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Hedging strategies

  • #1
  • First Post: Feb 4, 2006 11:32am Feb 4, 2006 11:32am
hi im fairly new to forex but not TA and would like some info on hedging positions in general and most importantly when heading into a major news event. ex long 10 lots EUR/USD and short 10 lots EUR/USD with stops for each placed an appropriate distance to offset headshakes.

this method im sure can be extremely profitable if managed correctly. any links or personal input would be awesome
thanks
  • #2
  • Feb 4, 2006 11:40am Feb 4, 2006 11:40am
Quoting Ezekiel91
hi im fairly new to forex but not TA and would like some info on hedging positions in general and most importantly when heading into a major news event. ex long 10 lots EUR/USD and short 10 lots EUR/USD with stops for each placed an appropriate distance to offset headshakes.

this method im sure can be extremely profitable if managed correctly. any links or personal input would be awesome
thanks
I'm afraid this strategy is not that good since quite a lot of big movements start from a short but strong move in the opposite direction.
time is money! Z
  • #3
  • Feb 4, 2006 11:58am Feb 4, 2006 11:58am
Whatch out the spikes during major news release.
  • #4
  • Feb 4, 2006 12:01pm Feb 4, 2006 12:01pm
So Do You Think This Hedging Will Be Ok In Quiet Range Bound Market?
  • #5
  • Feb 4, 2006 1:45pm Feb 4, 2006 1:45pm
What if i short the EUR/USD, set my stop, and then long the USD/JPY, also with an appropriate stop going into a news release?

I know theres an effective strategy out there as some brokers dont allow both positions to be taken.

say i was long and short the euro going into this fridays release i could have watched the fake up move then would soon see it reverse (remember it doesnt matter which way the price moves im still breaking even minus spreads) the appropriate direction is eventually established and made known through basic TA knowledge, and the respective losing position is exited manually not through a stop. once its exited your still at B/E as your loss is offset by your other positions profit. This then puts you in a much greater risk reward position to capitalize on any further follow through as opposed to guessing what direction a certain news release is going to have and taking one side of a trade. yes some may step aside during releases as it is "the golden rule" but lets face it huge profits can be made playing these events effectively.

any comments
  • #6
  • Feb 5, 2006 3:34am Feb 5, 2006 3:34am
Quoting Ezekiel91
hi im fairly new to forex but not TA and would like some info on hedging positions in general and most importantly when heading into a major news event. ex long 10 lots EUR/USD and short 10 lots EUR/USD with stops for each placed an appropriate distance to offset headshakes.

this method im sure can be extremely profitable if managed correctly. any links or personal input would be awesome
thanks
Why not just be flat the market and place limits instead - it will do the same thing except you won't pay the spread twice.

Simon
  • #7
  • Feb 5, 2006 7:36am Feb 5, 2006 7:36am
I agree, paying too much for the spread is making a broker richer. The better idea is to use entry points.
  • #8
  • Last Post: Feb 5, 2006 12:10pm Feb 5, 2006 12:10pm
Quoting Ezekiel91
What if i short the EUR/USD, set my stop, and then long the USD/JPY, also with an appropriate stop going into a news release?

I know theres an effective strategy out there as some brokers dont allow both positions to be taken.

say i was long and short the euro going into this fridays release i could have watched the fake up move then would soon see it reverse (remember it doesnt matter which way the price moves im still breaking even minus spreads) the appropriate direction is eventually established and made known through basic TA knowledge, and the respective losing position is exited manually not through a stop. once its exited your still at B/E as your loss is offset by your other positions profit. This then puts you in a much greater risk reward position to capitalize on any further follow through as opposed to guessing what direction a certain news release is going to have and taking one side of a trade. yes some may step aside during releases as it is "the golden rule" but lets face it huge profits can be made playing these events effectively.

any comments
this would make you net long USD on both trades...no hedge
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