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Proposal to phase out Hedging

  • #121
  • May 7, 2009 4:44pm May 7, 2009 4:44pm
Good points, hanover. Your math is correct, too. I know that. As I said before, I hedge only for simplicity. As a programmer, you know it is much easier to base decisions on an open trades table than to keep track of closed trades. You can ignore history at all. I don't mind about individual trades. I look at a sequence of them. I have near 90% small profits against 10% losses (individually larger, of course). The general outcome of the sequence (I call it a "cycle") is positive. As an immediate step, I am opening a new account with a broker that still allows hedging. But I will work on ajusting my procedures to a non hedging environment. How many will follow NFA? I don't know and I don't want to fall victim of rigidity. Regards.
  • #122
  • May 7, 2009 5:27pm May 7, 2009 5:27pm
Quote
Rabid, I don't disagree with the second part of your post (about authority and regulation). IMO you make some very valid points. However, I don't wish to join in the debate (earlier in this thread) about conspiracy theories, or speculate as to what the NFA's current or future motives might be.

Conspiracy theories and speculation aside, this new "rule" carries the rationale of protecting new traders against themselves. An impossible challenge.

Quote
Re the spread and swap: My experience is the same as Merlin's (here), i.e. that brokers tend to charge more swap than they pay out, hence the trader saves money by being out of the market altogether, as opposed to being net flat with offsetting positions.

I've seen brokers that do that, but I've also had brokers that don't. I'm not sure we can say "swap is cheaper" when it may or may not be. We can say "In some cases swap may be cheaper."

Quote
In the linked post, there's a simple example as to how hedging can be easily replicated (and also here), and (in Merlin's post) how being hedged can result in additional spreads. To summarize, the trader can never be better off, cost-wise, by being hedged; and there will be situations where he is worse off.

There are cases where the trader can be better off cost-wise if they hedge. Take for instance a position with increasing lot sizes, but where the offset non-hedged version straddles the tier of a commission structure. Those situations are rare, but possible.

While in some situations hedging can be easily replicated, there are cases where it can't be. Multiple timeframes make a mess of things in a hurry, requiring you to take long term positions based on the close of a short term pattern.

Quote
IMO these views are a total illusion. Everything else being equal, price has an approximately equal probability of rising or falling at any given point.

Nod. More or less. As I've said before, hedging does not provide a retail edge, nor does it eliminate one. Altho technically speaking price almost always will return back in FX, it may take 50 years to do so and a margin call is almost certain in the process.

The thing about "hedging" in that sense, most people base their lot sizes on their growing equity. Since only winning trades are closed, equity can grow and new trades pay for older trades. The problem isn't when price doesn't return, it's when price consolidates in a narrowing range. You end up with losing trades at the tops and bottoms of the range and no growing equity to pay for the new trades. Eventually you get a margin call and the losers become losers. That's why it's wise to treat your floating losses as actual losses, since FX is inherently mark-to-market anyway.

Quote
Hence, on this basis, I see absolutely no benefit, at least $$$-wise, in being hedged (in the same pair). One is simply incurring unncessary costs, for the privilege of convenience.

I don't disagree with that at all. But there's a lot of other cases where that's true in forex, too. The entire set of retail brokers falls into that category, with spreads that are multiples of ECN spreads. People pay for convenience all the time, even in trading... heck, especially in trading.

But the NFA doesn't regulate that. Nor do they attempt to regulate the millions of horribly unprofitably strategies "taught" every day. Hedging is a largely unprofitable strategy, and one that merely adds convenience. Fine. Why single that one out amongst all the others?

It's one thing to say "hedging by itself isn't profitable" and another to say "hedging should be banned."
  • #123
  • May 7, 2009 11:46pm May 7, 2009 11:46pm
Quoting Rabid
I'm not sure we can say "swap is cheaper" when it may or may not be. We can say "In some cases swap may be cheaper."
It will always be cheaper, brokers will never pay equal swap for long and short even if there is no interest rate differential.

