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Breeze....Update on GBP/JPY

  • #1,241
  • Jan 25, 2008 6:50am Jan 25, 2008 6:50am
Quoting bmwboyee
not so fast Breeze. The stock market looks to do very well today and could carry it higher.
I like u very much....!!!!.....
  • #1,242
  • Jan 25, 2008 9:31am Jan 25, 2008 9:31am
today i've try to calculate the possible price level that can lead this roller coaster slam to 183 level and it show around 217.50 + -

let's see
hope u doing well breeze
  • #1,243
  • Jan 25, 2008 9:35am Jan 25, 2008 9:35am
but ej may drop more then g/j according to e/g e/aud look bearish
  • #1,244
  • Jan 25, 2008 9:43am Jan 25, 2008 9:43am
Quoting pr0spero
Right after Breeze's first losses and ultimate margin call (what ever happened to his hedging?) he claimed he was taking a break for some days.


Hardly a few hours had passed after that statement, and he was back to take revenge on the market. And as the market does to those venturing on revenge trading, it took away everything

Lessons not learned are to be repeated..

i'm sure he didn't get margin called ! he's back making profits again !
  • #1,245
  • Jan 26, 2008 1:43am Jan 26, 2008 1:43am
Quoting pr0spero
Right after Breeze's first losses and ultimate margin call (what ever happened to his hedging?) he claimed he was taking a break for some days.


Hardly a few hours had passed after that statement, and he was back to take revenge on the market. And as the market does to those venturing on revenge trading, it took away everything

Lessons not learned are to be repeated..
U R SOOOOOOO STUPID....no more words.
  • #1,246
  • Jan 26, 2008 1:45am Jan 26, 2008 1:45am
Quoting styxgroup
today i've try to calculate the possible price level that can lead this roller coaster slam to 183 level and it show around 217.50 + -

let's see
hope u doing well breeze
I'm well styxgroup......very well.
  • #1,247
  • Jan 26, 2008 2:02am Jan 26, 2008 2:02am
Quoting Breeze
short @

209.10...............active
209.35...............active
208.50 X 10........active
208.10 X 10........active
209.22 X 10........active
214.00...............active.....set a protective stop @ 212.80.....Profits Booked

hedged all @ 213.00
unhedged @ 213.50.....added three more short @ 213.00
  • #1,248
  • Jan 26, 2008 2:04am Jan 26, 2008 2:04am
short @

209.10...............active
209.35...............active
208.50 X 10........active
208.10 X 10........active
209.22 X 10........active
213.00 X 3.........active.....set a protective stop @ 212.00
  • #1,249
  • Jan 26, 2008 2:09am Jan 26, 2008 2:09am
Yep it takes a lot of hard work....descipline.....courage....sleepless nigths....biting nails....stomping.....easy to get angry....swearing.....screaming etc....ect....in this lovely game....and the rewards can be sweet and bitter.
  • #1,250
  • Jan 26, 2008 2:38am Jan 26, 2008 2:38am
Quoting pearsonfx
Hello PerPIPtual,
As you probably know, Hedging is the buying and selling the same currency at the same time.....What does it mean?

If you opened a Short(SELL) on G/J at 205.00 the market moved away from you to 206.00(Maybe this was your stoploss, maybe not, maybe it was another point of resistance) At this point you choose to "freeze" your floating loss, so you enter a Long(BUY) at 206.00....until you close one of those positions you are floating with a -100 pip loss. Now the market moves up to where it is now, 210.00, you close your Long with 400 pips of profit. Your account is now much larger, however, your short trade is now -500 pip loss. Your account balance has changed, but your equity has remained unchanged.

The Market then moves down to 204.00 and you close out your Short trade with 100 pips. all in all on an original 100 pip move you have made 500 pips.

The Key to hedging then becomes you want to close your hedge trade at the top or the bottom of a swing, if you see another swing coming your goal is to enter at the top or bottom and exit at the opposite end of the swing. Although there is no way to predict where the exact top and bottom of swings are, you can use candlesticks and other indicators, to help you determine the most likely exit for a trade. This is the best possible explanation I can give of hedging. If use properly, a trade made from 220.00 on G/J maybe be sitting with over a 1000 pip loss at current moments, but with hedging on most or every swing CORRECTLY, you EQUITY could be up 1000+ pips....while your account balance would most likely be 2000+

In essence, the key to hedging a losing trade correctly becomes the same as trading normally. Buy Low, Sell High.

I hope this explains what you were looking for
Thanx pearsonfx......remember when u manage ur hedges in a correct way you could build up ur account as quick as possible....OK lets say

I'm short from 208.50 X 10 lots.......and I realise I'm in the wrong direction and desides to hedge @ 209.50 I now have a drawdown 0f 109 X 10 now the 209.50 hedge will 'FREEZE' my losses untill such time I decided to close the hedge @ 214+ then I will start to realise the acctual loss of the position. but then the market decides to go down a few more pips....thats when u start to make profits....cause those few more pips of the market going down will add "Credit" to your "MARGIN"....and that is the good news cause you havent just saved the loosing position but you took advantage of the "OPPOSITE" Direction" and added "MARGIN" to your Account.

