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Proposal to phase out Hedging

  • #141
  • May 8, 2009 8:12pm May 8, 2009 8:12pm
Uh-oh hanover, you've mocked redox, prepare for a verbal assault of epic proportions!
  • #142
  • May 8, 2009 8:28pm May 8, 2009 8:28pm
Quoting smittens4212
Uh-oh hanover, you've mocked redox, prepare for a verbal assault of epic proportions!
Yes, perhaps I've gone a bit too far. I'll delete my last post, it's too provocative, and contributes nothing to the original topic of the thread.

Anyway, I expect that this thread is headed for the bin. That's a pity, because it's had its moments of quality debate - from both hedgers and anti-hedgers alike.
  • #143
  • May 8, 2009 9:14pm May 8, 2009 9:14pm
Quoting hanover
Yes, perhaps I've gone a bit too far. I'll delete my last post, it's too provocative, and contributes nothing to the original topic of the thread.

Anyway, I expect that this thread is headed for the bin. That's a pity, because it's had its moments of quality debate - from both hedgers and anti-hedgers alike.
Nothing wrong with Hedging, its Nedging that it pointless....

Damn hanover... Learn the lingo man.
Living the adventure in my head.
  • #144
  • May 9, 2009 12:52am May 9, 2009 12:52am
Quoting Leonlorenzo
Nothing wrong with Hedging, its Nedging that it pointless....

Damn hanover... Learn the lingo man.
Damh it Leohlorehzo, must be time I bought a hew keyboard for this dahg computer.
  • #145
  • Edited 1:57am May 9, 2009 1:01am | Edited 1:57am
Quoting hanover
You're making the same tired old points over and over again.
haha,some people need to read something like 100 times to get it.
(ie smittens , i'm afraid it's useless in his case even after he reads 1000 times )


Quoting Redox77
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.
Quote

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 ?

Hi Hanover, Yes I did because those arguments are to much obvious , only "flat " thinking people like smittens , and deep inside also other arguers know, those 2-6 points are the true .

And for pipmutt is also true 7:

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, then falls asleep , and when he gets up his account is screwed....,

( point 7 is a true story from reality, my good friend pipmutt just did that , ehh doesn't matter , his a good trader , he will be back soon in the bussiness )
Quote
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

Thanks for the links Hanover.
Look, the way i use hedging though, gives me profit.

And there are obvious others, they also are making profit , that's obvious because there are people not happy about the rule.


They come said it once and then go to make money , is time losing to talk to smittens his flat, so I'll do the same.

They know that people like smittens is to flat into thinking ( smittens, your grand mam needs help in the kitchen LOL ), to recognize that at least for some hedging is profitable, and anyway told ya doesn't matter if it is not profitable, there where other complains of traders much more important.

So they don't their time with flat people , why not go and continue make money by hedging than losing it taking with a flat head.
( you begun smittens , I'll just send to you back , especially because you enjoy it )


Quote
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.

For some it works , for other it helps a lot, thats a fact, then why all the not happy voices ?


Quote
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.

No way, posting my trades, wil deconspire my million dollar strategy
I will anyway read other threads than talking with people denying the truth it's a losss of time.

Everyone is free to express his opinion though , doesn't matter on each side.

Quote
If you're making the 9%-12% per day that you say,

I'm not winning every day, only when market comes back,
friday was a losing day , but even if i lose , i lose less, per total.

Quote
As for the conspiracy theories, people will believe whatever they want to believe. More speculation, I'm afraid.

I agree , a bit to much conspiracy.

Many pips Hanover
  • #146
  • Edited 2:23am May 9, 2009 1:20am | Edited 2:23am
Quoting smittens4212
Uh-oh hanover, you've mocked redox, prepare for a verbal assault of epic proportions!
LOL , what r u doing there, r u choking on the floor ..take please a pill, u might make a stroke , we don't want that..
I know hanover doesn't agree with me, so what, everybody is free, to have his own opinion ,
anyway his way smarter than you only by looking at his forum posts
he also came here with some thread links, this is good for a debate....you...nada..
also pipmutt is smarter than you .

