Multiple orders (hedging) on the same currency? | Forex Factory

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Multiple orders (hedging) on the same currency?

  • #1
  • First Post: Jan 25, 2010 12:44am Jan 25, 2010 12:44am
Hi Vets

I would like to know if it is possible to have multiple Long and short orders in the same currency pairs. Lets say for instance I am trading on the 4hr chart and I am in a short position with two lots, the price is going down nicely and we are at about 100 pips profit. But then the price is suddenly making a u turn going back up (more than the average correction), even though I feel after VSA that it should go down allot more. Can I then go long 2 lots in a separate trade on the same currency without closing my short position higher up that also consists of two lots?

And then we I see the price is going down again I sell the two lots that I went long on for a small profit and still have open my earlier trade of two short lots?

Can this maybe be done with OCO brakets? Does it depend on the broker?
On the trading platform?, or is it just not possible?

PS: I really don't want to hedge it with another currency pair if it can be helped.
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  • #2
  • Jan 25, 2010 11:53am Jan 25, 2010 11:53am
The answer is effectively yes you can, but how you can do it depends on your broker, you will need to have sub accounts normally I would suspect, but why on earth would you want to do such a thing is beyond me.
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  • #3
  • Jan 26, 2010 12:26am Jan 26, 2010 12:26am
Thanks, I am working on a strategy that would need this to work...

Will hear form my broker then...
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  • #4
  • Jan 26, 2010 12:46am Jan 26, 2010 12:46am
If you have the right broker, you can have 1 account and open as many short and long positions in the same pair you want. Your broker should allow hedging, that's it. There is no extra margin either (provided you don't go over the original number of lots)
  • #5
  • Jan 26, 2010 12:10pm Jan 26, 2010 12:10pm
Quoting Purple_Heart
I would like to know if it is possible to have multiple Long and short orders in the same currency pairs.
It depends on your broker, and to what extent they are controlled by NFA governance. Many brokers outside the US still allow it.

However, there's no financial benefit in being long and short in the same pair, at the same time. It's the net position (long or short) that determines your profit/loss, hence any 'hedging' strategy can be replicated by a single order. It's more efficient to be out of the market altogether than 'hedged', because you'll pay less swap (orders open at 1700 EST New York time incur swap, and most brokers charge more swap than they pay out), and also possibly less spread, depending on how may orders you use.

There's a good thread explaining all of this here.
  • #6
  • Jan 26, 2010 10:49pm Jan 26, 2010 10:49pm
Quoting hanover
It depends on your broker, and to what extent they are controlled by NFA governance. Many brokers outside the US still allow it.

However, there's no financial benefit in being long and short in the same pair, at the same time. It's the net position (long or short) that determines your profit/loss, hence any 'hedging' strategy can be replicated by a single order. It's more efficient to be out of the market altogether than 'hedged', because you'll pay less swap (orders open at 1700 EST New York time incur swap, and most brokers charge more swap than...
Hanover is right. There is no financial benefit in being long and short in the same pair, at the same time.
There seems to be a big misunderstanding about what hedging is. In my job, i hedge our big mineral resource sales using derivatives to lock in best prices and to give us more certainty of our future prices for our international resource sales. (i work for one of the worlds biggest mining minerals and resource companies).
We then hedge our contacts USD currency transactions into the local currencies to get the best results for our shareholders because our costs are paid in the local currencies.
That is true hedging. The posts I have seen here about hedging as using long and short transactions in the one pair at the same time is rubbish and is a dicky idea.
  • #7
  • Jan 27, 2010 1:48am Jan 27, 2010 1:48am
Quoting zarraman
Hanover is right. There is no financial benefit in being long and short in the same pair, at the same time.
There seems to be a big misunderstanding about what hedging is....
Thanks for making it so clear in that last sentence Zarraman, I appreciate you taking the time to post. However I know for a fact that what you say is true if I were to use it in that way, but the way I plan on using it on the same currency is something that I can not explain now, and also something that does not have to do with how you think I might want to do it.

