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MB Trading Futures - Introduction

  • #7,221
  • Apr 13, 2011 1:09am Apr 13, 2011 1:09am
Quoting cgrey
If I am in a long-term position on a pair, and want to take a short-term position in the opposite direction to capitalize on a retraction, for example, with my long-term bias still in place, why would I want to pay spread and commission to close my long term position and then to re-open it after I close my short-term position? It amazes me that some folks would want to give away profits like this.
Good point!

the nay sayers just don't have a clue what they are talking about,
if it wasn't profitable, then the hedgefunds wouldn't be doing it. period!
Bulls are stupid Animals!especially when Im short!
  • #7,222
  • Apr 13, 2011 3:27am Apr 13, 2011 3:27am
Quoting roughtrader
Good point!

the nay sayers just don't have a clue what they are talking about,
if it wasn't profitable, then the hedgefunds wouldn't be doing it. period!
  • #7,223
  • Apr 13, 2011 4:34am Apr 13, 2011 4:34am
Quoting blueJ
sure...

one of your STP liquidity providers can implement a system where there are 2 bids that are competing for best bid, but they are cancel and bid again in quick succession....
How big was the trade size?
  • #7,224
  • Apr 13, 2011 4:59am Apr 13, 2011 4:59am
Quoting roughtrader
Good point!

the nay sayers just don't have a clue what they are talking about,
if it wasn't profitable, then the hedgefunds wouldn't be doing it. period!
Let's not start it up again...

Earlier on, the rep from MBT asked for an example of why hedging would be useful. More than anything else, I posted this as an example in response to his request.

I know the debate has gone on for years, and will continue to if we let it. This isn't the place to drag it out...
  • #7,225
  • Apr 13, 2011 11:24am Apr 13, 2011 11:24am
Quoting cgrey
So, if the retraction that I am trading is 5 lots, as opposed to the 1 lot I'm in the longer term trade for, my profit on that same retraction is 5 times greater than what I "save" by going flat and re-entering at the same original position size when the retraction ends. Given the wider stop I'd have on the longer term trade, I almost certainly would not want to re-enter it with 5 lots, so I'm not making up the same by being flat during the retraction as I would be trading it with a larger position.
You don't have to be flat. You can use different lot sizes. Not trying to pick on you here, just trying to educate because this is an issue some people have trouble understanding. Here's one last example that is similar to what you are saying, and I'm assuming all positions will be closed eventually.

hedging

(1) long 1 lot @ $1 ($.10 commish)
(2) short 2 lots @ $2 ($.20 comm) - you are long 1 lot, short 2 lots
(3) close 2 short lots @ $1 ($.20 comm) - you've now booked profits of (2 lots x $1 = $2) and are long 1 lot still
(4) close 1 lot long @ $2 ($.10 comm) - you are flat and have booked (1 lot x $1 = $1)

4 trades, $0.60 of commission, $3 total profit (ignoring commission)

non-hedging

(1) long 1 lot @ $1 ($.10 commish)
(2) short 2 lots @ $2 ($.20 comm) - you are now NET SHORT 1 lot @ $2, and have now booked profits from your initial long position of ($1 x 1 = $1)
(3) long 2 lots @ $1 ($.20 comm) - you are now NET LONG 1 lot @ $1, and have booked from your short position ($1 x 1 = $1)
(4) close 1 lot long @ $2 ($.10 comm) - you are flat and have booked (1 lot x $1 = $1)

4 trades, $0.60 of commission, $3 profit

This isn't to stir up debate about hedging, I could care less if you want to do it, but let's be very clear here, there's no monetary advantage to hedging whatsoever. That is why the MBT rep is asking why hedging would be more useful. Whatever advantage is purely psychological, i.e. managing two separate trades in the same symbol as opposed to managing one ongoing trade in the same symbol. Anything hedging can do, non-hedging can do better (when you factor in rollover, margin, etc.). I think it's absolutely necessary to dispel whatever myths are out there about "hedging" when there's clearly some traders out there who are being duped about the benefits. FIFO trading is just simply superior, and people should understand why before they start badgering brokers to offer it for reasons that don't exist.
  • #7,226
  • Apr 13, 2011 12:14pm Apr 13, 2011 12:14pm
Have you reduce min lot size? I see people put trade with 500 unit on EUR/USD!
  • #7,227
  • Apr 13, 2011 1:51pm Apr 13, 2011 1:51pm
Hey,

I gotta problem with my account history. At all trades the entry time is one hour earlier stated as it really was taken.

Any explanations on that?

Cheers,
Olarion
  • #7,228
  • Apr 14, 2011 9:22am Apr 14, 2011 9:22am
Quoting roughtrader
Good point!

the nay sayers just don't have a clue what they are talking about,
if it wasn't profitable, then the hedgefunds wouldn't be doing it. period!
hedge funds never take the same instrument both long and short at the same time......the title hedgefund is a misnomer in the first place......A real hedge would be say "long on oil, and hedging short on gold or another correlated instrument" going long and short on the same instrument is not a true hedge.

you could hedge a cross currency effectively like this long eur/jpy = long eur/usd + long usd/jpy that is how the cross is made....if you wanted to "hedge" this you'd go long 2 lots eur/jpy short 1 lot eur/usd short 1 lot usd/jpy......this is a true hedge. With such a hedge you can take advantage market flow and make money during fluctuations while at the same time covering most of the risk.

