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How do you get out of your Hedge trade?

  • #41
  • Edited 4:16am Jul 14, 2008 3:52am | Edited 4:16am
Why all this flaming nonsense?
After all, what matters is not what is the right way or wrong way to trade, only the profitable way. If one is comfortable with hedging and makes consistent profits, why not use it? If you cannot use chopsticks, would you call one third of the world population who has adopted them stupid? If you don't know how to drive, would you rather learn how to do it properly or dismiss it as too dangerous, which could get you killed in an accident?

Peace.
  • #42
  • Jul 14, 2008 4:13am Jul 14, 2008 4:13am
Quoting robertsonakp
...

WELL I DO HOPE I MADE A LITTLE SENSE HERE.
No offense, but I don't get it. In your example, if you just opened the third trade like you said on the bounce back from the border area of the range you would've ended up with the same profit, or in fact just a bit higher because you wouldn't pay the extra spread for the hedge part that went against you. Not to mention the psychological aspect of it - if you already entered the hedge trades I believe it makes sense that you'll be more involved and feel more compelled to close the hedge and open your extra position = open a single larger position + pay extra spread, and I believe that in forex something that makes you more willing to take a trade but has nothing to do with the market is probably not a good thing.

Anyway just my take on it and either way - Good luck
On the path to Enrichment.
  • #43
  • Jul 14, 2008 4:34am Jul 14, 2008 4:34am
Quoting pqt
Why all this flaming nonsense?
After all, what matters is not what is the right way or wrong way to trade, only the profitable way. If one is comfortable with hedging and makes consistent profits, why not use it? If you cannot use chopsticks, would you call one third of the world population who has adopted it stupid?

Peace.
If you can provide one mathematical reason for hedging then surely all the flaming will stop. It's OK to hedge if you need to do it because of the psychological aspect IMO, but it'd be better to deal with these emotions head on rather than attempt to bypass them. There is no shame in that, we are all flawed and susceptible to be fooled by our emotions.

I went through this debate with a couple of trading buddies who left MBT because it did not 'allow' them to hedge - it showed the net position so if you had 2 lots long and 1 short on GU it would show 1 lot long, not two separate positions - to which I testified was exactly the same as any other broker. They spoke of 'realised profits' but they couldn't argue with the sums. Every reasoning they gave boiled came down to either being married to their positions, not being able to close losing positions, having no clear analysis in the market and not following their own analysis.

Perhaps someone here could do a better job describing the attraction in 'hedging' and I will consider it with an open mind.
  • #44
  • Edited 5:18am Jul 14, 2008 5:08am | Edited 5:18am
This has been discussed ad nauseum. The logic behind this form of "hedging" is flawed. In fact, there is no logic behind it at all. By using it you will either decrease your profits or increase your losses. This is a mathematical fact.

No one is saying you can't make money using "hedging". You can. It's just that you will necessarily make less if you "hedge". Simple as that.

Take a minute to think about why all the experienced traders here are advising against it, and why all the novice traders are for it. If you know this market, you will know that every single pip matters, and if you're throwing away pips by hedging, you are diminishing your edge. It's hard enough to find an edge as it is - don't throw it away needlessly by unnecessarily increasing your transaction costs. Every time you "hedge" you donate a little bit of your money to your broker. This is an indisputable fact. Your broker is not a charity and does not need your donations. If you don't understand why this is the case, stop trading immediately and follow merlin's advice: read the Trading Room thread on the subject: http://www.forexfactory.com/showthread.php?t=68598
  • #45
  • Jul 14, 2008 6:12am Jul 14, 2008 6:12am
Quoting fierceman
This has been discussed ad nauseum. The logic behind this form of "hedging" is flawed. In fact, there is no logic behind it at all. By using it you will either decrease your profits or increase your losses. This is a mathematical fact.

No one is saying you can't make money using "hedging". You can. It's just that you will necessarily make less if you "hedge". Simple as that.