The harderst part confusing traders is when to "HEGDE" and when to "LOOSE" the "HEDGE"

1......I normally hedge when a trade is about 50-100pips agains me as Geppy is sometimes volatile....it can go 50-100pips before it gives back profits....remember that mistakes will be made and they'll be costly if youre clamsy like me

To Be Continued.....
  • #1,251
  • Edited 10:25am Jan 26, 2008 10:25am | Edited 10:25am
To Be Continued.....

2.....Know that hedging is a strategy that needs "Patience" & "Discipline" and I only use it to reduce the risk or damage and it requires skill and perfection....as you'll need to learn to use it in a correct way.

3....now hedging GBP/JPY is a very difficult task to take as this pair depends on "2" other pairs USD/JPY and GBP/USD for its next direction....I have now learnt to master the swings of GBP/JPY by monitoring the move in this 2 pairs....also watch what EUR/GBP is heading as it can be a mover of GBP/USD and GBP/JPY.....note that as long as EUR/GBP stays/holds below it will always support GBP/USD and GBP/JPY.

4....Now draw "Fib Extensions" on your 60minutes GBP/JPY Chart.....This is how I place and close my hegdes....this "Fib Extensions" are your friends.....as GBP/JPY is a cross it normally gets rejected @ some "Fib Lvl's" at least thats what have noticed but not at all times....some false breakouts can be confusing and thats where "Discipline" comes in.



To Be Continued.....
  • #1,252
  • Jan 26, 2008 10:54am Jan 26, 2008 10:54am
You must be Innovative....Different & Original in this Business

Breeze
  • #1,253
  • Jan 26, 2008 11:41am Jan 26, 2008 11:41am
Quoting Breeze
You must be Innovative....Different & Original in this Business

Breeze
Hey there Breeze

Great thread this one! I also trade GBPJPY exclusively and I also hedge to take advantage of the wild swings, using my own set of rigid rules on both money management and maximum number of positions etc.

As you said earlier it can be a rollercoaster ride at times but also very profitable if done right. Love the out of the box thinking - I do use stops at 1000 pips per position as this pair has such a wide range.

I know and you know it's not easy but it can be done and done successfully if you keep your nerve and listen what the market is telling you.

Just wanted to wish you all the best for 2008

Kind Regards
Steve
  • #1,254
  • Jan 26, 2008 6:50pm Jan 26, 2008 6:50pm
Quoting Breeze
To Be Continued.....

2.....Know that hedging is a strategy that needs "Patience" & "Discipline" and I only use it to reduce the risk or damage and it requires skill and perfection....as you'll need to learn to use it in a correct way.

3....now hedging GBP/JPY is a very difficult task to take as this pair depends on "2" other pairs USD/JPY and GBP/USD for its next direction....I have now learnt to master the swings of GBP/JPY by monitoring the move in this 2 pairs....also watch what EUR/GBP is heading as it can be a mover of GBP/USD and GBP/JPY.....note that as long as EUR/GBP stays/holds below it will always support GBP/USD and GBP/JPY.

4....Now draw "Fib Extensions" on your 60minutes GBP/JPY Chart.....This is how I place and close my hegdes....this "Fib Extensions" are your friends.....as GBP/JPY is a cross it normally gets rejected @ some "Fib Lvl's" at least thats what have noticed but not at all times....some false breakouts can be confusing and thats where "Discipline" comes in.



To Be Continued.....
Breeze,

I am more of a reader than a poster hoever, your hedging posts have cuaghyt my itnterest...You mentioned very early on using hedging and fx options but I do not see how fx optin are incoroprated in you trading...
Can you please elaborate? Also, I am not aware of a broker that provides fx options and heding spot capabiliity all on one platform...if there is one, please advise.

thanks.
  • #1,255
  • Jan 27, 2008 7:43am Jan 27, 2008 7:43am
Quoting steviet
Hey there Breeze

Great thread this one! I also trade GBPJPY exclusively and I also hedge to take advantage of the wild swings, using my own set of rigid rules on both money management and maximum number of positions etc.

As you said earlier it can be a rollercoaster ride at times but also very profitable if done right. Love the out of the box thinking - I do use stops at 1000 pips per position as this pair has such a wide range.

I know and you know it's not easy but it can be done and done successfully if you keep your nerve and listen what the market is telling you.

Just wanted to wish you all the best for 2008

Kind Regards
Steve
Hi Steve....good to see you arround....Ok heres my focuss for the next three months....Gold is heading for 1000points....which is going to outweight USD/JPY....I see it @ 103.00 very soon....or even further down, despite that i'm getting a distinct feeling that the fear of a meltdown in USD has increased and is now feeding on itself....were going to see a raapid appreciation of the Japanese YEN....and GBP/JPY heading for 90.

