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  • #561
  • May 6, 2012 12:22am May 6, 2012 12:22am
Quoting fierceman

"Hedging" does not help you, it only hurts you. You will make more money (or lose less) the moment you wean yourself off the "hedging" tit. This is a mathematical fact.
Absolutely!


Quoting fierceman

The type of hedging that is done by professionals does not mean, has never meant, and will never mean "buying and selling the same thing at the same time and thinking that the two don't offset".
lol, try telling Nanningbob that fact!
  • #562
  • May 6, 2012 12:25am May 6, 2012 12:25am
Quoting thelws

What flaw in logic I am attempting to point out is that a trade can be replicated using a SL method instead of a hedge.....
Excellent posts, explanations, and examples....but I think you're probably banging your head against a brick wall!

These guys don't want to know the logic or math, it's a psychological issue for them, they're unable to handle risk/loss is all so they dream up ways to convince themselves that what they're doing by nedging is perfectly logical. It seems they're much happier living/trading in denial rather than accepting the patently obvious!
  • #563
  • May 6, 2012 1:47am May 6, 2012 1:47am
Quoting George Adams
This SL vs. No SL debate is endless and traders on both sides have shown with their method a trader can be profitable either way. However, I believe the real difference is the amount of return on your investment potential each of those successful methods can generate.

I have traded both methods successfully over my 10 years of trading and the use of a SL allows you to generate more income from your investment. Now I did clarify my criteria as both methods being successful for the basis of my opinion. Use of a SL is not easy to master, however...

Hi George,


What you have shown here is a very sound and solid way to trade. My only concern and if I may get your opinion on this is that when you use such a small sl (15-20pips) in higher tf such as 1hr it will get hit more often than not before it takes off for profit.. in other word the trade is spot on but not enough breathing room given to catch the bounty. I trade the same way but because of this issue I went down to lower tf (5m) to spot my entry more precise.
I think I have seen you in my thread from time to time so you may relate to what I am talking about.

I would like to hear about your experience and results trading this way in higher tf (1hr) in relation to sl hit in such small frame.. how often it gets hit.. would you reenter and how.. etc, ..Looking forward to your reply.


Good trading to all.
Dean
  • #564
  • May 6, 2012 2:20am May 6, 2012 2:20am
Quoting AllanS
fti doesn't use stops. Graham (Millipede) hedges. At a guess, the two best traders in FF.
Yes, very probable Graham has 'n sell position open in 1.59 region for EurUsd and a buy position open at 1.20 region. What is wrong with a 3000 to 4000 pips floating profit, especially if you closed several 1000 to 2000 pips positions in between? Don't make much sense to me to come up with absolutes without taking a particular strategy, method etc into consideration. That is like ignoring the elephant in the room. If you are profitable, feel happy about your profits then what is the problem? I think it is a illusion to think about some maximized curve fitted profit hind sight function. What is an edge? Would participating, following the trend, determination, patience, money management, cutting losses, running winners qualify as edges? It does not seem philosophical very solid to me to make some mathematical / statistical absolute statement about positive mathematical expectation. It sounds nice in theory, but how does it work in reality? (I am thinking some clever Nobel price economist fund that went bust on these kind of ideas) How much data do you include / exclude? When will you know that your edge does not work anymore mathematically / statistically? What significance level do you pick? What if your strategy start to work again, just after you dump it because it does not work any more because of some or other arbitrary chosen significance level? However now you sit out, because there is a lag before enough data is gathered to confirm, that your strategy was still in fact working (though not statistically any more) etc. I am not saying statistics is completely useless, but that it also has some serious weakness like most things in life as we do not live in a perfect world.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #565
  • May 6, 2012 3:41am May 6, 2012 3:41am
Quoting pipmutt
Excellent posts, explanations, and examples....but I think you're probably banging your head against a brick wall!
Yes, excellent but not reflecting real life and thus besides the point altogether.

So all what you are doing is banging your head against that brick wall inside your own head.

Quote
These guys don't want to know the logic or math,
Because it does not reflect real life.

All of your perfect logic and math is only doing hindsight analysis:

If the hedger is going short here, the SL guy will do this.
If the hedger is going long, the SL guy will do that.