Take a minute to think about why all the experienced traders here are advising against it, and why all the novice traders are for it. If you know this market, you will know that every single pip matters, and if you're throwing away pips by hedging, you are diminishing your edge. It's hard enough to find an edge as it is - don't throw it away needlessly by unnecessarily increasing your transaction costs. Every time you "hedge" you donate a little bit of your money to your broker. This is an indisputable fact. Your broker is not a charity and does not need your donations. If you don't understand why this is the case, stop trading immediately and follow merlin's advice: read the Trading Room thread on the subject: http://www.forexfactory.com/showthread.php?t=68598
You have perfectly valid arguments.

However my point is still FX "trading" is not brain surgery. There is no "right" way or "wrong" way to do it as long as it is profitable. If I can be consistently profitable without having to trade the "greedy" way (which is what you seem to implicate by going after every pip and crumb), I am perfectly happy with it. My aim is not to become a millionaire, just be comfortable with what I do for a living.
  • #46
  • Jul 14, 2008 6:35am Jul 14, 2008 6:35am
Quoting pqt
You have perfectly valid arguments.

However my point is still FX "trading" is not brain surgery. There is no "right" way or "wrong" way to do it as long as it is profitable. If I can be consistently profitable without having to trade the "greedy" way (which is what you seem to implicate by going after every pip and crumb), I am perfectly happy with it. My aim is not to become a millionaire, just be comfortable with what I do for a living.
That is utter nonsense. Not seeking to maximise profits (as you call it the greedy way, I prefer rational myself) in trading is absurd.

If someone gave you a choice of whether you'd like $100 or $200 which would you choose? Only an idiot would opt for less when they could have more wouldn't they assuming there was no law of negative returns?
  • #47
  • Jul 14, 2008 6:41am Jul 14, 2008 6:41am
Quoting pqt
You have perfectly valid arguments.

However my point is still FX "trading" is not brain surgery. There is no "right" way or "wrong" way to do it as long as it is profitable. If I can be consistently profitable without having to trade the "greedy" way (which is what you seem to implicate by going after every pip and crumb), I am perfectly happy with it. My aim is not to become a millionaire, just be comfortable with what I do for a living.
I understand, however, if you treat this as a business, which you should, then the whole idea is maximizing your profits. There is really no good reason to hedge, and there is certainly one good reason not to: it saves you money. If you really insist on giving away your money, then there are many better and more deserving organizations that you can donate to rather than your broker's pocket. It's not greed, it's just sound business practice. Don't incur unnecessary expenses.
  • #48
  • Jul 14, 2008 6:41am Jul 14, 2008 6:41am
I'm obviously an idiot then but I can live with that as I'm a consistently profitable idiot.

Kind Regards
Steve
Quoting birdt
That is utter nonsense. Not seeking to maximise profits (as you call it the greedy way, I prefer rational myself) in trading is absurd.

If someone gave you a choice of whether you'd like $100 or $200 which would you choose? Only an idiot would opt for less when they could have more wouldn't they assuming there was no law of negative returns?
  • #49
  • Jul 14, 2008 6:59am Jul 14, 2008 6:59am
lol...what has become of this thread that started with an innocent question from a trader.

Quoting steviet
I'm obviously an idiot then but I can live with that as I'm a consistently profitable idiot.

Kind Regards
Steve
Steviet, I do not question your trading abilities, but I think that you know too that the results you achieve can be achieved without hedging as well with the same analysis that you do to determine near term market direction. I have followed your journal in the past and I understand that it may be more convenient for you to just place new orders every time with set TP and Sl instead of closing previous orders and reversing positions. But the fact is that hedging as a technique per se has no advantage as far as determining profits is concerned.

There are some people in other threads as well in this thread that think hedging itself is a technique/trick and an edge. Some think that hedging makes them money without worrying about which way the market goes which is not true. The only thing that can make money is the analysis and speculation about market direction.
In the end...to each its own.
  • #50
  • Jul 14, 2008 7:23am Jul 14, 2008 7:23am
Quoting birdt
That is utter nonsense. Not seeking to maximise profits (as you call it the greedy way, I prefer rational myself) in trading is absurd.

