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  • #641
  • May 9, 2012 4:39am May 9, 2012 4:39am
Quoting pipmutt
Various states, you mean price moving? Sure, but to profit (or lose) you need to be net long or short. If you know another way then please share it!
Sorry, I only picked up now that you did reply to my second question.
As far as I know to close a position you could become flat in the sense of not having any position at all and therefore you are not necessary net long or short.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #642
  • May 9, 2012 4:49am May 9, 2012 4:49am
Quoting pa_pips

This seems to be a contradiction. I gave you an example of a hedged position. Context won't change anything according to you as you are net short, long or flat, then why the need for additional information?
lol, it seems now you're just arguing for the sake of it. Honestly, if you can't understand the basic premise that in order to profit (or lose) you simply need to have a net position either long or short, it's an unavoidable fact!

Quoting pa_pips

to close a position you could become flat in the sense of not having any position at all and therefore you are not necessary net long or short.
Ok good, and would you be able to profit from not being net long or short? If so, how?
  • #643
  • May 9, 2012 4:56am May 9, 2012 4:56am
Quoting thelws
Let me put a twist in your thinking by asking you this question:
If you can show me the benefit of locking in -2900 pips of floating loss by being long on EurUsd at 1.59 and short at 1.20,

I will show you the benefit of locking in 2900 pips by being short on EurUsd at 1.59 and long at 1.20.

If you still don't catch my drift... the benefit of both would be the same. And for the most part it will be a psychological benefit. But if it is about monetary terms, then there is no benefit.
Personally, I cut my losses short and let my winners run so I am not really interested in a -2900 pip situation. You will have to expand what you mean by monetary benefit. I think you are referring to a relative concept. I am not that interested in some or other mathematical hindsight optimal profit function. Being reasonable profitable over long term is all that concern me.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #644
  • May 9, 2012 5:00am May 9, 2012 5:00am
[quote=pipmutt;5651272]lol, it seems now you're just arguing for the sake of it. Honestly, if you can't understand the basic premise that in order to profit (or lose) you simply need to have a net position either long or short, it's an unavoidable fact!


Quoting pipmutt
Ok good, and would you be able to profit from not being net long or short? If so, how?
lol, Buy EurUsd at 1.30 and close it at 1.31. That is 100 pips of profit and I am flat, having no position at all.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #645
  • May 9, 2012 5:10am May 9, 2012 5:10am
Quoting pa_pips

lol, Buy EurUsd at 1.30 and close it at 1.31. That is 100 pips of profit and I am flat, having no position at all.
Sorry it seems like so long ago, what was the question again?

Oh yeah, flawed, dunno still couldn't say....more details!!
  • #646
  • Edited 5:34am May 9, 2012 5:30am | Edited 5:34am
[quote=pa_pips;5651308][quote=pipmutt;5651272]lol, it seems now you're just arguing for the sake of it. Honestly, if you can't understand the basic premise that in order to profit (or lose) you simply need to have a net position either long or short, it's an unavoidable fact!



Quoting pa_pips
lol, Buy EurUsd at 1.30 and close it at 1.31. That is 100 pips of profit and I am flat, having no position at all.
Hmm, ok I see we approached it from two different perspectives. I see what you intended to convey is that the pre-condition to a profit was to have been net long or short. On the other hand my angle was that a profit is not a profit until closed as a profit (realized profit).
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #647
  • May 9, 2012 5:47am May 9, 2012 5:47am
Quoting pa_pips

Hmm, ok I see we approached it from two different perspectives. I see what you intended to convey is that the pre-condition to a profit was to have been net long or short.
Is there any other way? No matter how anyone slices and dices it, at the end of the day the trader needs to make a decision about direction, it's unavoidable, even for nedging there has to be a decision to close one side and let the other side run, thereby having a directional bias, potential for reward, and of course exposure to risk.


Quoting pa_pips

On the other hand my angle was that a profit is not a profit until closed as a profit (realized profit).
Uh-oh, does this mean that you also believe an unrealised loss isn't really a loss until closed as a loss? Look up mark to market and the recent financial crisis to see the pros and cons of such accounting methods, it's hiding losses or simply self-deception!

Deja vu.......
  • #648
  • May 9, 2012 5:57am May 9, 2012 5:57am
Quoting pipmutt
Sorry it seems like so long ago, what was the question again?

Oh yeah, flawed, dunno still couldn't say....more details!!
Yea, this answers my question. My personal conclusion is that to make a blanket statement that one cannot be profitable in the long run incorporating hedging into your strategy is nonsense. Yes, you can probably have some pissing competition about some optimised concept of profitability, but that is all relative as profitability between traders differ based on 101 factors.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #649
  • May 9, 2012 6:00am May 9, 2012 6:00am
Quoting pipmutt
Is there any other way? No matter how anyone slices and dices it, at the end of the day the trader needs to make a decision about direction, it's unavoidable, even for nedging there has to be a decision to close one side and let the other side run, thereby having a directional bias, potential for reward, and of course exposure to risk.