Best wishes of the New Year
  • #1,256
  • Jan 27, 2008 7:57am Jan 27, 2008 7:57am
also check on Crude Oil....it looks as if its going to base and has the potential of going up which would also weigh on CFD Indices

Breeze
  • #1,257
  • Jan 27, 2008 8:12am Jan 27, 2008 8:12am
Quoting candaguy2007
Breeze,

I am more of a reader than a poster hoever, your hedging posts have cuaghyt my itnterest...You mentioned very early on using hedging and fx options but I do not see how fx optin are incoroprated in you trading...
Can you please elaborate? Also, I am not aware of a broker that provides fx options and heding spot capabiliity all on one platform...if there is one, please advise.

thanks.
Hi candaguy.....the Internet is a very strong tool of Information....if you search the net for various platforms you will definately get answers about "Long/Short Call Option" or "Put" or "Hedging" and plenty more.....just let your fingers do the talking....

and hope this helps.....

Breeze
  • #1,258
  • Jan 27, 2008 12:03pm Jan 27, 2008 12:03pm
You guys are amazing! I really appreciate all of your help!
Let me see if I am understanding you correctly: Hypothetically:
I short the GBP/JPY at 209.00 x 10 lots
(S.L. at 210.00 -possible <100>)
(Limit: 207.00 - possible = +200)
Moves against me- 50 pips new price:210.50
Entry order: Buy@ 210.50 x 20 lots
*(move original SL to 209.50= <-100> x 20 lots or <200> but since my trade is now up 50 pips from original order, and I've doubled # of lots, I'm at BE and I dump my original short order .....or do I move original stop to BE and beyond, as I continue to climb?)
(same limit: 212.00 - possible +150 x 20 lots =+300)


Is this right? (This is very confusing). Especially when you consider, that somewhere within this action, it could reverse on you again, and pursue your original short order. Which begs the question....should you leave all of your original stops in place?
ppm
  • #1,259
  • Jan 27, 2008 4:46pm Jan 27, 2008 4:46pm
short @

209.10...............active
209.35...............active
208.50 X 10........active
208.10 X 10........active
209.22 X 10........active
213.00 X 3.........active.....set a protective stop @ 212.00....Profits booked
  • #1,260
  • Jan 27, 2008 5:16pm Jan 27, 2008 5:16pm
Quoting perPIPtual Motion
You guys are amazing! I really appreciate all of your help!
Let me see if I am understanding you correctly: Hypothetically:
I short the GBP/JPY at 209.00 x 10 lots
(S.L. at 210.00 -possible <100>)
(Limit: 207.00 - possible = +200)
Moves against me- 50 pips new price:210.50
Entry order: Buy@ 210.50 x 20 lots
*(move original SL to 209.50= <-100> x 20 lots or <200> but since my trade is now up 50 pips from original order, and I've doubled # of lots, I'm at BE and I dump my original short order .....or do I move original stop to BE and beyond, as I continue to climb?)
(same limit: 212.00 - possible +150 x 20 lots =+300)


Is this right? (This is very confusing). Especially when you consider, that somewhere within this action, it could reverse on you again, and pursue your original short order. Which begs the question....should you leave all of your original stops in place?
ppm
Let me take a stab at this...

If you are looking to hedge, then you are probably trying to avoid using stop losses at all, like Breeze. You protect your trade with the hedge instead of a stop loss.

In your example above, you would open the hedge with the same number of lots you opened the original trade. For an initial sell order:

Sell @209.00 x 10 lots

If you want to hedge after 50 pips of loss, then you would open an opposing trade of:

Buy @209.50 x 10 lots.

You've now frozen your loss at -50 pips no matter which way the price goes. If the price continues up, then your hedge trade will show a profit and the original trade will show a bigger loss, but the combination of the two will always be -50 pips.

The art of hedging is knowing when to release either trade in order to make some profit and hopefully increase your usable margin.

Hedging is very tricky and I would suggest trying it out for a long time on demo before trying it live. There are some peculiarities about hedge trades that most people don't consider. It's easy to get into a "hedge trap" as I call it. I know first hand as I was in the trap for months after the August drop and I'm still fighting with this latest drop in G/J.

Usable margin is the key to keeping from a margin call. Your account can have $1,000,000 in it, but if your usable margin gets too low you will be margin called.

Keep in mind that while a trade is hedged, your usable margin will not increase, but will probably decrease as days go on. Daily premiums will drop your usable margin every day. Opening a hedge trade in itself knocks the spread out of your usable margin and you won't get it back. Figure that one lot of G/J at a 9 pip spread is about $81 out of your usable margin every time you open a hedge. If you are constantly opening and closing hedges, you will eventually bleed away your usable margin.

Even if one of your hedge trades is showing a $10,000 profit, closing that trade will make no change to your usable margin. Your cash balance will increase, but your usable margin stays the same.

Also, if your account is in USD, be aware that if USD/JPY goes down, so does your usable margin figure due to the conversion of the losses in your account to USD.

So, if you've got plenty of margin, hedging can be profitable if you know what you are doing, but if you are hedging to protect your account because your margin is getting low, be very careful.

MARGIN IS KING in this business.

Bruce
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