If someone gave you a choice of whether you'd like $100 or $200 which would you choose? Only an idiot would opt for less when they could have more wouldn't they assuming there was no law of negative returns?
So you think if you're driving a Mercedes, I should be driving one too?
Not really, I would be perfectly happy with a Honda Civic
  • #51
  • Jul 14, 2008 8:11am Jul 14, 2008 8:11am
Quoting pqt
So you think if you're driving a Mercedes, I should be driving one too?
Not really, I would be perfectly happy with a Honda Civic
That's not the point... You can make a lot of money and still opt for the Civic and give all your excess money to Greenpeace instead of your broker. That has been my point all along and yet it seems to be getting ignored.

steviet, I've seen your comments before about this, and the fact that you are successful is great, I am truly happy for you. BUT, and there is a but, is it so hard to apply simple logic and take away even more from the market than what you are already taking now?
  • #52
  • Jul 14, 2008 9:24am Jul 14, 2008 9:24am
Quoting fierceman
That's not the point... You can make a lot of money and still opt for the Civic and give all your excess money to Greenpeace instead of your broker. That has been my point all along and yet it seems to be getting ignored.
Oh ,I get your point perfectly.
But while I say I'm no Scrooge, I NEVER said I'M A PHILANTHROPIST EITHER.
Just to each his own, is it so hard for you to understand?
  • #53
  • Jul 14, 2008 10:20am Jul 14, 2008 10:20am
No one is saying you can't make money using "hedging". You can. It's just that you will necessarily make less if you "hedge". Simple as that.


When u used a system that gave u less profit and use another system which perhaps is placing a normal trade and u ended in losses cos ur direction was wrong, WHICH IS BETHER ?

I guess people are not comprehending my english here, all i am saying is dat hedging in a tactical way in such a case has given me netprofit many at times. So whats d big deal ? is my main aim of trading not making profits? , no matter how big or smaall it is ?
know thy edge and abide by it ! 4 in it shall thou be successful !
  • #54
  • Jul 14, 2008 10:48am Jul 14, 2008 10:48am
Quoting robertsonakp
hedging in a tactical way in such a case has given me netprofit many at times.
That's just plain wrong. Please understand that when you hedge, you HAVE NO NET POSITION IN THE MARKET, and yet you are paying spread. It's exactly the same as exiting your position, except that you pay for it. It is basically a scam by your broker in order to increase your transaction costs and make you feel like you are doing something useful.

If you think that hedging has in any way helped you I urge you to go back over those trades and look at your NET POSITION and look at your transaction costs. You will see that you could have made the same money without hedging, plus you would have saved yourself an extra spread payment.
  • #55
  • Jul 14, 2008 11:01am Jul 14, 2008 11:01am
I just knew that this is going to happen with this topic.
I hedge and i make money. For those who cannot see the benefit and who are not willing to try it , so be it. Will you at least try to respect us traders who know how to hedge and make constant profits.
The only way to hedge is not by going long and short at the same time. We hedge in accordance with our trading style and plan. One day when i had enough about this anti hedging attitude in this forum i might just post my statement to proof my point......
For those desperate anti hedgers i will not post my statement today....lol!

Hedge is my edge!
Never Ever Give Up!
  • #56
  • Jul 14, 2008 11:17am Jul 14, 2008 11:17am
Quoting fierceman
That's just plain wrong. Please understand that when you hedge, you HAVE NO NET POSITION IN THE MARKET, and yet you are paying spread. It's exactly the same as exiting your position, except that you pay for it. It is basically a scam by your broker in order to increase your transaction costs and make you feel like you are doing something useful.