Kind regards
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  • #8
  • Jan 27, 2010 8:00pm Jan 27, 2010 8:00pm
Quoting Purple_Heart
Thanks for making it so clear in that last sentence Zarraman, I appreciate you taking the time to post. However I know for a fact that what you say is true if I were to use it in that way, but the way I plan on using it on the same currency is something that I can not explain now, and also something that does not have to do with how you think I might want to do it.

Kind regards
Then what is the point of coming on to a forum if it "is something that I can not explain now" and it "does not have to do with how you think I might want to do it"
There is no financial benefit in being long and short in the same pair, at the same time. If you can show me something that I don't know about hedging AND that makes money, I am all for seeing it.
  • #9
  • Jan 28, 2010 1:50am Jan 28, 2010 1:50am
Quoting zarraman
Then what is the point of coming on to a forum if it "is something that I can not explain now" and it "does not have to do with how you think I might want to do it"
There is no financial benefit in being long and short in the same pair, at the same time. If you can show me something that I don't know about hedging AND that makes money, I am all for seeing it.
The point of coming on to the forum is to ask if it is possible for me to do this with some brokers, it was not to educate YOU. The reason I can not explain right now is because I do not know myself if it will work. I hear what you are saying and I choose to try and work out something in my head for myself.

I came on to the forums to learn, not to teach. Some people are here to learn and some are here to teach, from the amount of posts that I have made I give you one guess into which category I fall... ??
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  • #10
  • Jan 30, 2010 5:14pm Jan 30, 2010 5:14pm
Then you have learned something. There is no financial benefit in being long and short in the same pair, at the same time.
  • #11
  • Jan 30, 2010 5:47pm Jan 30, 2010 5:47pm
Quoting Purple_Heart
The point of coming on to the forum is to ask if it is possible for me to do this with some brokers, it was not to educate YOU. The reason I can not explain right now is because I do not know myself if it will work. I hear what you are saying and I choose to try and work out something in my head for myself.

I came on to the forums to learn, not to teach. Some people are here to learn and some are here to teach, from the amount of posts that I have made I give you one guess into which category I fall... ??
Hello purple heart,
My advice is dont totally 100% listen to them just do it yaself and learn from that...if it turn out to be good..im happy for ya...
  • #12
  • Aug 29, 2013 3:16am Aug 29, 2013 3:16am
Quoting poundforex
The answer is effectively yes you can, but how you can do it depends on your broker, you will need to have sub accounts normally I would suspect, but why on earth would you want to do such a thing is beyond me.


I just found this thread after searching it out and the reason why he does it is to make money off the retracments. You ever noticed that if you have a large TP of say 100 pips for example you usually have to wait a very very long time because price will move against the tp?

For him to do that is to make money off the retracements. So let's assume he is long on a pair with tp 100 pips away. It is always 100% certain that price won't just shoot up 100 pips like that it will take days for price to reach those 100 pips or it might not even hit. The idea is like this

Price moves upwards 20 pips then goes down 10 pips, then goes up 15 pips goes down 5 pips. The idea is to identify a trend on the longer period so let's say the pair is bullish. You put in a big trade on it and expect to take profit 1 or 2 weeks away cos the tp is say 100 pips. Then price is sure to retrace by 10-20 pips each hour/day so you play off those retracements and make the profit.