Quoting Rabid
The thing about "hedging" in that sense, most people base their lot sizes on their growing equity. Since only winning trades are closed, equity can grow and new trades pay for older trades.
And I think that is where some of the problem lies. As Hanover said it's an illusion, what they should be basing their lot sizes on is Net Asset Value, that is a true representation of the state of their account. I think a lot of this is psychological, some traders only look at account balance and for some reason disregard unrealized loss perhaps because it's too painful, as long as the account is growing then everything must be going well, right? Isn't this how the current financial crisis started, ignoring mounting losses and debt until finally the debt outweighed the credit? I think forex should be mark to market, that way the bottom line is absolutely clear, no illusion. If financial institutions had used mark to market we wouldn't be in the situation we're in now and that is what a lot of people are calling for going forward.


Quoting Rabid
But the NFA doesn't regulate that. Nor do they attempt to regulate the millions of horribly unprofitably strategies "taught" every day. Hedging is a largely unprofitable strategy, and one that merely adds convenience. Fine. Why single that one out amongst all the others?
Perhaps because NFA regulate brokers and not traders. Up until now brokers have offered something which they openly admit has no financial benefit for traders but which does produce a revenue stream for brokers. Understandibly NFA saw that as unfair so it seems like a logical step to ban it.
  • #124
  • May 8, 2009 12:46am May 8, 2009 12:46am
Quote
I think forex should be mark to market, that way the bottom line is absolutely clear, no illusion.
It is. Which is why people that rely on floating losses could find themselves hosed at any moment. Altho many financial institutions are actually in trouble because of MtM.

Quote
Perhaps because NFA regulate brokers and not traders. Up until now brokers have offered something which they openly admit has no financial benefit for traders but which does produce a revenue stream for brokers. Understandibly NFA saw that as unfair so it seems like a logical step to ban it.
That doesn't really explain it. I mean there's 2 sides to every strategy, even unprofitable ones. Does the NFA ban everything that's unfair? Of course not. And since when was it the NFA's job to be the judges of fairness, anyway? Trading, itself, is rarely fair. Large orders can run the market. We don't see large orders getting banned.

It's just picking and choosing on the part of the NFA. Pick some random thing, make up a reason, ban it. But of course they don't prevent brokers from allowing you to run multiple accounts, or require the same kind of balancing rules applies to all accounts, so lo and behold... it's a mostly useless rule.

I'm not a fan of useless cruft. "Hedging" (in this sense) may be a largely "for convenience" thing, and provides no native edge, but it's only one of a gazillion such things. I have a natural aversion expansive legislation. So yes, if I were to speculate, I'd certainly suspect nefarious plans.
  • #125
  • Edited 1:59am May 8, 2009 1:13am | Edited 1:59am
Quoting pipmutt

Perhaps because NFA regulate brokers and not traders..
Yeah , you said it, LOL, so they should have done something about complainings regarding brokers,like slippage , requotes, forums are full of them, pipmutt-logic, and not a rule for traders .

Quote
Up until now brokers have offered something which they openly admit has no financial benefit for traders

..not profitable for traders....
What an aberation !!! Where did you came up with that pipnutt ?
Why then , there are traders , that use hedging , pipnutt-logic ?

Not profitable for you pipnutt,
You don't hedge that simple like you described it
there are hedging strategies , if you hedge like smittens is, you surely lose .

And please give me brake about the rule is a protection against ourself, we all know from forums , trading might be 95 % a loss, and only for 5 % profitable, we all read the disclaimer "forex might indure big losses " , we all know we shouln't jump into trading without demoing for a year at least, we all know you don't jump with a 10,000$ deposit from beginning.