You are just ...flat :

Quoting smittens
While the trades are hedged, you are flat
LOL, smittens , just go help your grand -ma in the kitchen...you think...flat

Hedging to be profitable you gotta be more subtile , you don't do it like that, you can't comprehend it.

Proof :
Why lots of unhappy voices about the rule , be logic ..but hey , i can't ask from you to be logic , heh because u r flat ..

Your worse than pipmutt hahahahaha witch screwed his account because he didn't had a rule from NFA about not drinking and he falled asllep with a wrong order in the market.( he forgot to set a SL hihihihih )


See , there should have been a not drinking rule too.
By hedging pipmutt would have losed ONLY a lousy 3 pip spread, flat-guy.
but would have won when market comes back ,
and market COMES every time back.

If some don't succeded by hedging that don't means it isn't profitable , flat guy, proof is, told u , the unhappy voices about the not hedging rule, deniying those upset about the no hedging rule is dening someting it exists, they weren't exist if wouldn't be profitable, your ridiculous....those are adults they are not flat ( like quess who ) to see if they're account has a +or a minus in fron of the equity figure., like yours had when you used your flat hedging, hedging doesn't work like you used it , oh...i hear yor grand ma calling u in the kitchen... , you better send her trading in your place



Thinking is hard4 u.

hahahaha

I won't lose my time anymore here, it's a loss of time , it is possible now and then though, only 4 the fun like this time .
  • #147
  • May 9, 2009 2:24am May 9, 2009 2:24am
Quoting smittens
:
Uh-oh hanover, you've mocked redox, prepare for a verbal assault of epic proportions!
- I know hanover doesn't agree with me, so what, everybody is free, to have his own opinion ,
anyway his way smarter than you only by looking at his forum posts

- He also came here with some thread links, this is good for a debate....you...nada..
also pipmutt is smarter than you .

Update:
I'm sure my good friend pipmutt will recover his lost account

You smittens , are just ...flat .
Oh , hurry up, your grand ma is yelling at you to stop trading and let her doing it, safer.


Happy trading
  • #148
  • Edited 3:33am May 9, 2009 2:52am | Edited 3:33am
Quoting Leonlorenzo
Nothing wrong with Hedging, its Nedging that it pointless....

Damn hanover... Learn the lingo man.
Nedging....ok I give up, give us a clue! Negative Hedging? Never-do-it Hedging?
  • #149
  • Edited 7:50am May 9, 2009 2:59am | Edited 7:50am
Quoting pipmutt
I was just reading one of the links hanover posted (the one with the ABCD diagram) and it suddenly hit me why this type of hedging (nedging, lol) strategy is so popular among novice/inexperienced traders. !
LOL:

Deniying those not happy about the no hedging rule is dening someting it exists, they wouldn't have had existed if hedging wouldn't be profitable,if done with head ( well, not a flat head, smittens and pipnutt or pipmutt whatever lol)
Some just didn't find a way by hedging to increase also equity of their account ,they must be good in other strategies though.

LOL seems u tried to hedge and YOU didn't found a strategy to increase ALSO EQUITY of your account, only your balance.....
lol

...better go play backgammon with smittens.

Try to get many pips though
  • #150
  • Edited 7:41am May 9, 2009 3:14am | Edited 7:41am
Quoting pipmutt
I was just reading one of the links hanover posted (the one with the ABCD diagram) and it suddenly hit me why this type of hedging (nedging, lol) strategy is so popular among novice/inexperienced traders.
Who said profitable hedgers use hedging only like that ?

They use it embedded in more subtile strategy, you can't comprehend
and no way tell it to you, i preffer to let u screw ur 2nd account


( NFA didn't set a rule against drinking, you might forget to set a sl, get asleep and screw ur second account too )
- A law against drinking was more necesary in your case.
Hedging would have been more safe than drinking regarding the consequences for your account, it's a lousy 3 pips spread , it's a hedge remember ???

so give me a brake about this rule was for traders protection.
  • #151
  • May 9, 2009 3:24am May 9, 2009 3:24am
I was just reading one of the links hanover posted (the one with the ABCD diagram) and it suddenly hit me why this type of hedging (nedging, lol) strategy is so popular among novice/inexperienced traders. The attraction is they are always banking profit and that's a better feeling than accepting a loss! Whichever way the market goes they will always have a profitable position to liquidate.

