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Three Pairs Hedging

  • #181
  • Feb 27, 2011 6:39pm Feb 27, 2011 6:39pm
Quoting sidhujag
The lot size is irrelevant in the big picture.

This strategy will work during the correlations ranging or if you are on the right side of the correlation IF you use a static lot size between the triangle.

Why? Because thats the nature of the beast in the market. It usually will range enough to give you profit OR if you are on the right side and the trend continues.

So does this mean you should save paying extra spread and work with the unfactored pair? Maybe not is my answer and it relates to the fact that in proper triangular arbitrage...
Wasn't referring to that, I was referring to how much persia had risked in terms of lot size to get the $1K profit.
  • #182
  • Feb 27, 2011 8:35pm Feb 27, 2011 8:35pm
Quoting the-game
The better question would be what was your lot size for each pair traded?
hello dear,i did with one lot standard for each pair,again is a great system,i dont consider the whole subjects about the mm,correlation,spread,DD.... etc,just
trade the 3 pairs as directed and see the profit rolling into your account.
  • #183
  • Feb 28, 2011 3:17am Feb 28, 2011 3:17am
dear persia

congra for your success, thank cash4u2.

Can you please tell me which ea you used to achieve such result ( there are many ea -- which one do you used) thank
  • #184
  • Feb 28, 2011 6:51am Feb 28, 2011 6:51am
Quoting cash4u2
Hello Ladies and Gentlemen,
sorry that I was not here for a while, but I had some problems with my internet connection and had to wait for my new cable modem.

It's great to read that some people trying the three pairs hedging are happy with it, I am too ;-)

@josid
Could you change the code of the newHedgingEA.ex4, that it is also possible to enter the pairs manually, because it allows only to trade GBPUSD, USDCHF and GBPCHF.

I would also like to use it...
Modified this EA, so you can choose which pairs to trade
Attached File(s)
File Type: mq4 newHedgingEA.mq4   3 KB | 1,880 downloads
  • #185
  • Feb 28, 2011 8:11am Feb 28, 2011 8:11am
Quoting Kayuikan
dear persia

congra for your success, thank cash4u2.

Can you please tell me which ea you used to achieve such result ( there are many ea -- which one do you used) thank
i did manually,if there is any good EA you can use it,manually you have to watch the positions consistently,but i personally donut trust any EA.
regards
  • #186
  • Feb 28, 2011 9:13am Feb 28, 2011 9:13am
I opened these trades during Asia open on a $10K demo account:

EURUSD/USDCHF/EURCHF(BBS)
GBPUSD/USDCHF/GBPCHF(BBS)

Let's see how far we can go:
Attached Image (click to enlarge)
Click to Enlarge Name: hedge.jpg Size: 45 KB
  • #187
  • Feb 28, 2011 9:46am Feb 28, 2011 9:46am
Quoting fchaman
I opened these trades during Asia open on a $10K demo account:

EURUSD/USDCHF/EURCHF(BBS)
GBPUSD/USDCHF/GBPCHF(BBS)

Let's see how far we can go:
Which added together means you are simply short about 0.5 lots USDCHF.
  • #188
  • Feb 28, 2011 9:55am Feb 28, 2011 9:55am
Quoting euclid
Which added together means you are simply short about 0.5 lots USDCHF.
Interesting!

Then which pair would be a good idea to buy/sell, in order to get these trades an almost zero hedge, or is it possible?
  • #189
  • Feb 28, 2011 10:00am Feb 28, 2011 10:00am
Read the thread. It's not that long. I as well as several others have shown how this is nothing more than placing a single trade on a single pair. There is no method here. And making a perfect hedge will do nothing to help!
  • #190
  • Feb 28, 2011 10:12am Feb 28, 2011 10:12am
Well obviously, a perfect hedge is the same as not opening any position at all and an imperfect hedge is the same as a naked trade for the unhedged portion. Except, of course the hedging adds costs.

It's amazing that this thread is still going.
  • #191
  • Edited 10:12am Feb 28, 2011 10:12am | Edited 10:12am
Quoting Lonestar
Read the thread. It's not that long. I as well as several others have shown how this is nothing more than placing a single trade on a single pair. There is no method here. And making a perfect hedge will do nothing to help!
Agreed

I thought perhaps I could hedge it with selling eurusd, but this is what I got:
Attached Image
  • #192
  • Feb 28, 2011 1:37pm Feb 28, 2011 1:37pm
Quoting Lonestar
Read the thread. It's not that long. I as well as several others have shown how this is nothing more than placing a single trade on a single pair. There is no method here. And making a perfect hedge will do nothing to help!
Hi Lonestar,

Making a perfect hedge would be a different system altogether... and your enemy is now execution/fills rather than picking direction. I think they are just placing directional trades like you say but with confidence you can win I guess lol

Jag
  • #193
  • Feb 28, 2011 1:47pm Feb 28, 2011 1:47pm
Quoting sidhujag
Hi Lonestar,

Making a perfect hedge would be a different system altogether... and your enemy is now execution/fills rather than picking direction. I think they are just placing directional trades like you say but with confidence you can win I guess lol

Jag
I have even done the math for people on this thread showing them that using three pair the way they are is absolutely no different than placing a trade on a single pair and whether they profit or loose is completely dependent on the movement of that single pair but some still seem to think they are taking advantage of some market inefficiency which is incorrect.