Told you, why not also a rule YOU are not allowed to drink, you might get drunk and instead to insert a buy , you insert a sell and screw your account , we are adults we know forex is very risky ,
we don't needded a protection against a lousy 3 pips spread ( remember, is a hedge ),

So a not drinking rule is necesary , you know , many adults drink , you know it better , so there is absolutely necessasry this new rule for you , you might screw your account

Why not a rule against requotes , artificial spikes,stop hunting , slippage, artificial dissconnections , forums are full of complains like that, invalid prices...oh boy , lots off errors ,
... big delay for in orders execution when an account begins to win..........
the forums is full of complains against brokers, that's a fact pip-logic.

- oh, i even saw posts about metatrader plug-ins which can screw a trader so good, ( preset delays in order execution settings , ie ), i hope those are fake though.

So , THERE was needed protection, OPEn your eyes,pip-logic.
..Or enjoy the "invalid prices" errors when you try enter an order and gets filled after 2 minutes without any news reason..

We don't needded a protection against a lousy 3 pips spread ( remember, is a hedge ), the protection shoud have been against brokers, pip-logic,I knew NFA is regulating brokers , not traders, remember ??..pip-logic

Regulation IS necessary, so NFA is necesary,otherwise brokers run away with traders money, i always searched for a broker regulated by NFA, now i'm not so sure anymore,what about all those complains regarding slippage...etc.. , but in this case , the rule is against traders , NFA is a regulatory agency for brokers , remember ?

Many pips to you , pip-logic
  • #126
  • May 8, 2009 1:15am May 8, 2009 1:15am
Quoting Rabid
Does the NFA ban everything that's unfair? Of course not. And since when was it the NFA's job to be the judges of fairness, anyway? Trading, itself, is rarely fair. Large orders can run the market. We don't see large orders getting banned.
Well no, that's the way the market operates, it's the nature of the game and a legitimate tactic of it's players. NFA are fighting the battles they can win, would you rather they left brokers to do what they like? Who else is going to referee the game if not NFA? We're the underdogs, we need all the help we can get to make this a more level playing field. NFA may be a poor ally but they're all we've got unfortunately, better than nothing though.

Quoting Rabid
It's just picking and choosing on the part of the NFA. Pick some random thing, make up a reason, ban it. But of course they don't prevent brokers from allowing you to run multiple accounts, or require the same kind of balancing rules applies to all accounts, so lo and behold... it's a mostly useless rule.
Rules are made to be broken or at least bent, but without any rules we're at the total mercy of the broker. NFA are flexing their regulatory muscles and making their presence felt, I think it's overdue. How about the part (a), good rule? Ok so maybe we have to take them as a package, part (b) might be a pain to some people but that's amply compensated for by the benefits of part (a). Maybe if I hedged in this way I'd be protesting as well, as it is I don't so I'm probably guilty of 'I'm alright Jack'!
  • #127
  • May 8, 2009 2:01am May 8, 2009 2:01am
Thanks to those who took the time to read, and reply to, my post(s) (Jairo, Rabid, Pipmutt). This is just to let you know that I've read your responses. I have no issues with the points that you've made.
  • #128
  • May 8, 2009 2:26am May 8, 2009 2:26am
Quoting Redox77
pipnutt ?
pipnutt-logic ?
Where did you came up with that pipnutt ?
why not also a rule YOU are not allowed to drink, you might get drunk and instead to insert a buy , you insert a sell and screw your account
many adults drink , you know it better
that's a fact pip-logic.
OPEn your eyes,pip-logic.
pip-logic
remember ??..pip-logic
Many pips to you , pip-logic
Redox77, you've obviously got an opinion and points to make which are no less valid than anyone else's but all the nonsense above detracts from the message you're trying to get across.

Just my 2c, take it or leave it, just don't hold your breath waiting for me to reply to posts like that any more!
  • #129
  • May 8, 2009 2:34am May 8, 2009 2:34am
Quoting hanover
You guys need to think outside the box! There's an easy way to replicate hedging (in the same pair) by only ever being EITHER long OR short. You'll make exactly the same number of pips, and end up paying less swap, and - in certain situations - less spread.