Their account is growing, the balance is going up, and if someone asks them 'did you make money in the market today' their answer will always be yes because it's true, they banked profit, how great is that! In a business where an alleged 95% lose, they're making money, they're a success! How about unrealized losses? Well they don't see unrealized losses as losses, they see them as trades waiting to go into profit, I'm sure you can see that's a very important psychological distinction. In their mind and experience the market will always come back to allow them to exit their waiting-for-profit trades, I mean it always does, right?

For the people who realize the futility of this type of 'hedging' strategy we ask ourselves are these guys inexperienced or just plain dumb, we're amazed they can't grasp a simple concept like 'an opposite position on the same pair equals flat'. While it's probably true that a lot of them are undoubtedly cerebrally challenged (you only have to read some of their posts) I don't think that's the only excuse, there's a big psychological attraction to this type of strategy and we all know how significant and potentially debilitating psychology is in this game. This is a feel good strategy, a temporary high but what the heck, worry about tomorrow when it comes.

Maybe one day they will overcome the psychological hurdles of trading and get a handle on the mandatory necessity of things like exposure, risk, and risk management, until then everything in their utopian trading world is rosy because they can honestly say today they made some money!
  • #152
  • Edited 6:17am May 9, 2009 5:55am | Edited 6:17am
Quoting pipmutt
I was just reading one of the links hanover posted (the one with the ABCD diagram) and it suddenly hit me why this type of hedging (nedging, lol) strategy is so popular among novice/inexperienced traders. The attraction is they are always banking profit and that's a better feeling than accepting a loss! Whichever way the market goes they will always have a profitable position to liquidate.

Their account is growing, the balance is going up, and if someone asks them 'did you make money in the market today' their answer will always be yes because...
Hey guy the problem is you assume that they just lose money with a hedging strategy. I had a nice little system that worked and it went like this and it does work. You do a buy and sell at the beginning of a session. No matter what price does halfway through you bank all the profit and close half of the losing position. Then you match half of the losing position and wait for a good profit again. Bank all the winner and close 40-60% of the loss and hedge the rest of the losing position. You are now sitting at .30 to .20 of the original position. Then wait for the off hours when price is just bouncing between two points and do anywhere from a 4 to 1 to 8 to 1 trade and close out the position at break even. In other words if you are now 100 points down and you are at .20 you wait for the opposite trade and trade a 1 or 2 lot position. A one lot will close out a 100 pip for break even at 20 pips and a 2 lots will close out even at 10 pips plus the spread. Maybe you get lucky and it goes 15 in your favor and and all three trades you did ended in profit. Sometimes it only goes 6 or 8 but the other two still make a profit even though your last trade is a loser.Ta da, You make a profit. Not big, not fantastic but a steady trade. So there are hedging type trading systems that work but you must be disciplined and know how to read the high and low during non trading hours. Just thought I would point that one strategy out to you.

If you go to Trading the AUD/NZD successfully thread that in its original form was a very profitable hedging strategy using an EA. The enlarging of spreads helped to minimize its effectiveness but when there were fixed spreads I made money every week with that one. So the NFA assumption that traders were losing money hedging is not true and enough guys have spoken out that they did have effective hedging strategies. So I just listed two.
  • #153
  • Edited 7:10am May 9, 2009 6:44am | Edited 7:10am
Quoting nanningbob
you must be disciplined and know how to read the high and low during non trading hours. Just thought I would point that one strategy out to you.
Thanks for that. I haven't done the math or worked out a hypothetical trade but doesn't overall profitability rely solely on the discretionary element of the strategy? As you say, at some point you need to know how to read the high and low and take a view of price direction. You're also increasing leverage to cover losses which I'm not sure is a good thing is it, in effect you would no longer be hedged as you have exposure to risk just like any other non-hedged trade. What happens if you read the high and low wrong and the trade takes off in the opposite direction, a real possibility during illiquid market times and the exact time when it's easier for stop hunters to operate, and what better place to hunt stops than an obvious high/low range? With the increased in leverage you made on that trade to try and cover losses you could in fact wipe out a whole series of previous gains and perhaps more. Why not just read the high and low, take a view, and trade it one way?
  • #154
  • Edited 7:19am May 9, 2009 6:58am | Edited 7:19am
Quoting nanningbob
Hey guy the problem is you assume that they just lose money with a hedging strategy. I had a nice little system that worked and it went like this and it does work. You do a buy and sell at the beginning of a session. No matter what price does halfway through you bank all the profit and close half of the losing position. Then you match half of the losing position and wait for a good profit again. Bank all the winner and close 40-60% of the loss and hedge the rest of the losing position. You are now sitting at .30 to .20 of the original position....
@Nanningbob
Bob, I think everybody here is agreed that it's possible to make money by hedging. All that's being argued is whether or not it's possible to work around the NFA ban by replicating a hedge strategy whereby the trader makes the same profit, pip for pip, by only ever being long or short in the market. I believe that there is an easy workaround, and I posted it here.