And with that hindsight you can always prove that SL-trading is much more profitable because you can trade with a higher initial risk ( plus you don´t pay swap etc.)

So yes, friends:
with perfect hindsight you will always beat the hedger and the guy
who does not use a SL.

There is no doubt about it.

But when will you stop beating that dead horse ?

You whole math and logic does not match real life.

In real life the trader will not do what you tell us he would do when you know where price went up or down on historical charts.

Is it so hard to accept reality ?

In real life the trader is placing his SL too near and will be stopped out.
He is cutting a winning trade and he is letting run the losing trade.

He is a prey for stop-hunting brokers and for traders who know how to trade against the herd of other traders.
Maybe you should read "Trade the Trader" by Quint Tatro.
The only reason why he is so successfull in his trading career is the herd of traders who use a SL and he knows where their SL sits and how to take the money from them.


Although mathematically and logically the SL-user is ahead in theory, in real life he gets beaten by nanningbob and others who don´t use a SL.

That is all there is to say about it, but all you are doing is beating a dead horse, so the psychological issue is yours but somehow you are not able to admit it.

Conclusion:
You can belong to the 5% who win by using SL and/or using no SL .
All depends on the skills and personality of the trader.
  • #566
  • Edited 4:37am May 6, 2012 3:41am | Edited 4:37am
Just want to say thanks to everyone who posts on this thread. FXTR51, fierceman, pipmutt, thelws, and all others. We may have our differences in philosophy, but we are all seeking to improve. I think now's a good time to step back and acknowledge that we have the same intentions which is to become better traders. So thank you all for sharing your thoughts, ideas and experiences.
  • #567
  • Edited 6:03am May 6, 2012 5:19am | Edited 6:03am
Quoting fxtr51
Yes, excellent but not reflecting real life and thus besides the point altogether.

So all what you are doing is banging your head against that brick wall inside your own head.

Because it does not reflect real life.

All of your perfect logic and math is only doing hindsight analysis:

If the hedger is going short here, the SL guy will do this.
If the hedger is going long, the SL guy will do that.

And with that hindsight you can always prove that SL-trading is much more profitable because you can trade with a higher initial risk ( plus you don´t...
I dont know why I am in this debate since i cant hedge but I love a good debate. The difference is this. Once a SL is taken it is permanent. The hedger always has the opportunity to decrease the difference. His hit may not be -100 but -50. In that way he beats out the SL guy by 50 pips, again assuming that both trades are closed at the same time is a fallacy. I do sympathize with the guy who said he tried hedging and now he had two trades to deal with instead of one. It is why I never really got into it as a trading method other than a time out, which as I said before I have only used a handful of time over the years, so not really part of the box of arrows.

The second part of the argument also has a fallacy in that once you are done with the profit trade they dont immediately do the opposite trade. They look for the next best trade. So if they went a -100 SL and then did a +200 profit trade they would not be in the CT trade situation. They wont be taking the opposite trade, (I know they are not a CT trader because you made fun of them in the past). So the hedger will be increasing his profit and reducing his losses while they are still looking for another trade. During this process the hedger is gaining on his account while they are looking. That is how and why it does work. Their assumption in their problem that they are both opened and closed at the same time and the SL trader would make the same trade and reenter at the same time is a very false assumption that would never play out in real life.

Again, I see no problem in taking a hedge and walking away from a screen and taking breather, plan a strategy and then get back into the battle. It is like a Baskeball game, you call timeout everything stops you plan a strategy and then get back out on the court. That is such a simple easily understood concept it amazes me that some are so stuck in the mud, they cant see the value of that. I can very easily. Anyway gotta go have fun writing about this post for the next 3 pages.

Pipmutt get a life.
  • #568
  • May 6, 2012 5:20am May 6, 2012 5:20am
Quoting nanningbob
I dont know why I am in this debate since i cant hedge but I love a good debate. The difference is this. Once a SL is taken it is permanent. The hedger always has the opportunity to decrease the difference. His hit may not be -100 but -50. In that way he beats out the SL guy by 50 pips.

