See my username fxbaby, i always need milk, water and good care. For me, milk is a good strategy, water is new threads started by experienced trader and care is posts of senior traders.
And you've found a good place to aquire these resources, however I would encourage you to learn to trade first. Then if you feel you would still like to experiment with hedging come back to it. A beginner will only get into hot water with this style of hedging.

Quoting FXBaby
Well as i told hedge can reduce ur loss and maximize ur profit. i want to clear my doubt.
I have a strategy. When i used it on gbp/usd system my trade win and lossing ratio is 60% 40%. It means 60 times it go in my favour and 40 times i lose my money.
The math there works if every trade has a perfect 1:1 ratio. However you must ensure that all winners are the same size as your losses for that math to work. Keep in mind, Vegas operates on a 4% margin and you know the wealth they pull in. When you find the strategy you are looking for, ideally look for a system with a better than 1:1 ratio. This will ensure you can still make out with even a 50% win ratio.


Quoting FXBaby
Many professionals say me -" Donot use stoploss".
Ok may be stoploss solution is hedging. Example is below-
My strategy give me a short entry when g/u at 2.0477. If i hegde g/u with e/g (correlation -0.93) my profit will become limited and if hedge it with e/u (correlation +0.47) it maximize my profit and also miximize my loss.
Not many professionals say that actually, take a look around here and see. There are some swing traders that will hold their losses until their account is margined, assuming it will always come back. However this is not where I would recommend you to start your forex education.

Quoting FXBaby
So how can i use hedging in good way that maximize my profit and reduce my loss.
You can't as a beginner. I'm sorry.
The basis of a democratic state is liberty. ~ Aristotle
  • #26
  • Last Post: Dec 18, 2007 2:00pm Dec 18, 2007 2:00pm
I have read all comments. Yes iam junior but i want to get more knowledge. How can i learn hedge if no one help me. Yes iam beginner but iam trading on demo. I want to try all strategies. I thought many professional hedger would like to share their hedging style on this thread. They will post comments, they will give me suggestions and share their tips. If i want to use stop loss why should i start this thread ?
Every body suggesting me learn forex. Tell me what am i doing here ?
Every time when i have question i start thread. Am i doing something wrong ?

Ok iam a stupid guy tell me how to start ?
I have completed sir my baby pipes college and have Read all beginner threads and searching on google. Every body told me just do ur study but donot tell me how ?
should i start to buy costly books and make a copy of notes just like a child of class first ? I donot think this is a good way of learning.

Ok i have asked u all who have told me, baby do ur study. How u have started when you were newbie ?

Donot take me another way. Iam asking because many seniors told me to learn. Yes Iam stupid and i accept, i donot know how to start but u guys professionals u can suggest me how to start.

No body at least no man give a pure hedge style here. Iam suprised how hedged fund works ?

Why people said hedging is future of trading ?

Sorry if my this post has hurt u but belive me i donot like to hurt any one iam here for only learn and looking for trading styles. And hedging is one of them.
Again sorry if i hurt u.
Let's trade together.
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