Uh-oh, does this mean that you also believe an unrealised loss isn't really a loss until closed as a loss? Look up mark to market and the recent financial crisis to see the pros and cons of such accounting...
No, I did not imply that, the principal of prudence comes to mind here. You know what they say about asumptions...
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #650
  • May 9, 2012 10:15am May 9, 2012 10:15am
Quoting pa_pips

My personal conclusion is that to make a blanket statement that one cannot be profitable in the long run incorporating hedging into your strategy is nonsense.
Did someone say you can't be profitable in the long run if you incorporate nedging into your strategy? I must have missed that bit.....I think what most knowledgeable traders are saying is that it makes absolutely no sense to have long and short positions of the same size on the same pair because in effect it means you're flat. If you're going to be flat then be flat, why tie up margin and why pay interest on a tactic which offers absolutely no benefits? People who use nedging may well be profitable in the long run, if they are then it's despite nedging not because of it.


Quoting pa_pips

You know what they say about asumptions...
No not really. That they're good for the soul?


Quoting pa_pips

No, I did not imply that, the principal of prudence comes to mind here.
I wasn't implying that you implied it, it was a question hence the question mark, nevertheless if it was an assumption I think it was a reasonable one to make bearing in mind you haven't been exactly forthcoming with specific information in your examples. There, now that's what I call hedging, lol
  • #651
  • May 9, 2012 11:02am May 9, 2012 11:02am
Quoting pipmutt
Did someone say you can't be profitable in the long run if you incorporate nedging into your strategy? I must have missed that bit.....I think what most knowledgeable traders are saying is that it makes absolutely no sense to have long and short positions of the same size on the same pair because in effect it means you're flat. If you're going to be flat then be flat, why tie up margin and why pay interest on a tactic which offers absolutely no benefits?
I see the benefit in having both shorts and longs of equal size on the same pair. Just, because I am flat today why do I need to be flat tomorrow or a week from now? Specially if both my long and short today are in the money.

Quoting pipmutt
People who use nedging may well be profitable in the long run, if they are then it's despite nedging not because of it.
Hmm, I cannot recall that an argument was made in this thread that hedging is the source of profits

Quoting pipmutt
I wasn't implying that you implied it, it was a question hence the question mark, nevertheless if it was an assumption I think it was a reasonable one to make bearing in mind you haven't been exactly forthcoming with specific information in your examples. There, now that's what I call hedging, lol
I think I was simply shadowing you as it seems you have a track record of your last mentioned kind of hedging
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #652
  • May 9, 2012 9:42pm May 9, 2012 9:42pm
Quoting pa_pips
I see the benefit in having both shorts and longs of equal size on the same pair.
People see leprechauns too.

Quoting pa_pips
Just, because I am flat today why do I need to be flat tomorrow or a week from now? Specially if both my long and short today are in the money.
If you want to be flat, then don't have two offsetting trades on - just be flat. Tomorrow or next week, whenever you want to take a chance, then open a position. It's really that simple.

You can be profitable when "hedging", you'll just be less profitable. You can also lose money not "hedging", you'll just lose less. This is mathematical fact. Why is it so hard for people to see this?
  • #653
  • May 10, 2012 1:01am May 10, 2012 1:01am
[quote=fierceman;5654075]People see leprechauns too.


If you want to be flat, then don't have two offsetting trades on - just be flat. Tomorrow or next week, whenever you want to take a chance, then open a position. It's really that simple.

Quoting fierceman
You can be profitable when "hedging", you'll just be less profitable. You can also lose money not "hedging", you'll just lose less. This is mathematical fact. Why is it so hard for people to see this?
I assume you meant lose more. Less profitable, losing more - Could be, but also maybe not
Hmm, that mathematical proven stuff is thrown a lot but never shown. How can you show it if you don't even know the strategy? I would say trading is synergistic where 1 + 1 = 3 and 1 is not 3. Profitability is the result of the cumulative effect of various factors. Do you use some or other crystal ball to read the future? Do you consider all the other multiple factors that make up profitability? I would state probably the only way to test this theory is to trade 2 accounts at the same time, where for 1 account hedging is not used. (Mentioned various times that showing stuff in hindsight is proof of nothing) I wish you luck, because I don't know how that will be possible. I am interested in 500, 1 000 and 10 000 pip movements in multiple currencies in both directions not 20 or 50 pips. Swaps is mostly a constant whereas legs on a millipede grow exponentially. Furthermore for what period do you do you test it, if you even can (another arbitrary factor)? And how about multiple various other strategies that other people may use? You can sit in a prison cell, have a Phd in knowing every little fine detail about 1 inch of that prision cell. The fact is you are still in a prison cell, because you cannot see the bigger picture.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #654
  • May 10, 2012 1:30am May 10, 2012 1:30am
[quote=pa_pips;5654404]
Quoting fierceman
People see leprechauns too.


If you want to be flat, then don't have two offsetting trades on - just be flat. Tomorrow or next week, whenever you want to take a chance, then open a position. It's really that simple.