Again, I see no problem in taking a hedge and walking away from a screen and taking breather, plan a strategy and then get back into the battle. It is like a Baskeball game, you call timeout everything stops you plan a strategy and then get back out on the court....
Hero calls followed by margin calls...
  • #569
  • May 6, 2012 5:36am May 6, 2012 5:36am
Quoting nanningbob
I dont know why I am in this debate since i cant hedge but I love a good debate. The difference is this. Once a SL is taken it is permanent. The hedger always has the opportunity to decrease the difference. His hit may not be -100 but -50. In that way he beats out the SL guy by 50 pips, again assuming that both trades are closed at the same time is a fallacy. I do sympathize with the guy who said he tried hedging and now he had two trades to deal with instead of one. It is why I never really got into it as a trading method other than a time out,...
Well said while i would not recommend hedging forex with forex (except for automated mtf strategies which do multiples for the sake of simplicity instead of merging positions) this is probably the only but valid reason to hedge - take a timeout. While using a clearly defined SL is prefered in my opinion there are cases where you suddenly find yourself in a setup where that SL might not make sense anymore so paying an additional spread/comm might give you some time to reassess the situation and get a better exit on one of your positions to make up for the double spread/comm and get out at a better price the same time.

However people... doing this successfully is even harder than being profitable in the first place since getting out cleverly of such situations is even harder than your average trade. So if you still have to decide - hedge or not - chances are you don't even have the fraction of the knowledge you should have to pull this through successfully.
  • #570
  • May 6, 2012 5:43am May 6, 2012 5:43am
Quoting 2+2=4ex
Just want to say thanks to everyone who posts on this thread. FXTR51, fierceman, pipmutt, thelws, and all others. We may have our differences in philosophy, but we are all seeking to improve. I think now's a good time to step back and acknowledge that we have the same intentions which is to become better traders. So thank you all for sharing your thoughts, ideas and experiences.
I agree, I have had fun sharpening iron on iron. Anyway good luck this week trading and look for the gbp/nzd re-entry for a buy back into the trend.
  • #571
  • Edited 6:12am May 6, 2012 6:01am | Edited 6:12am
Quoting fxtr51

In real life the trader is placing his SL too near and will be stopped out.
If that's the case then he needs to review his analysis and adjust where he places his stop loss. I would have thought that was pretty obvious.


Quoting fxtr51
He is cutting a winning trade and he is letting run the losing trade.
On the contrary, he's protecting capital, minimising risk, exploiting profitable trades, and utilising leverage.


Quoting fxtr51

He is a prey for stop-hunting brokers and for traders who know how to trade against the herd of other traders.
If (you suspect) your brřker is spiking price to trigger your stops then you need to either find another brřker/market or take counter measures to compensate. Simply not having a stop is not a sensible solution, well not unless you intend to eventually give all your money away!

Trading against the herd would be a bit like swimming against the tide. The herd don't drown because they're swimming in the wrong direction, they drown because they can't swim.


Quoting fxtr51

Maybe you should read "Trade the Trader" by Quint Tatro.
I thought Tatro trades equities doesn't he?
  • #572
  • May 6, 2012 6:08am May 6, 2012 6:08am
Quoting pipmutt
If that's the case then he needs to review his analysis and adjust where he places his stop loss. I would have thought that was pretty obvious.
Everything is pretty obvious.
And because it is, 95 % are losing and only 5 % win.

Your perfect trader is a virtual thing, created to "prove" that you must use SL.
And yes, you must , because otherwise brokers and smart traders cannot be profitable.

In the real world, 95 % of your SL believers lose money while the NO SL people constantly
win money.

And on it goes ... and again .... running in a circle only.
  • #573
  • May 6, 2012 6:24am May 6, 2012 6:24am
Quoting fxtr51

In the real world, 95 % of your SL believers lose money while the NO SL people constantly
win money.
An easy claim to make but not so easy to substantiate with reason, logic, and math. Your argument simply doesn't hold water, neither reasonably, logically, nor mathematically, but I guess that's not going to stop you trying!