If you think that hedging has in any way helped you I urge you to go back over those trades and look at your NET POSITION and look at your transaction costs. You will see that you could have made the same money without hedging, plus you would have saved yourself an extra spread payment.

did u bother to read my post on page 3 at all ? i said
i went both long and short at 1.9703 and 1.9700 respectively closed the long at 1.9960 total pips = + 257 leaving the intial short and immediately placed a sell at 1.9960, closed the two sell left at 1.9860, giving -160 and + 100 pips respectively.
257 - 160 + 100 = +197 pips net profit ,i made a net profit of 197 pips all from hedging , did u made dat number of pips dat day? or how do u mean to me from dis by not having a net position ? if i am making 197 pips from a tactical hedged method, i'm i not better than those traders whose account plummeted ? or is there no sense in what i dd ?paying spread or no paying spread is not my business so far i made profit. at least it means i am not GREEDY for paying spread, which is one of the good characters of good traders.
know thy edge and abide by it ! 4 in it shall thou be successful !
  • #57
  • Jul 14, 2008 11:17am Jul 14, 2008 11:17am
Quoting Cobra
I just knew that this is going to happen with this topic.
I hedge and i make money. For those who cannot see the benefit and who are not willing to try it , so be it. Will you at least try to respect us traders who know how to hedge and make constant profits.
The only way to hedge is not by going long and short at the same time. We hedge in accordance with our trading style and plan. One day when i had enough about this anti hedging attitude in this forum i might just post my statement to proof my point......
For those desperate anti hedgers i will not post my statement today....lol!

Hedge is my edge!
Once again: I NEVER SAID THAT YOU CAN'T MAKE MONEY HEDGING. I said:
Quoting fierceman
you will necessarily make less if you "hedge".
I am really not sure how much more clearly I can spell it out. Cobra, I am glad you are making money, but if you want to make more, stop hedging.
  • #58
  • Jul 14, 2008 11:25am Jul 14, 2008 11:25am
Quoting Cobra
I just knew that this is going to happen with this topic.
I hedge and i make money. For those who cannot see the benefit and who are not willing to try it , so be it. Will you at least try to respect us traders who know how to hedge and make constant profits.
The only way to hedge is not by going long and short at the same time. We hedge in accordance with our trading style and plan. One day when i had enough about this anti hedging attitude in this forum i might just post my statement to proof my point......
For those desperate anti hedgers i will not post my statement today....lol!

Hedge is my edge!
dont mind them, i advice dem to just improve their IQ on this subject matter, try to see a sense in it, try to see tactical approaches that can be made to it AND NOT KILLING THIS WHOLE IDEA ! INFACT IF THEY CAN DO, AT LEAST DEY WILL BE LIKE US SUCCESSFUL TRADERS !
know thy edge and abide by it ! 4 in it shall thou be successful !
  • #59
  • Jul 14, 2008 11:29am Jul 14, 2008 11:29am
Quoting robertsonakp
did u bother to read my post on page 3 at all ? i said
i went both long and short at 1.9703 and 1.9700 respectively closed the long at 1.9960 total pips = + 257 leaving the intial short and immediately placed a sell at 1.9960, closed the two sell left at 1.9860, giving -160 and + 100 pips respectively.
257 - 160 + 100 = +197 pips net profit ,i made a net profit of 197 pips all from hedging , did u made dat number of pips dat day? or how do u mean to me from dis by not having a net position ? if i am making 197 pips from a tactical hedged method, i'm i not better than those traders whose account plummeted ? or is there no sense in what i dd ?paying spread or no paying spread is not my business so far i made profit. at least it means i am not GREEDY for paying spread, which is one of the good characters of good traders.
So all in all you could've avoided waisting your time and entering when you weren't sure anough of the direction at 1.97, only enter when you were sure anough - a double short at 1.9960 and make 100*2=200 pips which is of course minus the spread of that enitial long. But of course if you're cool with the extra work, time and spread payment then cool.
On the path to Enrichment.
  • #60
  • Jul 14, 2008 12:07pm Jul 14, 2008 12:07pm
Quoting fierceman
Once again: I NEVER SAID THAT YOU CAN'T MAKE MONEY HEDGING. I said:

I am really not sure how much more clearly I can spell it out. Cobra, I am glad you are making money, but if you want to make more, stop hedging.
Fierceman

Thx for your advice. Problem is i am addicted to hedging and the money that goes with it!
Never Ever Give Up!
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