It's guaranteed to work in all situations where 2 + 2 = 4.

And it's so simple that a 12 year old with a decent grasp of math could understand it.

The NFA ruling can be easily gotten around, without having to change your broker, or even open a second account. All it requires is a slight...
Hi Hanover,

of course your math is correct, but most of us are overseeing a very important advantage of hedging (at least for me): You can expand the use of you margin below the well known 100%. Ok someone may say that is very unwise to do, because it is a protection to our own safety.

But let me give an example how to use it:
Why shouldn't we use an sepperate account (with the guaranted close if all Money is lost by th broker) in that way, that we put only the amount of money, that we want to risk in a trading session/per trade on that sub-account. Now we can trade without the risk to loose more money as our risk management model tells us and the broker is keeping care of this limit. Of course all profits are withdrawn at the end of the daily trading session and will start with a fresh new account at the next day.

If you do so you of course will try to squeeze as much out of your funded money in that specific account, to expand your return as much as possible.

And finally to come back to the topic, therefore I'm using the hedging facility heaviliy .... (as a tool "against" the broker ;-))

Just my 0.02 EUR
  • #130
  • May 8, 2009 5:30am May 8, 2009 5:30am
Quoting MaMood
Hi Hanover,

of course your math is correct, but most of us are overseeing a very important advantage of hedging (at least for me): You can expand the use of you margin below the well known 100%. Ok someone may say that is very unwise to do, because it is a protection to our own safety.

But let me give an example how to use it:
Why shouldn't we use an sepperate account (with the guaranted close if all Money is lost by th broker) in that way, that we put only the amount of money, that we want to risk in a trading session/per trade on that...
Hi MaMood,

I'm sorry, I don't fully understand where you're coming from, with the margins and the sub-accounts. The way my broker operates, it makes no difference whether I'm flat hedged, or out of the market altogether; the available margin is equal to the net equity in the account(s) in both cases. But different brokers may operate differently, in this respect.

Margin is not an issue to me. If I get to the point where I'm using 10% of the available margin, then I'd be massively overleveraged, such is the conservative way in which I size my positions.

No matter how many accounts are used, and how any 'hedging' is applied, I still believe that it's possible to replicate the exact same P/L, pip for pip, without hedging, and in a single account. The equation will always be: to profit, you must be net long when price is rising, and net short when it's falling, regardless of what types of order, and accounts, you use. It ultimately comes down to how accurately you time adjustments to your positions, relative to the price movement. I can't see any way around that. But having said that, hedging/multiple accounts might well be a more convenient way to operate.

Anyway, if you've found a method that delivers profit on a consistent basis, then more power to you. Well done!

I'm just repeating what I've said in earlier posts, so I'll bow out of the discussion now.
  • #131
  • Edited 9:26am May 8, 2009 6:41am | Edited 9:26am
Don’t be fooled by these explanations trying to justify the unjustifiable!!! These forums are infested with slick writing fronts for the US brokers. For over 3 years Brokers have been rewording their army of IB’s, staff to actively participate them on all traders forum and blogs to propagate readers in their favor.

Read between the lines, why on earth would anyone without a hidden agenda put so much into trying to justify the unjustifiable. Read he topics that would most effect the brokers and you will see yourself
  • #132
  • Edited 7:52am May 8, 2009 6:56am | Edited 7:52am
Quoting pipmutt
Redox77, you've obviously got an opinion and points to make which are no less valid than anyone else's but all the nonsense above detracts from the message you're trying to get across.

Just my 2c, take it or leave it, just don't hold your breath waiting for me to reply to posts like that any more!
ahah , you obvious liked that , pip-nutt.
You started when you first replyed to me , so i just give you back , i know u like it, so take it buddy.

oh , please don't get drunk, NFA didn't yet proclaimed a rule against drinking and you might insert a BUY order instead of a SELL order, pip-nutt, take care you might screw your account , pipmutt.



