There's plenty of discussion regarding hedging in order to cover a loss until such time as a trend develops and you can remove the hedge. In my opinion it's probably just easier to take the loss and take a better trade next time. I am interested in the idea of hedging once a trade is in profit in order to take some profit from a retrace.
The way I see it is that if a pair is trending strongly and more or less following Elliott wave theory (this thread isn't about that, I know it never fits reality but it's a fair idea and that is the way that forex tends to trend) and you are using fib extensions, channel lines and horizontal s/r to determine roughly where a pair may reverse in a trend isn't it possible to take a trade in the opposite direction of the trend, locking in some profit and then remove the hedge and add on another trade if/when the pair reverses from it's retrace? This way you get the best of both worlds, you lock in your gains from the move in your favour so whatever happens you can keep that and if the pair does follow Elliott and retrace then carry on you can take profit on your countertrend trade and add on in the direction of the trend keeping your original trade open.
It seems to me to be a lot less frustrating than watching a pair make a big move then retrace, taking your gains with it, only to hit your stop at breakeven or wherever you have put it.
Anyone got anything positive to say about this idea?
The way I see it is that if a pair is trending strongly and more or less following Elliott wave theory (this thread isn't about that, I know it never fits reality but it's a fair idea and that is the way that forex tends to trend) and you are using fib extensions, channel lines and horizontal s/r to determine roughly where a pair may reverse in a trend isn't it possible to take a trade in the opposite direction of the trend, locking in some profit and then remove the hedge and add on another trade if/when the pair reverses from it's retrace? This way you get the best of both worlds, you lock in your gains from the move in your favour so whatever happens you can keep that and if the pair does follow Elliott and retrace then carry on you can take profit on your countertrend trade and add on in the direction of the trend keeping your original trade open.
It seems to me to be a lot less frustrating than watching a pair make a big move then retrace, taking your gains with it, only to hit your stop at breakeven or wherever you have put it.
Anyone got anything positive to say about this idea?
Position trader - Anything intraweek is just noise...