Joined Apr 2007
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Status: Gettin' kick in the nutz every day!
|721 Posts
U.S. traders: How have you "gotten around" the banishment on hedging? Hedging here being opening a Long and Short at the same time, on the same pair, on the same account.
U.S. traders: How have you "gotten around" the banishment on hedging? Hedging here being opening a Long and Short at the same time, on the same pair, on the same account.
Ignored
Like the tax questions in the other thread, I'm starting to wonder of people from the CFTC etal., use these forums to find out what other limitations they wish arbitrarily place on retail forex traders.
Does anyone else have the same gut feeling about such posts? Or, maybe I'm just too paranoid.
Yes, there are several ways around the no hedging rule and some of them should be laughingly obvious. The real question is why on earth did we allow it to happen in the first place? Were too many brokers starting to actually lose money, because traders finally learned how to properly hedge their fx trades?
If you know how to design the right set of indicators and an EA that uses them, then you can use hedging to your advantage and almost never lose any capital on a per session basis. You will lose money on various trades, but you should either break-even, or net a profit on the session, if you do it correctly. I wonder if too many of those types of traders, forced these retail bucket-shops to cover their counter-party tracks, by pushing the regulators to eliminate hedging, while they sat back and told all their customers - "Hey! We are not the cause of this new regulation!"
Again, I could be paranoid. Or, I could be hitting the nail squarely on the head, here. Who will ever know for sure?
U.S. traders: How have you "gotten around" the banishment on hedging? Hedging here being opening a Long and Short at the same time, on the same pair, on the same account.
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Open 2 sub accounts with your broker. One for longs and one for shorts. IBFX allows me to do this with ease.
Why would you want to hedge anyway? What is the sense in buying and selling the same pair at the same time? You are market neutral but paying double the spread. Any move in the market will get you nothing. Roll is cancelled out for a loss too in overnight positions. I'd LOVE to finally hear a good explanation for why some of you think hedging in the forex market is a good idea.
Why would you want to hedge anyway? What is the sense in buying and selling the same pair at the same time? You are market neutral but paying double the spread. Any move in the market will get you nothing. Roll is cancelled out for a loss too in overnight positions. I'd LOVE to finally hear a good explanation for why some of you think hedging in the forex market is a good idea.
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Some people trade multiple systems on different time frames, sometimes the signals of the systems oppose each other in directions and/or lot sizes. If you have a long-term system that puts you long 6 lots with stops and limits in place, and a short-term system that puts you short on 2 lots of the same pair with stops and limits that overlap the S/L's of the long positions then it ends up being a clusterflock of fills of entries and exits and you can't keep track of what stop or limit was hit or how each system is performing.
Ok this is a good example. One migh want to hold a long term position on EU for a few weeks while also scalping the same pair in different directions multiple times per day.
But to those who hedge their positions to "freeze" or "lock" their profit/loss, it is simply nonsense in my opinion. People who think there is any benefit to this practice don't understand the very most basic principles of trading.
Ok this is a good example. One migh want to hold a long term position on EU for a few weeks while also scalping the same pair in different directions multiple times per day.
But to those who hedge their positions to "freeze" or "lock" their profit/loss, it is simply nonsense in my opinion. People who think there is any benefit to this practice don't understand the very most basic principles of trading.
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Agree 100%. Hedging is a tool of convenience (in situations such as that described by seant7326), but that is all. There are no mathematical benefits from hedging, because all hedged positions ultimately resolve themselves into being net long, short or flat, and can therefore be replicated by a single position, at every point along the way.
There might be situations where hedging is reasonable.
Say for example you went long in anticipation of an uptrend.
Now you see a pullback which might be good for a scalp trade.
You still think that the uptrend is intact, so you don't close the first trade.
Instead you open the counter-trend hedge trade and might be able to grasp some pips.
If the trend then continues you would have gained more than in simply staying just long.