You claim that :
Quote
The problem is some people don't have the experience to realize what is bad for them or not in their best interests

Any other order inserted in the market is MORE dangerous than hedging , simply because not beeing hedged it might go against you , so a rule against hedging is the last thing we needed protection for,pipmutt.


So NFA should have done a rule you are not alowed to insert ANY order in the market, because any other order, not beeing hedged, you lose it entirely if market doesn't go in the direction you want.

Don't you see, hole thing is ridiculous ??
obvious you don't , u r unrecovable pipmutt.

So that's why, if you need protection against hedging , more than against any other order inserted in the market, then
why not also a rule YOU are not allowed to drink, you might get drunk and instead to insert a buy , you insert a sell and screw your account , you know pipmutt,... if u drink there is waaaaaaaaaay more dangerous to screw ur account , than having a LOUSY 3 pips loss on GBP/USD hedged positions.


Like i said there are on forums lots of complains against slippage and requotes.
THERE was needed protection.

Besides NFA is supposed to regulate brokers FOR the traders, not traders.

Besides..again...those are my goddamm earned money if i want i just through them to the bin if i want so.
Besides , ...what help is that when someone restricts the options somebody elses has ?
and besides again..there are traders and not a few who are not happy about that, don't you think they win using hedging ?

so..you are waaaaay of of logic, pip-logic-man.

A hedge are 2 opposite orders which from can't lose but the spread ....BANG..pip-nutt.
But when you win , you win the hole range.

You better please go play backgammon with smittens which also keeps repeating

Quote
when you hedge , you are flat

Yeah due to the fact you both apply hedging like that , not having a strtegy , sure you both are...lol..flat, hedging is not like that and i'm not going to explain to you .
  • #133
  • Edited 12:31pm May 8, 2009 7:02am | Edited 12:31pm
Quoting MaMood
Hi Hanover,

of course your math is correct, but most of us are overseeing a very important advantage of hedging (at least for me): You can expand the use of you margin below the well known 100%. Ok someone may say that is very unwise to do, because it is a protection to our own safety.

But let me give an example how to use it:
Why shouldn't we use an sepperate account (with the guaranted close if all Money is lost by th broker) in that way, that we put only the amount of money, that we want to risk in a trading session/per trade on that sub-account....
Very well said.
Hedging in same pair is done by many traders more subtile ,like you do or anyway are many hedging strategies,
those people didn't passes the first grade , all math they know is 1-1 =0

Guess what( not you , there are some i talked with, ), market is waving and comes 70 % back,for otherrs 1-1 makes 1+ 1 = 2 forex because the short order -1 becomes a +1 when sold lower at -2.

many pips to all
  • #134
  • May 8, 2009 7:28am May 8, 2009 7:28am
Quoting Tom_C
Don’t be fooled by these explanations trying to justify the unjustifiable!!! These forums are infested with slick writing fronts for the US brokers. For over 3 years Brokers have been rewording their army of IB’s, staff to actively participate them on all traders forum and blogs to propagate the the readers in their favor.
Unfortunately, you are quite right. Some of these brokers have unleashed their army of spin doctors a long time ago. Some have many posts and vouches against their names
  • #135
  • May 8, 2009 1:46pm May 8, 2009 1:46pm
Quoting PipStar
Unfortunately, you are quite right. Some of these brokers have unleashed their army of spin doctors a long time ago. Some have many posts and vouches against their names
There are contributors to this (and other similar) threads with vouches and posts, who have explained their views on the benefits in hedging. And there are contributors with vouches and posts who see hedging the same way as I do: that it's an illusion. IMO both have contributed to a healthy discussion.

