Hedging the Retrace | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Pippo: A Murrey Maths Retrace EA 188 replies

retrace/breakout system 17 replies

Martingale Trading In Fibonacci Retrace With EA or Manual 2 replies

Midnight Retrace Journal 5 replies

Max movement without retrace 0 replies

Hedging the Retrace

  • #1
  • First Post: May 14, 2008 10:06pm May 14, 2008 10:06pm
Ok, so i'm getting more trades right than wrong at the moment but I am noticing that often the retrace is getting close to my stop. Quite often on GU I am finding myself -25 pips before it goes positive (more so with GJ and GC.)

So, with that in mind, is there any benefit to placing orders in both directions at the same point? As an example if we have a 40 pip take profit and a 40 pip stop loss and we aim to make 20 pips from the hedge we have three possibilities:

1) Trade goes wrong, we lose 40 pips on the main trade but gain 20 pips on the hedge so -20.

2) Trade goes immediately right we lose 20 pips on the hedge then but gain 40 pips on the main trade so +20.

3) Trades goes wrong then right we gain 20 on the hedge and 40 on the main trade.

(I don't have a fixed take profit but often get to 40 or more hence the example.)

I think I'm missing something glaringly obvious but any advice / opinions appreciated.

Ta

Max
Gravity goes both ways in forex...
  • #2
  • May 14, 2008 10:09pm May 14, 2008 10:09pm
Do you hold trades for a day, week, 2 weeks?
  • #3
  • May 14, 2008 10:14pm May 14, 2008 10:14pm
Anyway , why don't you just want for a retrace , and enter then. Even if it means missing a trade. The most important skill to learn in forex is patience.
  • #4
  • May 14, 2008 10:38pm May 14, 2008 10:38pm
Most of my trades last for a few hours. I could just wait for the retrace but i haven't got the hang of that yet. I would have missed some good moves through doing so, after all it is often the faster moves that give the bigger gains.

thanks
Max
Gravity goes both ways in forex...
  • #5
  • May 14, 2008 10:49pm May 14, 2008 10:49pm
Quoting max pips
Most of my trades last for a few hours. I could just wait for the retrace but i haven't got the hang of that yet. I would have missed some good moves through doing so, after all it is often the faster moves that give the bigger gains.

thanks
Max
Well, then you can get in to a trade, then set SL to BE after 20 pips or so of profit, but the biggest gains are the trades you sit on for 1-2 weeks, and get 1000 pips, and just move S/L to comfortable level of profit. Better to have 1 good trade a week /month than, 5 good trades , and 5 bad trades.
  • #6
  • May 14, 2008 11:07pm May 14, 2008 11:07pm
Quoting Clouds
Well, then you can get in to a trade, then set SL to BE after 20 pips or so of profit, but the biggest gains are the trades you sit on for 1-2 weeks, and get 1000 pips, and just move S/L to comfortable level of profit. Better to have 1 good trade a week /month than, 5 good trades , and 5 bad trades.
Definitely true and those are the trades that I would love but I like to have a couple of different methods on the go at once, especially while I am building up my confidence.

For the above example, assume that all three options happen equally, that is stopped out -40, gain +40, retrace and gain +40, with a hedge method we get -20, +20, +60 pips so +60 pips, whereas with the non hedge method we get -40, +40, +40 so plus 40 pips overall.

Any more thoughts

Max
Gravity goes both ways in forex...
  • #7
  • May 14, 2008 11:11pm May 14, 2008 11:11pm
Quoting max pips
Definitely true and those are the trades that I would love but I like to have a couple of different methods on the go at once, especially while I am building up my confidence.

For the above example, assume that all three options happen equally, that is stopped out -40, gain +40, retrace and gain +40, with a hedge method we get -20, +20, +60 pips so +60 pips, whereas with the non hedge method we get -40, +40, +40 so plus 40 pips overall.

Any more thoughts

Max
My advice is don't hedge, Don't give away any pips. Keep them all. Do not lose pips, Ever. Reflect on the trade before entering, make sure it's right, then keep the pips with SL..
  • #8
  • May 14, 2008 11:16pm May 14, 2008 11:16pm
Not saying you won't ever lose pips, but that is your most important thing to keep safe. Dont worry about profit, just worry about loss. Place trade when time is right, set SL, then as it goes in your favor move SL to break even. Anyway, I dont hedge , but you can ask someone else that does.
  • #9
  • Last Post: May 14, 2008 11:20pm May 14, 2008 11:20pm
Hedging is a good way to limit your losses, but perfect way to eat away all your profits, if you can't identify the level to close your hedge.
0 traders viewing now