EurAnalysis | Page 1310 | Forex Factory

Options

Go to
Permalinks
Print Thread

Related Instruments

EUR/USD

Similar Threads

EurAnalysis Kindergarten 24 replies

Attachments: EurAnalysis
Exit Attachments

EurAnalysis

  • #26,181
  • Apr 5, 2012 4:05am Apr 5, 2012 4:05am
Another level, which I focus on, is zone below 1,31. As we had more fights for this price, investors created multiple supports just below this number. This resulted in creation of a ressistance zone which is marked turqouise down on the chart.

T
Attached Image (click to enlarge)
Click to Enlarge Name: h4.gif Size: 38 KB
"I know one thing, that I know nothing." Sokrates
  • #26,182
  • Apr 5, 2012 4:11am Apr 5, 2012 4:11am
Quoting TheSwede
...

In this case he opens a long and a short at the same time????? Now how can that be hedging?
Well, simply talking, you answered yourself in your very own post.

If you take counterposition, you offset losses. It is the most simplified hedge which is possible. It is nonscence to do it, but it is still a hedge.

T
"I know one thing, that I know nothing." Sokrates
  • #26,183
  • Apr 5, 2012 4:11am Apr 5, 2012 4:11am
A shalow retracement, but 3160 level was good SR recently, so that was one of the reasons why I took short at 3157. Wanted to add on Break-Pullback-Continuation of little support trendline, but was on phone then...

Anyways, banked +24 for 1/2, and TP activated at 3115 for +42 on second half. Ussualy watching all TF, but especially M15, H1 and H4. Here is why I took trade:
Attached Image (click to enlarge)
Click to Enlarge Name: eu-short-05-04-2012.gif Size: 25 KB
  • #26,184
  • Apr 5, 2012 4:16am Apr 5, 2012 4:16am
Quoting rekon67
Going long and short is going flat. It's the same as having no position on. The only difference is you'll pay the spread twice (a bad thing).

Having a short and long position in the same instrument, and then taking the short one off, is the same as just entering long. That's it.

Furthermore, how do you know that the market will continue to move up after you take the short off? If it moves down again will you put the short on again? If you do, you will pay the spread a third time for a single trade.
That is correct.
However, allow me to make an argument here in favor of hedges.

1. You have a short position at 1.32 and price is moving down.
2. Price reaches 1.31 and you expect a 40 to 50 pip bounce before it continues on to 1.3050
3. You want to lock in 50% of your profit in case it does not continue down after the bounce but you also want the chance to capitalize on the bounce and further capitalize on the continuation with the full position. So instead of closing have the sell, you take a buy position of half the sell size.
4. Possible scenarios.
a. Price goes up to 1.3150, you close the half position buy and price continues down with your full position. Result: Maximum return for 1 extra spread.
b. Price goes up to 1.3150, you close the half position buy and price continues up to 1.32 and you close the sell at BE and the buy in profit. Result: Same profit as closing half the sell at 1.31 and not taking a long. Extra cost of one spread.
c. Price continues down to 1.3050 without bouncing and you close the full sell in profit and the half buy in a loss. Result: 100 pips at full position plus 50 pips at half position = same effect as closing half the position at 1.31 and continuing down with a cost of one extra spread.

So for the cost of one extra spread, you have a chance at extending your profit. If you close your sell in full and then re-enter, you still have the extra spread to pay anyway.

Notwithstanding the above, I agree that even steven hedging is pointless.
Those who say it cannot be done should not interrupt those who are doing it
  • #26,185
  • Apr 5, 2012 4:17am Apr 5, 2012 4:17am
Quoting PipTrapper
1.31 barrier defense should kick in soon...

E/U H4

Attachment
FAIL!!
Those who say it cannot be done should not interrupt those who are doing it
  • #26,186
  • Apr 5, 2012 4:18am Apr 5, 2012 4:18am
Quoting PipTrapper
FAIL!!
1.3080 my point of resistence.
  • #26,187
  • Apr 5, 2012 4:19am Apr 5, 2012 4:19am
Quoting rekon67
1.3080 my point of resistence.
support???
Those who say it cannot be done should not interrupt those who are doing it
  • #26,188
  • Apr 5, 2012 4:20am Apr 5, 2012 4:20am
Quoting PipTrapper
That is correct.
However, allow me to make an argument here in favor of hedges.

1. You have a short position at 1.32 and price is moving down.
2. Price reaches 1.31 and you expect a 40 to 50 pip bounce before it continues on to 1.3050
3. You want to lock in 50% of your profit in case it does not continue down after the bounce but you also want the chance to capitalize on the bounce and further capitalize on the continuation with the full position. So instead of closing have the sell, you take a buy position of half the sell size.
4. Possible scenarios.
a....
Then we can call it Trading ... Hedging has some orthodox definition
  • #26,189
  • Apr 5, 2012 4:21am Apr 5, 2012 4:21am
Quoting PipTrapper
support???

Resistence for the falling Price = Support
  • #26,190
  • Apr 5, 2012 4:23am Apr 5, 2012 4:23am
Quoting rekon67
Resistence for the falling Price = Support

Not sure next better point is 1.3025!
  • #26,191
  • Apr 5, 2012 4:23am Apr 5, 2012 4:23am
Quoting rekon67
Resistence for the falling Price = Support
Those who say it cannot be done should not interrupt those who are doing it
  • #26,192
  • Apr 5, 2012 4:32am Apr 5, 2012 4:32am
Quoting rekon67
Going long and short is going flat. It's the same as having no position on. The only difference is you'll pay the spread twice (a bad thing).

Having a short and long position in the same instrument, and then taking the short one off, is the same as just entering long. That's it.