Your hedged trades will be profitable whenever you are net long while price is rising, and net short while price is falling. Hence it's the timing of the order placement, relative to the market moves, that determines the pips won/lost, not the order types that are used. Orders are nothing more than a vehicle for adjusting your net position.

Hopefully the three links that I posted back in post #138 further explain my thoughts.

@Redox77
I don't believe that I'm smarter than anybody else. As I've said elsewhere, I'm a programmer, not a professional trader. IMO the markets reward opportunism (and qualities like patience, nerve and dedication) more than they reward intelligence.

@Pipmutt
Re hedging being a feel-good strategy, that aligns nicely with the point I was trying to make back in post #120. The trader closes out the first position in profit. Then he believes that if he waits long enough, the second position must eventually return to profit. But, unless there's some underlying technical or statistical rationale (like in Nanningbob's strategy), then that's no better than a 50/50 proposition. And like you say, he is ignoring unrealized losses. Thiere's a similar kind of mindset behind trading without stoplosses, martingale sizing, averaging down without limit, and so forth - that price must eventually return to breakeven, and that no loss is really a loss until a trade is closed. All a great illusion, for the reasons I gave back in post #120. And like you say, brought about by an unwillingness to accept losses.

I think it was Merlin who coined the term "nedging", as an abbreviation for "noob hedging" (hedging in the same pair). More info in this thread.
[EDIT] There's a nice summary of the pros and cons of h/nedging in post #129 of that thread.
  • #155
  • May 9, 2009 7:11am May 9, 2009 7:11am
Quoting pipmutt
Thanks for that. I haven't done the math or worked out a hypothetical trade but doesn't overall profitability rely solely on the discretionary element of the strategy? As you say, at some point you need to know how to read the high and low and take a view of price direction. You're also increasing leverage to cover losses which I'm not sure is a good thing is it, in effect you would no longer be hedged as you have exposure to risk just like any other non-hedged trade. What happens if you read the high and low wrong and the trade takes off in the...
Because the object is to collect the days move in some form of profit. It is a I only have to think one time trading strategy. The high low trade would be a small winning trade to wipe out leftover debt. If you do the math right it should be only a 10-20 pip move and then you are done. In other words, can you trade a small move during off hours. If price went against you, you would hedge the trade quickly and use your first winning trade later to take out the old left over debt and maybe take out 30-40% of the new debt instead of 50 and start the whole process again.
  • #156
  • May 9, 2009 7:20am May 9, 2009 7:20am
Quoting hanover
@Nanningbob
Bob, I think everybody here is agreed that it's possible to make money by hedging. All that's being argued is whether or not it's possible to work around the NFA ban by replicating a hedge strategy whereby the trader makes the same profit, pip for pip, by only ever being long or short in the market. I believe that there is an easy workaround, and I posted it here.