Which group do you see as being involved in the conspiracy? Do you have any real proof?
  • #136
  • Edited 3:22pm May 8, 2009 2:38pm | Edited 3:22pm
Quoting hanover
There are contributors to this (and other similar) threads with vouches and posts, who have explained their views on the benefits in hedging. And there are contributors with vouches and posts who see hedging the same way as I do: that it's an illusion. IMO both have contributed to a healthy discussion.

Which group do you see as being involved in the conspiracy? Do you have any real proof?
My opinion is everyone is free to express his opinion, both sides.
But my opinion , and course the truth is this

1- hedging if applied not corectly , might indure a only smal lousy 3 pip loss ( the spread ) , NOT 2 spreads, first was ALREADY losed in the first place.
2- hedging applied corectly in a more complex strategy is for sure profitable.Some want proof :

- I wont explained the strategy, it's not free , and it's not even for sale ,
that would be the tip of the aisberg, to give the rude ( and then they wonder why i'm responding to them the same ) non-believers ...for free , a million dollar strategy using hedging , it cost me huge, too, and is not for sale.

- I'm very sure also hedging IS profitable, sure one has to do it corectly, , as a proof IS ENOUGH the big number of unsatisfyed traders about this new rule, so beeing a considerable number of no happy traders about the new anti hedging rule, IT's OBVIOUS hedging works if applied corectly.

About what said Tom , it might be true , there are to many obvious things your side denies:

.


1 - what about the many forum complains against slippage and requotes.
THERE was needed protection.

2 - NFA is supposed to regulate brokers FOR the traders, not traders.

3 -It's my money , if i want i just through them to the bin if i want so, i don't need protection against a lousy 3 pip spread.

4 - What help is that when someone restricts the options somebody elses has ?
5 - there are traders and not a few who are not happy about this rule, don't you think at least some of them WIN using hedging ? so what , now screw these traders too ?


6- why not protection against any simple order inserted in the market ,
any simple order introduced in the market is evident is waaaaay MORE dangerous than 2 hedged orders , what can you say about that mister ?

7 - why not prohibit drinking, one might have an idea to go trade when is drunk, insert a big lot order by mistake , lets say a BUY instead of a SELL, ( his hands are shaking ) ,then falls asleep , and when he gets up his account is screwed....,
no joking here drinking is more dangerous than a lousy 3 pip loss on a hedged order.


That's why Tom said what he said in his post, there are obvious some points of the above , if not all, that can't be denied , but some continue to deny them.

And you know what ?
It doesn't even matter , if hedging is or not profitable
for reasons 2, 3 and 4.


Oh, till now i don't even thinked to choose a broker not regulated by NFA.
I still think , brokers MUST be regulated, it's a very good thing, otherwise they , for sure run with traders money,but, i think now I'm not so sure anymore.

Many pips Hanover
  • #137
  • May 8, 2009 3:29pm May 8, 2009 3:29pm
Quoting hanover
There are contributors to this (and other similar) threads with vouches and posts, who have explained their views on the benefits in hedging. And there are contributors with vouches and posts who see hedging the same way as I do: that it's an illusion. IMO both have contributed to a healthy discussion.

Which group do you see as being involved in the conspiracy? Do you have any real proof?

 I knew it!!! as always the conspiracy theory accusation comeback was going to enter this thread sooner or later.

Brokers / government/PR teams have long used the conspiracy theory, and alike on valid allegations as a tactic ( that has worked very well I may add) to try to convince readers/viewers the source is not to be taken seriously and crazy .

Just read the forums, When a broker, complete come up you get a bunch of “regular posters here discredit the accusations by discrediting the accusing party in r another then poof 75 % of the time the posts and accusing party vanish. I personally know some this had happed to, their IP is now blocked.



Quoting Tom_C
Don’t be fooled by these explanations trying to justify the unjustifiable!!! These forums are infested with slick writing fronts for the US brokers. For over 3 years Brokers have been rewording their army of IB’s, staff to actively participate them on all traders forum and blogs to propagate readers in their favor.