Furthermore, how do you know that the market will continue to move up after you take the short off? If it moves down again will you put the short on again? If you do, you will pay the spread a third time for a single trade.

First of all, the whole idea of hedge began earlier than the concept of hedging in forex. Secondly, in the definition, the hedge talks about instruments, nowhere it is said that the instruments have to be different.

"Definition of 'Perfect Hedge'
A position undertaken by an investor that would eliminate the risk of an existing position, or a position that eliminates all market risk from a portfolio. In order to be a perfect hedge, a position would need to have a 100% inverse correlation to the initial position. As such, the perfect hedge is rarely found."
Investopedia

And thirdly, it's not opening both the positions at the same price, but either blocking the position when you are not using a SL or blocking a profit through news or when you expect a correction or something.

EDIT: and it has never been cheaper to enter and exit a position like nowadays, so paying a tinny spread should be the least of your concerns.
charting the euro...
  • #26,193
  • Apr 5, 2012 4:38am Apr 5, 2012 4:38am
Quoting shhhhh
First of all, the whole idea of hedge began earlier than the concept of hedging in forex. Secondly, in the definition, the hedge talks about instruments, nowhere it is said that the instruments have to be different.

"Definition of 'Perfect Hedge'
A position undertaken by an investor that would eliminate the risk of an existing position, or a position that eliminates all market risk from a portfolio. In order to be a perfect hedge, a position would need to have a 100% inverse correlation to the initial position. As...

If you are following the strategy posted by PT then I think the idea is comfortable otherwise it increases the Risk exponentially!

in Forex this Hedging is a customized term, I am not dis-agreeing, I just wanted to let the others know about my hesitation about that
  • #26,194
  • Apr 5, 2012 4:52am Apr 5, 2012 4:52am
Let me counter that then

This is not hedging this is taking two different trades on two different signals on different time frames. Or failing to take profit.

Quoting PipTrapper
That is correct.
However, allow me to make an argument here in favor of hedges.

1. You have a short position at 1.32 and price is moving down.
2. Price reaches 1.31 and you expect a 40 to 50 pip bounce before it continues on to 1.3050
3. You want to lock in 50% of your profit in case it does not continue down after the bounce but you also want the chance to capitalize on the bounce and further capitalize on the continuation with the full position. So instead of closing have the sell, you take a buy position of half the sell size.
4. Possible...
  • #26,195
  • Apr 5, 2012 4:55am Apr 5, 2012 4:55am
Good Morning Traders

BULLs finally gave up.
What looked like a nice beginning of a correction, turned to be a minor spasm on further way down.
This morning ascending support line was finally broken and we need to look down deeper to find different support lines.
On my chart first possible support line is at 1.3060 which is nice 50% Fibo retracement line of whole January 2012 UPPER leg,
but I would focus more on another ascending support line and a little bit below, which can be hold until tomorrow's data release.
I was stopped out on BE this morning, but hope you were doing much better ;-)
Goooooood Luck

Attached Image (click to enlarge)
Click to Enlarge Name: eurusd.gif Size: 34 KB
Read Charts - Not Papers
  • #26,196
  • Apr 5, 2012 5:10am Apr 5, 2012 5:10am
Quoting TheSwede
Let me counter that then

This is not hedging this is taking two different trades on two different signals on different time frames. Or failing to take profit.
Semantics my friend. My definition of Hedge is to take two opposing trades which limit or block losses whether on the same instrument or not. There are as many ways to hedge as there are to win or lose in this game.

Anyway, everyone's got their own style. Some styles make no sense, but if they all did, then this market would die because in order for there to be winners, there have to be losers. Forex is a zero sum game. It does not create nor does it destroy money. Banking on the other hand is a different story
Those who say it cannot be done should not interrupt those who are doing it
  • #26,197
  • Apr 5, 2012 5:14am Apr 5, 2012 5:14am
Quoting halkins
Good Morning Traders

BULLs finally gave up.
What looked like a nice beginning of a correction, turned to be a minor spasm on further way down.
This morning ascending support line was finally broken and we need to look down deeper to find different support lines.
[color=black][font=Verdana][b]On my chart first possible support line is at 1.3060 which is nice 50% Fibo retracement line of whole January 2012 UPPER leg,...

I'm watching that fib too... let's see if it brings something, after 4 consecutive down days
charting the euro...
  • #26,198
  • Apr 5, 2012 5:19am Apr 5, 2012 5:19am
Quoting PipTrapper
Semantics my friend. My definition of Hedge is to take two opposing trades which limit or block losses whether on the same instrument or not. There are as many ways to hedge as there are to win or lose in this game.

Anyway, everyone's got their own style. Some styles make no sense, but if they all did, then this market would die because in order for there to be winners, there have to be losers. Forex is a zero sum game. It does not create nor does it destroy money. Banking on the other hand is a different story
So true!
I observe your reality but live my own.
  • #26,199
  • Edited 5:30am Apr 5, 2012 5:20am | Edited 5:30am
Quoting shhhhh
I'm watching that fib too... let's see if it brings something, after 4 consecutive down days
At this point I don't expect a significant bounce until we touch down on the daily H/S neckline. Let's see what NFP does for this pair.

Attached Image (click to enlarge)
Click to Enlarge Name: eu-d1.gif Size: 29 KB
Those who say it cannot be done should not interrupt those who are doing it
  • #26,200
  • Apr 5, 2012 5:40am Apr 5, 2012 5:40am
Attached Image (click to enlarge)
Click to Enlarge Name: genuinelyFX_2012.04.05_eurusd_daily.jpg Size: 147 KB
charting the euro...
199 traders viewing now