Not to worry, you do your thing, others will do theirs, at the end of the day who really gives a crap as long as we're all happy!
  • #574
  • May 6, 2012 6:40am May 6, 2012 6:40am
Quoting pipmutt
Not to worry, you do your thing, others will do theirs, at the end of the day who really gives a crap as long as we're all happy!
That sounds logical, doesn´t contradict math and reflects real life.
We have solved the riddle.
  • #575
  • May 6, 2012 7:45am May 6, 2012 7:45am
Quoting fxtr51
That sounds logical, doesn´t contradict math and reflects real life.
We have solved the riddle.
Hello,

It sounds logical and reflects real life if you for one and some of your 10+v friends to grow some you know what to open a explorer account and trade it for minimum of 6months if not more for the world to see to reflect anywhere close to real life.. otherwise you just talking atta your you know what sport.
You and most in here are just talking a good talk, that's all.
I am not saying that one vs other (sl or no sl etc) is better or worse.. IMHO they both make money and lose money or create dangerous times to do crazy things out of your way, it all boils down to TRADERS execution at different difficult stages of either style. I think most will concur with me on this.
so, you making a firm claim that one is better than other, well, show it.. ok man show it.. open a explorer account.. show everyone how you hold your ground when your -100 trend against perhaps and you hedge now or do recovery level one trade or lock and unlock etc, and so on deeper into losses.
if now your replying back that: you don't have time or care or less to put the effort in!!.. ok, than stop preaching, lecturing and claiming shit.. I know its a forum but at some point things need to be settled like the old days, duel style, lol.
listen friend,
People want to see reality and not the constant lectures and arguments and empty claims. it don't matter you win or lose its about the process.. this way the level of learning and helping (in your case!, I guess) jumps to the moon.

good trading to all.
  • #576
  • May 6, 2012 8:26am May 6, 2012 8:26am
Quote
so, you making a firm claim that one is better than other, well, show it
No, I never made a claim which one is better.
Because it depends 100% on the trader.

My only claim is:
You can lose using a SL.
You can lose using no SL.
You can win using a SL.
You can lose using a SL.

This is my final verdict on this matter.
  • #577
  • May 6, 2012 8:38am May 6, 2012 8:38am
Quoting fxtr51

In the real world, 95 % of your SL believers lose money while the NO SL people constantly
win money.

And on it goes ... and again .... running in a circle only.
I thought the above were your words.

bcz the way I understand it is that the 95% losers who believe in sl no matter if they are good traders bcz they believe in what they believe they are losers at the end and vise versa are not. isn't this pretty close to claiming that sl traders are ultimately the losers and no sl's are not.
maybe i am missing something.
  • #578
  • May 6, 2012 8:50am May 6, 2012 8:50am
Quoting P.Dean
I thought these were your words.
I suppose one can reason that majority of retail traders use stop losses, but according to some statistics 95% are not profitable. The implication is that those that do not use stop losses has then a higher success rate (even though there are also failures obviously). If however, the assumption that majority of retail traders use stop losses or only 5% is profitable is wrong, then the argument though is not valid any more. So I think that was more a relative than absolute statement, loaded with some sarcism in my reading.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #579
  • May 6, 2012 8:57am May 6, 2012 8:57am
Quoting pa_pips
I suppose one can reason that majority of retail traders use stop losses, but according to some statistics 95% are not profitable. The implication is that those that do not use stop losses has then a higher success rate (even though there are also failures obviously). If however, the assumption that majority of retail traders use stop losses or only 5% is profitable is wrong, then the argument though is not valid any more. So I think that was more a relative than absolute statement, loaded with some sarcism in my reading.

He is basically saying that the 95% losers of this market all or most of them are the sl believers and none of or less of no sl believers fall into the 95% overall market losers.
If that's the case i like for him to put his mouth where his money is and show it or anyone else in that case.
  • #580
  • May 6, 2012 9:38am May 6, 2012 9:38am
Quoting pipmutt
Absolutely!




lol, try telling Nanningbob that fact!
That is the fallacy of your argument once again. Here is the real fact, you cannot buy and sell IBM at the same time it is a zero sum, you can only do one or the other as separate transactions. You cant sell IBM if you dont have any. You cannot buy and sell eur/usd. You can buy eur and you can buy usd and you can buy both at the same time because they are two different instruments not unlike stocks etc. I have to buy IBM stock before I can sell it. However with eur/usd I can do both at the same time, I can buy euro and I can buy usd at the same time, that is a fact. So they are two separate transactions. So let us be factual when we debate OK??
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