Read between the lines, why on earth would anyone without a hidden agenda put so much into trying to justify the unjustifiable. Read he topics that would most effect the brokers and you will see yourself...
  • #138
  • May 8, 2009 4:42pm May 8, 2009 4:42pm
Quoting Redox77
7 - why not prohibit drinking, one might have an idea to go trade when is drunk, insert a big lot order by mistake , lets say a BUY instead of a SELL, ( his hands are shaking ) ,then falls asleep , and when he gets up his account is screwed....,
no joking here drinking is more dangerous than a lousy 3 pip loss on a hedged order.
You're making the same tired old points over and over again. This is the third time in this thread that you've mentioned drinking. Anybody can use the copy/paste keys. Anyway, for whatever it's worth, I agree with you that it might have been more helpful to traders if the NFA dealt with some of the less 'superficial' issues.

But, in terms of the viability of hedging, you'll only make a believer out of me when you can disprove the logic in these posts:
http://www.forexfactory.com/showpost...&postcount=196
http://www.forexfactory.com/showpost...&postcount=295
http://www.forexfactory.com/showpost...&postcount=120

Otherwise, I'll continue to believe that hedging is an illusion, and a tool of convenience, in the way that I described in the third of these posts.

If you want to make a point about why a trading methodology does or doesn't work, then at least back it up with statistical evidence. Some people might enjoy speculation, but I'm willing to debate only facts.

If you're making the 9%-12% per day that you say, then I congratulate you. That's a fantastic result - considerably better than my own performance - and I don't blame you for not wanting to share your system.

As for the conspiracy theories, people will believe whatever they want to believe. More speculation, I'm afraid.
  • #139
  • Edited 5:12pm May 8, 2009 4:51pm | Edited 5:12pm
Quoting MaMood
Hi Hanover,

of course your math is correct, but most of us are overseeing a very important advantage of hedging (at least for me): You can expand the use of you margin below the well known 100%. Ok someone may say that is very unwise to do, because it is a protection to our own safety.

But let me give an example how to use it:
Why shouldn't we use an sepperate account (with the guaranted close if all Money is lost by th broker) in that way, that we put only the amount of money, that we want to risk in a trading session/per trade on that sub-account....
Hi MaMood,

Glad to see you here. I have changed my mind about using high leverage. The reason was the simplest possible: I didn't see an obvious mathematical flaw in my risk management and blew up my account today. I was up near 40% this week. I knew I was overleveraged but I decided to try just one more day. Today would be the last day IBFX would accept hedging. Fine. I counted on usual NFP volatility to gather some more profit. My system does well in high volatility. But two more levels against the strong persistent move produced by the release were enough. What I failed to see was: if a method is a consistent loser with limited losses (say 10%, 20%, whatever), tolerating more drawdown will not make it profitable. Simple and obvious. I shouldn't have risked anything if my tests showed that limiting risks turned my system a consistent loser. I should have concentrated on improving it first. I was caught by the black swan event. I am sharing my experience hoping to somehow contribute to reduce your risk of taking similar loss, as I know you like high leverage as much as I (maybe more) . Take care my friend.

P.S.: as the terminator would say: "I'll be back!"
  • #140
  • May 8, 2009 4:56pm May 8, 2009 4:56pm
Generally when someone says they earn x% per day (especially a ridiculous number like 12% a day) using their 'system' but they won't even show a trade sequence from it (which would hardly give away their system) because their system is worth a million dollars (even though they are trading a $400 mini account), on top of making completely irrelevant and downright stupid points (NFA should ban drinking because...), and their only "proof" of hedging working being

Quote
I'm very sure also hedging IS profitable, sure one has to do it corectly, , as a proof IS ENOUGH the big number of unsatisfyed traders about this new rule, so beeing a considerable number of no happy traders about the new anti hedging rule, IT's OBVIOUS hedging works if applied corectly

I'd say you can more or less ignore everything they have to say, because they're either lying, selling something, or just plain stupid.
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