For a good example of hedging go to fbsinvestments.com & click on "How to Use" on upper left hand corner. This the only signal service that uses swing style & hedging that I know of and they are very accurate from my short experience with them. I only did the signals for 1 month & only was in a few trades, but thier history page is accurate as far as I can tell. You can go over thier history page of what happened also & look at the charts to get a good idea of how to use hedge really good. I think the average hold for a trade there is one week.
I'm shocked that most traders don't use hedging techniques. I think it's really the only way to be really successful without losing that much. If you use the strategy right, you shouldn't really lose if you think about it. We are doing the same thing that the big commercial traders do, which is called "circular trading." A few big guys raise the market, & next session the next big commercial traders will come in & buy those positions. These guys really can't lose & thier profits are all off our backs. To be smart, we need to trade like them. Swing style with hedging is doing the same thing here. If a trade goes against our orignal position, then have hedge about 40-60 pips below that will get triggered. Double the amount of lots on hedge position so that in order to make up the gap you only need it to go 20-30 pips into your hedge. Once you "define" a reversal point & market heads towards your original position, cut the hedge & now we can emply another tactic called "double backing." You can hedge long with gaining much more profit & once you get close to your original long position, you can either cut your orignal position or cut the (long) hedge & let it ride north for even more profit.
So you see, hedging is a smart money management method. If used correctly, it can be used very successfully.I would reccomend that to get alot of experience using this method because it can also be somewhat dangerous if you don't know what the hell you are doing. The key is "defining" where the reversal points are & market direction. This is pivotal when knowing where to place a hedge & when to cut your hedge position. Hope this helps out a little....
I'm shocked that most traders don't use hedging techniques. I think it's really the only way to be really successful without losing that much. If you use the strategy right, you shouldn't really lose if you think about it. We are doing the same thing that the big commercial traders do, which is called "circular trading." A few big guys raise the market, & next session the next big commercial traders will come in & buy those positions. These guys really can't lose & thier profits are all off our backs. To be smart, we need to trade like them. Swing style with hedging is doing the same thing here. If a trade goes against our orignal position, then have hedge about 40-60 pips below that will get triggered. Double the amount of lots on hedge position so that in order to make up the gap you only need it to go 20-30 pips into your hedge. Once you "define" a reversal point & market heads towards your original position, cut the hedge & now we can emply another tactic called "double backing." You can hedge long with gaining much more profit & once you get close to your original long position, you can either cut your orignal position or cut the (long) hedge & let it ride north for even more profit.
So you see, hedging is a smart money management method. If used correctly, it can be used very successfully.I would reccomend that to get alot of experience using this method because it can also be somewhat dangerous if you don't know what the hell you are doing. The key is "defining" where the reversal points are & market direction. This is pivotal when knowing where to place a hedge & when to cut your hedge position. Hope this helps out a little....