Anytime you are both long and short on the same instrument in a direct fashion your just flat its not a real hedge.
  • #7,229
  • Apr 14, 2011 4:40pm Apr 14, 2011 4:40pm
Quoting SnapCracklePip
hedge funds never take the same instrument both long and short at the same time......the title hedgefund is a misnomer in the first place......A real hedge would be say "long on oil, and hedging short on gold or another correlated instrument" going long and short on the same instrument is not a true hedge.

you could hedge a cross currency effectively like this long eur/jpy = long eur/usd + long usd/jpy that is how the cross is made....if you wanted to "hedge" this you'd go long 2 lots eur/jpy short 1 lot eur/usd short 1 lot usd/jpy......this...
Did he really just imply (not you, the person you replied to) that a hedgefund by definition was always net flat. OMG.
  • #7,230
  • Apr 14, 2011 5:26pm Apr 14, 2011 5:26pm
Quoting SnapCracklePip
you could hedge a cross currency effectively like this long eur/jpy = long eur/usd + long usd/jpy that is how the cross is made....if you wanted to "hedge" this you'd go long 2 lots eur/jpy short 1 lot eur/usd short 1 lot usd/jpy......this is a true hedge.
Are you sure about that?
  • #7,231
  • Apr 15, 2011 7:40am Apr 15, 2011 7:40am
what are the margin requirements during the weekend? 100:1, like during the week?

regards
leeon
Everyone has a plan 'till they get punched in the mouth.
  • #7,232
  • Apr 15, 2011 8:56am Apr 15, 2011 8:56am
justin,i need to check with u that after the NFA's new ruling,is $100 or $200 the min.amt thats require to trade for my existing fx acct?
  • #7,233
  • Apr 15, 2011 4:26pm Apr 15, 2011 4:26pm
Quoting SnapCracklePip
hedge funds never take the same instrument both long and short at the same time......the title hedgefund is a misnomer in the first place......A real hedge would be say "long on oil, and hedging short on gold or another correlated instrument" going long and short on the same instrument is not a true hedge.

you could hedge a cross currency effectively like this long eur/jpy = long eur/usd + long usd/jpy that is how the cross is made....if you wanted to "hedge" this you'd go long 2 lots eur/jpy short 1 lot eur/usd short 1 lot usd/jpy......this...
Thank you for explaining it to all the newbies out there thinking they are hedging.
  • #7,234
  • Apr 15, 2011 4:58pm Apr 15, 2011 4:58pm
/hedge

If you want to run multiple strategies on the same pair (example the same strategy on multiple timeframes, or just different strategies ) without interference between them at some point you may be in a hedge situation on the same pair; if there is no hedging allowed there could be a problem if your strategy is actively monitoring the open trades to modify TP or SL based on the market conditions
  • #7,235
  • Apr 15, 2011 7:43pm Apr 15, 2011 7:43pm
All depends on how you approach the "strategies". As an example, you can track your "virtual" positions per strategy and simply net them. So if strategy A wants to go long 100K and strategy B goes short 150K, your real live net position is short 50K, but each strategy continues tracking its respective long 100K and short 150K. Once your strategies decide to close positions, you will be virtual and real flat.

Quoting Rikers
/hedge

If you want to run multiple strategies on the same pair (example the same strategy on multiple timeframes, or just different strategies ) without interference between them at some point you may be in a hedge situation on the same pair; if there is no hedging allowed there could be a problem if your strategy is actively monitoring the open trades to modify TP or SL based on the market conditions
  • #7,236
  • Apr 16, 2011 12:08am Apr 16, 2011 12:08am
Quoting fiberangel
All depends on how you approach the "strategies". As an example, you can track your "virtual" positions per strategy and simply net them. So if strategy A wants to go long 100K and strategy B goes short 150K, your real live net position is short 50K, but each strategy continues tracking its respective long 100K and short 150K. Once your strategies decide to close positions, you will be virtual and real flat.
Sry for the term ; "strategies" = EA. And yes, that is a big problem in coding, because you need a master EA to track virtual positions of all EA or to code all of the EA in one EA (depending what platform you use)....

virtualization is the only fix in no heading situation but a very bad one from the programming side, even if it goes in your favor and reduces commission
  • #7,237
  • Edited 12:51am Apr 16, 2011 12:26am | Edited 12:51am
Quoting zznbrm
Are you sure about that?
yeah maybe 2 lots short on euro and ninja to cover the 2 lots on euppy trade but the point is dont flat hedge......thats not a hedge......it only gets you flat and only the middle man gains........

true hedges like taking options to cover loss are good hedges .....say im long euro with a profit target of 1k and stop at 300bucks.....i could buy a put (sell) option for 100 bucks that would pay 300-400 bucks on a strike at my stoploss of my trade.......if my trade wins 1000 id loose the option trade so id net 900 bucks.......if my trade looses my option would win and cover most of my loss to near break even......

that is hedging........

going long and short to be flat is simply digging a hole deeper ......yeah your balance increases but ur equity does NOT!

argue all you like.......we know noobie traders love flat hedges.........
  • #7,238
  • Apr 16, 2011 12:55am Apr 16, 2011 12:55am
Quoting Rikers
/hedge

If you want to run multiple strategies on the same pair (example the same strategy on multiple timeframes, or just different strategies ) without interference between them at some point you may be in a hedge situation on the same pair; if there is no hedging allowed there could be a problem if your strategy is actively monitoring the open trades to modify TP or SL based on the market conditions
pffft
  • #7,239
  • Apr 16, 2011 12:57am Apr 16, 2011 12:57am
Quoting mdiz2
Thank you for explaining it to all the newbies out there thinking they are hedging.
i been at this game 7 years and im still standing......most of you will be gone in the first year
  • #7,240
  • Apr 16, 2011 1:01am Apr 16, 2011 1:01am
Quoting leeon
what are the margin requirements during the weekend? 100:1, like during the week?

regards
leeon
50:1......... are you new?
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