Making a perfect hedge isn't a different system altogether. It's simply not a system. It's paying spread to have zero exposure to market moves. Someone nailed it on the head earlier that most people don't understand exposure. Oh well, live and learn I guess. Although people seem to disregard that which they don't understand so the learning part goes out the window.
  • #194
  • Feb 28, 2011 4:42pm Feb 28, 2011 4:42pm
Quoting Lonestar
I have even done the math for people on this thread showing them that using three pair the way they are is absolutely no different than placing a trade on a single pair and whether they profit or loose is completely dependent on the movement of that single pair but some still seem to think they are taking advantage of some market inefficiency which is incorrect.

Making a perfect hedge isn't a different system altogether. It's simply not a system. It's paying spread to have zero exposure to market moves. Someone nailed it on the head earlier that...
Yes it is read my earlier post... you are near zero exposure but still doesn't mean you can't make profit... think about what happens when someone wants to do a big exchange of EUR's to USD's. The rings don't automatically balance out you know.. it takes supply on one and demand on another over a period of time for this to happen.

The bit about profit is dependent on execution... its a high risk low reward strategy that offers a very high hit rate if you get it right...

I'm surprised you never heard of triangular arbitrage?

I think you may have assumed that the market is 100% efficient.

Jag
  • #195
  • Feb 28, 2011 4:57pm Feb 28, 2011 4:57pm
Quoting oashken1
Modified this EA, so you can choose which pairs to trade
Hi Oashken1,

Thanks for the modification.

AJ
  • #196
  • Feb 28, 2011 5:33pm Feb 28, 2011 5:33pm
hedging with profits? thats a myth.

there is a thread somewhere with hundreds of pages hedging the EURUSD USDCHF. after months and 1000s of posts they knew it was just trading EURCHF LOL!

here is my rule of thumb: "how many traders in the world are trading this? how many are starring at this?"

Well after skipping 98% of systems, You will find some HOLY price patterns!








.
Follow the Trend, thats all
  • #197
  • Feb 28, 2011 5:42pm Feb 28, 2011 5:42pm
Quoting sidhujag
Yes it is read my earlier post... you are near zero exposure but still doesn't mean you can't make profit... think about what happens when someone wants to do a big exchange of EUR's to USD's. The rings don't automatically balance out you know.. it takes supply on one and demand on another over a period of time for this to happen.

The bit about profit is dependent on execution... its a high risk low reward strategy that offers a very high hit rate if you get it right...

I'm surprised you never heard of triangular arbitrage?

I think you may have...
You mention near zero exposure can turn a profit. Of course it can cause there's exposure. But there is no reason to use three pairs to get exposure in one pair all the while paying extra spreads costs. The issue is that people do not understand where the profit or loss is coming from. And I have no idea why you are mentioning triangular arbitrage when it has nothing to do with what this "strategy" is doing. What people are doing here with three pairs is not arb. They are just creating a single pair trade synthetically, using three pairs, that's directional and paying extra spread. That's it. No arb. No market inefficiencies. Do the math. When they open these trades any profit will be from the movement of the synthetic pair and has absolutely nothing to do with inefficiencies or correlations changing or anything else. It's about exposure to a single pair. That's it. Apparently I can't say that enough but it's still not getting through. True arbitrage is completely different from what they are doing here. They may think it's arb but it's not. They have exposure. And with no exposure there can be no profit unless there is a inefficiency between the pricing of the pairs which is extremely rare and will not overcome the spread costs. Open a complete hedge, zero exposure, and see how many times you see a profit beyond spread costs.
  • #198
  • Feb 28, 2011 6:09pm Feb 28, 2011 6:09pm
Thanks lonestar for explanation...As a slow learner, I dig you
  • #199
  • Feb 28, 2011 7:10pm Feb 28, 2011 7:10pm
i think some peoples here are confusing every body with nonsense discussions
around this strategy,we are all here to get ability to make money in this market
if there is a simple way to go and grab that profit it welcomes,otherwise please
donut disturb others mind and system as well,i think the experiment for those people that donut agree with this strategy would be excellent.

regard
  • #200
  • Mar 1, 2011 11:40am Mar 1, 2011 11:40am
Quoting Lonestar
You mention near zero exposure can turn a profit. Of course it can cause there's exposure. But there is no reason to use three pairs to get exposure in one pair all the while paying extra spreads costs. The issue is that people do not understand where the profit or loss is coming from. And I have no idea why you are mentioning triangular arbitrage when it has nothing to do with what this "strategy" is doing. What people are doing here with three pairs is not arb. They are just creating a single pair trade synthetically, using three pairs, that's...
Hey Lonestar

I have to agree with you as I am "stuck" in a basket e/u/j for over a week as the market moved. My dd has remain about the same about 60pips. What makes this confusing is I cant say what direction a particular pair(s) has to go for me to TP out.
If you say we are just playing a pair with only with high spread then what pair is that? Say on G/Chf/U or E/U/J
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