It's obviously much riskier but you could plan those retracements off say a fib or old support and resistances then you make extra pips off the retracements.
  • #13
  • Aug 29, 2013 3:39am Aug 29, 2013 3:39am
Maybe some people are profitable with hedging strategies. I have not seen any. And I would not recommend it.
  • #14
  • Sep 23, 2013 1:08pm Sep 23, 2013 1:08pm
I think you can do it, there are a lot of brokers that allow hedging. Hedging is the only trading style in forex that has not been explored enough. There are only two strategy logic as bases and all other strategies are following the one logic or the other or both together. It would be intersting if someone could create a third logic base strategy but i know it is difficult .
  • #15
  • Feb 22, 2016 11:48pm Feb 22, 2016 11:48pm
Quoting zarraman
{quote} Hanover is right. There is no financial benefit in being long and short in the same pair, at the same time. There seems to be a big misunderstanding about what hedging is. In my job, i hedge our big mineral resource sales using derivatives to lock in best prices and to give us more certainty of our future prices for our international resource sales. (i work for one of the worlds biggest mining minerals and resource companies). We then hedge our contacts USD currency transactions into the local currencies to get the best results for our shareholders...
Everyone has their own trading strategies. So you work for one of the worlds biggest resources coy. Still in the job/coy/industry mate?
  • #16
  • Feb 22, 2016 11:58pm Feb 22, 2016 11:58pm
Quoting forex_fairy
{quote} I just found this thread after searching it out and the reason why he does it is to make money off the retracments. You ever noticed that if you have a large TP of say 100 pips for example you usually have to wait a very very long time because price will move against the tp? For him to do that is to make money off the retracements. So let's assume he is long on a pair with tp 100 pips away. It is always 100% certain that price won't just shoot up 100 pips like that it will take days for price to reach those 100 pips or it might not even...
Yes. This is the same principle applied in black box trading. Perhaps hitting 20 trades/squaring-off on small gains rather than taking one position in a unilateral direction. Works well in range-bound currency pair.
  • #17
  • Feb 24, 2016 6:08pm Feb 24, 2016 6:08pm
Hey there Purple Heart,

There are plenty of brokers that will allow for direct hedging. US brokers are an exception since they have a FIFO (First In First Out) rule to adhere to, other than that, you should have plenty of choice.

Hedging is in fact very useful provided that is used and understood properly. Hope you find a broker that suits your needs and much luck with you strategy!
  • #18
  • Feb 26, 2016 10:45pm Feb 26, 2016 10:45pm
Quoting AlbertoC
Hey there Purple Heart, There are plenty of brokers that will allow for direct hedging. US brokers are an exception since they have a FIFO (First In First Out) rule to adhere to, other than that, you should have plenty of choice. Hedging is in fact very useful provided that is used and understood properly. Hope you find a broker that suits your needs and much luck with you strategy!
I don't understand, how FIFO rules is connected with hedging? Its not about execution speed, you're playing long-time there.
Maybe I don't understand something important, please explain...
I consider hedging very important and in some times essential trading technique but doubt it has sense making it on the same instrument. Basically you just cut your position.Fx positions can be hedged with Options, sometimes when I trade Oil I hedge it with Yen or Gold put options, works fine for me.
  • #19
  • Feb 29, 2016 3:26am Feb 29, 2016 3:26am
Quoting AlbertoC
Hey there Purple Heart, There are plenty of brokers that will allow for direct hedging. US brokers are an exception since they have a FIFO (First In First Out) rule to adhere to, other than that, you should have plenty of choice. Hedging is in fact very useful provided that is used and understood properly. Hope you find a broker that suits your needs and much luck with you strategy!
Wait, US brokers forbid hedging? This is the first time I've heard of that, it sounds...I don't know to describe it. Impractical, at the very least?
  • #20
  • Mar 2, 2016 7:12pm Mar 2, 2016 7:12pm
Quote
I don't understand, how FIFO rules is connected with hedging? Its not about execution speed, you're playing long-time there.
Maybe I don't understand something important, please explain...
I consider hedging very important and in some times essential trading technique but doubt it has sense making it on the same instrument. Basically you just cut your position.Fx positions can be hedged with Options, sometimes when I trade Oil I hedge it with Yen or Gold put options, works fine for me.

Well, basically you need to close your, let's say, long position in order to go short, Just as it happens with crude oil, for instance. At least with oil you can hedge with a forward month. With currencies you can choose a correlated one, or as you say an option.

Hedging in the same instrument makes sense. Basically what you do with it is control your drawdown. Let's say I enter a position that is fundamentally strong, but for whatever reason we get a very strong opposing sentiment for a few days. In that case my position will go on the red. Now if you place a hedge, your drawdown is limited and once the sentiment fades away, the fundamental story behind the currency pair takes over. At that point you take out the hedge.

This might not make a whole lot of sense, but if you're trading large accounts you certainly don't want to have a big drawdown. I hope it makes some sense (bear in mind I still need a coffee today)
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