Hedging the same pair works if you are holding a long term trade and you want to play a correction in a smaller timeframe. can be a great tool if used correctly.
Hedging the same pair works if you are holding a long term trade and you want to play a correction in a smaller timeframe. can be a great tool if used correctly.
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That's not hedging. That is two separate but opposite trades. One is a long term position and one is a short term position in the opposite direction. question is, If you think it is going to go in the opposite direction, why don't you close the long term position and then reopen it when you would have closed the short trade?
what about hedging a short trade on a futures contract with a call option on the same instrument?
I know of some professionals who do this and assume it must have a point to it. Why is that different from what is being discussed?
Is there an EA to Hedge a single pair/ instrument FX Hedging Strategy For Metatrader Platform: Broker which allows “Hedging” in same currency pair For example www.fxcm.com.au in Australia Variables: TP = Take Profit, SL = Stop Loss, TL = Trailing Stop Entry requirements: None ( may be revised down the track on measure of volatility Special conditions * see middle case scenario Idea: Open both long and short position in a pair Set: ( as example) on both positions TP = 100 SL = 50 TL = 20 Best cast scenario: (ignore spread) Long moves up by 100 pips Short side is closed at -50 loss Long side takes profit @100 = =100 Overall = +50 Worst cast scenario: (ignore spread) Long moves up by 50 pips and then moves down by 20 Long side : TS triggered on Long side Long side closes at +30 Short Side loss = -50 Overall = - 20 Middle case scenario: (ignore spread) Long moves up by 20 pips and then moves down by 20 pips Long side : TS triggered on Long side Long side closes at 0 * AT the same time EA Must close Short side at 0 Overall = 0
Is there an EA to Hedge a single pair/ instrument.......
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Are you saying that the second trade is closed automatically ANY TIME the first trade exits via its trailing stop?
If that's NOT so, then what if the following happens......... price rises 30 pips, then falls 20 pips, then rises 40 pips
In this case, long trade is closed at +10 (trailing stop hit); short trade gets stopped at -50 (original stop hit)
Net result is -40, which is worse than your designated 'worst case'
Apart from your special case (i.e. when one trade's trailing stop gets hit, the other trade immediately closes) then - assuming your br0ker allows nedging - you don't need an EA. Simply enter the trades manually with their respective TP, SL and TL
If you want to transfer funds form one account to another;
Go long eu with one account, go short eu with your other account, (net exposure =0).
Wait until the desired amount of money is transferred in the right direction.
Close the hedge.
hedging has many pros and cons depending on its use. a very very nice use is instead of stop loss. you open a hedge position instead of closing a position. then you wait for the market to calm down, you get the profit from the one positions (if there is any) and wait for a good moment to close the other position with smaller losses or even profit. this off course works on normal market conditions and needs some experience as well. and patience. but it is a nice tactic for forex trading.
however, I am not sure for how long the market is going to be stable. collapse is coming next months or year. and it will be a collapse collapse. so make money while there is time to do so.
hedging has many pros and cons depending on its use. a very very nice use is instead of stop loss. you open a hedge position instead of closing a position. then you wait for the market to calm down, you get the profit from the one positions (if there is any) and wait for a good moment to close the other position with smaller losses or even profit. this off course works on normal market conditions and needs some experience as well. and patience. but it is a nice tactic for forex trading.
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You can achieve exactly the same result without 'hedging':
-- Hedged both long and short = net zero = same as being out of the market
-- Closing one of the hedged positions = leaves you net long or short = same as opening a position long or short
Every stance in the market is either net long X lots, net short X lots, or net zero. You can achieve it either with or without 'hedging'. It's not the hedge itself that determines the P/L, it's your net position relative to whether price is rising or falling.
This has been explained in more detail in other threads.
a hedged position of net zero is worse than no position because:
even if a position is hedged at net zero it is not "safe". If the spread widens 100 pips you could potentially get a MC. As the P/L of the long will depend on the BID price and the P/L of the short will depend on the ASK price, these are two separate prices with obvious correlations, but don't always move in the same direction, e.g. under extreme market conditions.
where as if you have no position you not exposed to this risk
a hedged position of net zero is worse than no position because:
even if a position is hedged at net zero it is not "safe". If the spread widens 100 pips you could potentially get a MC. As the P/L of the long will depend on the BID price and the P/L of the short will depend on the ASK price, these are two separate prices with obvious correlations, but don't always move in the same direction, e.g. under extreme market conditions.
where as if you have no position you not exposed to this risk
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It's also better to be out of the market, than 'hedged', at 5pm New York time, if your br0ker charges more swap on the 'negatively aligned' position than he pays on the 'positively aligned' one.
There are additional situations where one pays more spread by using 'hedging', as explained here.
I talked with some people about hedging, and what I've seen is that in general they can't accept the idea that they were wrong. They must win, no matter what. Thus they "hedge". Of course, with such a mentality you won't get too far.
You can achieve exactly the same result without 'hedging':
-- Hedged both long and short = net zero = same as being out of the market
-- Closing one of the hedged positions = leaves you net long or short = same as opening a position long or short
Every stance in the market is either net long X lots, net short X lots, or net zero. You can achieve it either with or without 'hedging'. It's not the hedge itself that determines the P/L, it's your net position relative to whether price is rising or falling.
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off course you can do the same thing without hedging, but the question is if you would open a position in that case. if you bid on the trend and something goes wrong, by hedging you get the opportunity to even make some profit when the market goes in the opposite direction. then you wait for it to stabilize and return to its normal trend. and not only you don't lose money, but make some. all the above, off course, under normal market conditions. for the time being there are such conditions.