I assume you meant lose more. Less profitable, losing more - Could be, but also maybe not
Hmm, that mathematical proven stuff is thrown a lot but never shown. How can you show it if you don't even know the strategy? I would say trading is synergistic where 1 + 1 = 3 and 1 is not 3. Profitability is...
Hedge method
1.0000 - Buy ENTRY (pay 1st spread) Pay Rollover for 1 position
0.9000 - Ohnoes... price went wrong way
0.9000 - Hedge (by selling). (Pay 2nd spread). Pay Rollover for 2 position. -100 pip floating loss
0.7000 - Price reversing. Oh yea. Close hedge leg. +200 pips.
1.1000 - Oh yea. My original position made 100 pips.
Total pips made: +300

SL method
1.0000 - Buy ENTRY (pay 1st spread) Pay Rollover for 1 position
0.9000 - Ohnoes... price went wrong way
0.9000 - Close position. -100 pips
0.7000 - Price reversing. Oh yea. Open a new trade.
1.1000 - Oh yea. Made +400 pips
Total pips made: +300

The more "hedged" pairs you have, the more you will pay for rollover and spread.

You mentioned millipede. I suppose you are talking about the building equity millipede thread. The truth is, if you follow that strategy, you will pay a lot for rollover (I have 1st hand experience trading that way so I can tell you it can hurt). You can ultimately achieve the same result by being net long or net short. But as that strategy is complex, you can justify hedging in the name of keeping your sanity and not having to keep track of your 20 or so open positions. (If you really trade using the milipede strategy u are never hedged. You are almost always net 1 direction.)

But the truth still remains, every time you hedge, you bleed money for having no impact in the market. When price moves up or down, you don't make or lose money. Why pay money to have no position?
  • #655
  • May 10, 2012 1:39am May 10, 2012 1:39am
[quote=thelws;5654491]
Quoting pa_pips

Hedge method
1.0000 - Buy ENTRY (pay 1st spread) Pay Rollover for 1 position
0.9000 - Ohnoes... price went wrong way
0.9000 - Hedge (by selling). (Pay 2nd spread). Pay Rollover for 2 position. -100 pip floating loss
0.7000 - Price reversing. Oh yea. Close hedge leg. +200 pips.
1.1000 - Oh yea. My original position made 100 pips.
Total pips made: +300

SL method
1.0000 - Buy ENTRY (pay 1st spread) Pay Rollover for 1 position
0.9000...
It's pretty sad that this has to be explained to some people. Maybe not so much for a brand new beginner, but for those that claim to have been trading for over a year, so sad.
  • #656
  • May 10, 2012 2:11am May 10, 2012 2:11am
[quote=thelws;5654491]
Quoting pa_pips

Hedge method
1.0000 - Buy ENTRY (pay 1st spread) Pay Rollover for 1 position
0.9000 - Ohnoes... price went wrong way
0.9000 - Hedge (by selling). (Pay 2nd spread). Pay Rollover for 2 position. -100 pip floating loss
0.7000 - Price reversing. Oh yea. Close hedge leg. +200 pips.
1.1000 - Oh yea. My original position made 100 pips.
Total pips made: +300

SL method
1.0000 - Buy ENTRY [b](pay 1st spread)...
Lot of mumble jumble, but do not address any points raised. People also seem to assume that swap is always negative?
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #657
  • May 10, 2012 2:13am May 10, 2012 2:13am
Quoting 2+2=4ex

It's pretty sad that this has to be explained to some people. Maybe not so much for a brand new beginner, but for those that claim to have been trading for over a year, so sad.
When Compliance Rule 2-43(b) was introduced a few years back brokers were using 'hedging' a selling gimmick ("you can still hedge with us!") and I wondered then just how many people actually fall for it. Turns out more people than I thought, and like you say some of them aren't novices!

Simple math but seemingly beyond comprehension for some people! And we wonder why the failure stats are so high.....
  • #658
  • May 10, 2012 2:16am May 10, 2012 2:16am
Quoting thelws
The more "hedged" pairs you have, the more you will pay for rollover and spread.
Huh, how would you pay more spread if you do not close positions willy nully on each stop loss that is triggered. It seems rather the opposite should apply.
Much depend on luck, but the more you practice the luckier you get! NT & GP
  • #659
  • May 10, 2012 2:17am May 10, 2012 2:17am
Quoting pa_pips

People also seem to assume that swap is always negative?
Probably because it always is when you have two opposing trades of equal size on the same pair!

lol, as I typed that I find it incredible that some people can't see the futility of having 'two opposing trades of equal size on the same pair'.....sounds even dumber when you type it out!

lol, maybe it could be a new sales gimmick, 'we don't trade against our clients, with us you can be your own counterparty'!
  • #660
  • May 10, 2012 2:19am May 10, 2012 2:19am
Quoting pipmutt
Probably because it always is!
Pay no attention. The mutt just likes to bark.
When the Joker is in the deck.. fear not and play it well
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