Your hedged trades will be profitable whenever you are net long while price is rising,...
Hi Hanover, havent seen you in a while. How is it going? I am sure there are ways around it but hedging was kind of fun. The one thing I really hate about this rule is I used hedging instead of stop losses. If a trade went too far against me I just hedged it and waited for another time to deal with a bad trade. Or better yet something has come up and I have to leave my computer for a while. I dont want out of my position but I dont want it to go unguarded either so hedging allowed me to keep my position safe until I could come back to it. I didnt need NFA's protection on this issue. Hedging and retracements is what I use now instead of stop losses. If some position has to sit for a month before it becomes profitable or managable so be it. Hedging allowed me to do that. Now I have to consider taking the loss instead of hedging it and waiting for my terms on the trade. So my pro hedging argument is it allowed me to trade in a way that I waited for my terms to be met to trade not what the market is doing. If the market is not doing what I want I hedge and wait until it does. Well beating a dead horse here. Wish you well in your trading.
  • #157
  • May 9, 2009 7:29am May 9, 2009 7:29am
Quoting nanningbob
Because the object is to collect the days move in some form of profit. It is a I only have to think one time trading strategy. The high low trade would be a small winning trade to wipe out leftover debt. If you do the math right it should be only a 10-20 pip move and then you are done. In other words, can you trade a small move during off hours. If price went against you, you would hedge the trade quickly and use your first winning trade later to take out the old left over debt and maybe take out 30-40% of the new debt instead of 50 and start the...
Yeah, see that's where I'm having a problem. A small target and by comparison high-leverage trade to wipe out losses, a quick fix and everything will be ok, and if it's not then let's compound the problem and start over. Murphy's Law says it's always those quick-few-pips overleveraged trades to wipe out loss which go disasterously wrong and cause even more loss!

Hey if it's working for you then great, I've always said if a strategy consistently makes money with an acceptable risk then it can't be wrong, but as far as an exclusive no-risk fully-hedged strategy goes I'm not sure it fits into that catagory.
  • #158
  • Edited 1:22pm May 9, 2009 8:45am | Edited 1:22pm
[quote=pipmutt;For the people who realize the futility of this type of 'hedging' strategy we ask ourselves are these guys inexperienced or just plain dumb ![/quote]


OMG !! ...oooh boy.....ohh boy... please pipnutt , don't make a fool of yourself, Pipnutt- buddy , how dumb can you be ???

don't you saw all the posts of traders not happy about this rule ?

I'm sure all those are not dumb using hedging , I'm sure they must have a profit , or at least hedging helps them.

Dear pipnutt, if there ARE more than 10 hedgers on this forum, that say hedging IS profitable for them, (and there ARE more than 10 ), then please go to bed pip-nutt , or go play some backgammon with your friend flat-smittens ...

For those that claim it isn't , maybe they tried and concluded that other strategy is better for them , this one beeing to risky, that doesn't mean it isn' t profitable for some that know how to apply it.


Is well known hedging IS a good strategy, not the best ,but surely good if applied corectly though.
  • #159
  • May 9, 2009 10:21am May 9, 2009 10:21am
Quoting hanover
@Pipmutt
Re hedging being a feel-good strategy, that aligns nicely with the point I was trying to make back in post #120. The trader closes out the first position in profit. Then he believes that if he waits long enough, the second position must eventually return to profit. But, unless there's some underlying technical or statistical rationale (like in Nanningbob's strategy), then that's no better than a 50/50 proposition. And like you say, he is ignoring unrealized losses. Thiere's a similar kind of mindset behind trading without stoplosses,...
Thanks for the links and references, oh and the explanation of 'nedging', it was a new one on me and as usual I guessed wrong! Seems I've repeated a lot of what has already been said by others, guess I should have read more first! (any plagiarism was purely coincidental!)

In-between the noise this has been an interesting debate, I think having opposing views and debating sensibly can often result in either a conversion of someone's thinking or a confirmation of it. Good stuff, the real advantage of trading forums like these.

What's next, NFA capping leverage? Now that ought to be a fiery topic, flame-proof clothing worthy I reckon!
  • #160
  • May 9, 2009 11:22am May 9, 2009 11:22am
Yea its happened to me once, i openlong andshort EURUSD set eachof them to a reasonable TP, and go to sleep, the next day i see both of them closed by TP and i got 100+ pips but it can only happened if there're no big news which could turn the price to a different level

But i do like hedging, it can protect me from getting margin calls since i oftenly using more than 10% of my margin ^_^
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