|
Joined Mar 2007
|
Status: Señor Member
|801 Posts
Quoting Thijs
Disliked
Now what iff I want to hedge let's say EURUSD short
using:
EURJPY (Short) and USDJPY (Long)
How do I have to calculate my lotsize then ?
Ignored
I am not entirely sure why you would want to do this, unless there is some sort of arbitrage you are looking to hit (even so, there may be better pairs for you to choose).
In any case, assuming you have your reasons, use the calculations in the article above, except substitute JPY instead of USD in the "Type 2" calculation. Please also note that there is a typo in the Type 2 paragraph: the part that reads
Quote
Disliked
If we want to go long X/Y, then we go long both X/USD and Y/USD.
should actually read
Quote
Disliked
If we want to go long X/Y, then we go long both X/USD and USD/Y.
I would also like to stress that traders should be very familiar with these types of calculations, and should perform them on paper repeatedly until they are familiar with them, not just for crosses, but for any pair that you trade. It really helps to understand where all these important numbers come from, such as pip values, and it helps to calculate your exposure to any single currency in case you have multiple positions open, etc...
I am not entirely sure why you would want to do this, unless there is some sort of arbitrage you are looking to hit (even so, there may be better pairs for you to choose).
Ignored
Thanks !!
It's interesting to know how my Portfolio is balanced (Net Exposure).
My understanding of the pairs has grown by just calculating what they actually represent.
Do you know or have a spreadsheet/indicator that can make these calculations somewhat easier ?
Inflation in things we need, Deflation in things we want.
Do you know or have a spreadsheet/indicator that can make these calculations somewhat easier ?
Ignored
It's easy to make one - just do up the 3 formulas from the article and vary the position size and the appropriate price for each one. You can also get it to calculate pip values etc. This will then set you up on a good course to get position sizes calculated based on how much risk you want to take on.
My question is just like host about Hedge. I love hedge very much and i spend 3 months to think about it but it doesn't work. Because i face 2 questions.
1.How to decide lots , for exemple, i want to buy X eurusd ,sell x gbpusd and sell x eurgbp?
2.how to know about the correlation?
Thanks in advance, I am chinese boy ,it has not many informations about this theme with chinese and in fact i speak very bad in english. It my first time write in english. I hope someone can help me to answer these question . I am waiting for u answer. thansks!
I´m not sure if it was mentioned in the article, but pip values change as a function of price. Therefore, for a perfect hedge you´ll need to continuously adjust the the lot sizes.
Also, a source of profit for most retail brokers is the skew of interest rate swaps. You pay a higher swap in one direction, than you receive if you have a position in the other direction.
I´m not sure if it was mentioned in the article, but pip values change as a function of price. Therefore, for a perfect hedge you´ll need to continuously adjust the the lot sizes.
Also, a source of profit for most retail brokers is the skew of interest rate swaps. You pay a higher swap in one direction, than you receive if you have a position in the other direction.
Ignored
Thanks a lot, really. Now,it's my second time writing in english.
can u telle me help to decide the lot sizes, please? I am really very serious about that, please someone can help me?
