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Hedging Over the Weekend

  • #1
  • First Post: Jul 24, 2009 12:35pm Jul 24, 2009 12:35pm
I have a couple of trades working.
I usually close trades out Friday afternoon, in case it gaps against me Sunday.

I'm going to try hedging them this time, because I would like to keep them alive.

Any pointers?
Should I remove my SL and TP if I do?
Should I have a SL and TP on my hedging positions?

Thanks.
  • #2
  • Edited 2:07pm Jul 24, 2009 1:49pm | Edited 2:07pm
I also plan to hedge my euro/usd position.
Usually there are wild reactions at monday morning asia trade period. I think I may profit at monday 50 pips with counter trend trade.
Once I lost an account at monday morning so to leave the account open at week end is always dangerous.
There are many systems here but in practise most of them are worthless.
At my previous hedges I always lost money. I shut the wrong trade.
This is my first week end hedge .Lets see the result .

To put SL at hedge is a mistake .Once both of my SL's were hit.
I will close them manually.

You can shut the one in profit if you believe that it reached the resistance point.
Mainly bank traders use hedge.
  • #3
  • Nov 21, 2013 5:49pm Nov 21, 2013 5:49pm
does anyone hedge significant positions for the weekend, so as to offset Monday morning gap risk

of course you would also forgo any favourable gaps if you hadnt of hedged

.........but i'm more interested in off-setting weekend risk, than the profits i may forgo

anyone?
  • #4
  • Nov 24, 2013 4:36pm Nov 24, 2013 4:36pm
?
  • #5
  • Nov 25, 2013 4:59am Nov 25, 2013 4:59am
Quoting PeterE
?
//----

hey peter...... as you know, in the states we can not have offsetting trades for any reason..... we are equally unnecessarily burdened with fifo......h
to trade and code, keep both simple... no call to impress....h
  • #6
  • Nov 25, 2013 3:46pm Nov 25, 2013 3:46pm
hay, thanks for replying

your gov's meddling may increase your risk

Quoting hayseed
{quote} //---- hey peter...... as you know, in the states we can not have offsetting trades for any reason..... we are equally unnecessarily burdened with fifo......h
  • #7
  • Nov 25, 2013 5:48pm Nov 25, 2013 5:48pm
if hedging (in the same currency pair) or not hedging (and close the position) is the question, then the difference between them is a spread wide

don't look at your balance and floating profit/loss, look at your equity, that is.

some people didn't understand automatic trading, so they setup hedge to reverse trade with sl and limit
some people love their open trade soo much, that they didn't want to close it
some people loove their green looking floating profit, so they keep it

but hey that just me,
  • #8
  • Dec 9, 2013 3:35pm Dec 9, 2013 3:35pm
Quoting PeterE
does anyone hedge significant positions for the weekend, so as to offset Monday morning gap risk of course you would also forgo any favourable gaps if you hadnt of hedged .........but i'm more interested in off-setting weekend risk, than the profits i may forgo anyone?
I hedge any exposure leading into the weekend..I try to initiate the hedge at a point where there might be a small correction... if not the trade is hedged just before the spreads widen before the close, removing any stops/tp orders. when Asia opens i always wait for the spreads to calm down and try to drop
the hedge in a profitable postion..

Peace of mind over the weekend is a must imo..
Memories caught in time but never forgotten
  • #9
  • Dec 11, 2013 1:11am Dec 11, 2013 1:11am
Wouldn't this be the same thing essentially as closing the position entirely?
  • #10
  • Dec 11, 2013 1:37am Dec 11, 2013 1:37am
Quoting 2+2=4ex
Wouldn't this be the same thing essentially as closing the position entirely?
I use hedging over weekends, have two accounts one for shorts the other for longs.
  • #11
  • Dec 11, 2013 5:09am Dec 11, 2013 5:09am
Quoting 2+2=4ex
Wouldn't this be the same thing essentially as closing the position entirely?
//---

hey 4ex..... upfront it appears to be the same thing but it's not..... even if perfectly and fully hedged it's possible to have each side move against you to the point where it could margin call the account.....

the safest option is to close the trade and reopen next week.....

there are some valid reasons to have opposing trades, commonly referred to as hedging..... those reasons have more to do with individual trade accountability rather than account safety.....

nfa's no hedge and fifo rules both are the biggest stumbling block to trade accountability.....h
to trade and code, keep both simple... no call to impress....h
  • #12
  • Edited 10:46am Dec 11, 2013 6:14am | Edited 10:46am
Quoting hayseed
{quote} //--- hey 4ex..... upfront it appears to be the same thing but it's not..... even if perfectly and fully hedged it's possible to have each side move against you to the point where it could margin call the account..... the safest option is to close the trade and reopen next week..... there are some valid reasons to have opposing trades, commonly referred to as hedging..... those reasons have more to do with individual trade accountability rather than account safety..... nfa's no hedge and fifo rules both are the biggest...
Your right h..

I find knowing your gross notional requirements are essential and even then a wild black swan could be awkward..
( its only a matter of time to the next one )there is no perfect way to protect weekend exposure.. Probably the nearest you can get is
a broker who will guarantee stops over the weekend ( in the UK IG do ) but these can only be implemented on the opening of the trade
and the spreads are very wide.

Having larger accounts and small risk % per trade i prefer to hedge, my broker allows this...though knowing that there is no perfect solution.. ultimately its down to what you feel comfortable with ..
Memories caught in time but never forgotten
  • #13
  • Dec 28, 2013 9:46am Dec 28, 2013 9:46am
Quoting hayseed
{quote} //--- hey 4ex..... upfront it appears to be the same thing but it's not..... even if perfectly and fully hedged it's possible to have each side move against you to the point where it could margin call the account..... the safest option is to close the trade and reopen next week..... there are some valid reasons to have opposing trades, commonly referred to as hedging..... those reasons have more to do with individual trade accountability rather than account safety..... nfa's no hedge and fifo rules both are the biggest stumbling block to...
h... with ref to this subject would you be able to pm me.. i would appreciate it.

hope you spoilt the rug rats over xmas ..

Ja
Memories caught in time but never forgotten
  • #14
  • Dec 29, 2013 10:50am Dec 29, 2013 10:50am
let me better explain......

Quoting hayseed
upfront it appears to be the same thing but it's not..... even if perfectly and fully hedged it's possible to have each side move against you to the point where it could margin call the account.....
it might be worthwhile to read this post...... and perhaps a few leading up to it......
//-----

Quoting hayseed
the safest option is to close the trade and reopen next week.....
this would apply more when the accountfreemargin() is extremely low..... meaning less than 150%, or more specifically less than 105%......

fwiw, it is very possible to have trades accountfreemargin() stopouts even when the account is overall very profitable.......
//-----


Quoting hayseed
there are some valid reasons to have opposing trades, commonly referred to as hedging..... those reasons have more to do with individual trade accountability rather than account safety.....
individual trade accountability ...... this is a diverse subject and would only appeal to those with multi hundreds of open trades based on a wide variety of decisions .....

//------
//------

if fully hedged in a normal sunday gap situation, ie both bid and ask jump 100 pips, one trade gains while the opposite loses..... not too bad.....

now suppose there is not a normal gap, but instead the spread widens say 50 pips..... so basically the bid falls 25 pips and the ask rises 25 pips...... here both trades lose even though fully hedged..... could the accountfreemargin() handle that......

the first picture below shows standard account with a 1000$ balance and a single open long with the accountfreemargin of 123%.....

as time goes by, the second picture shows the trade has become very profitable, almost doubling the 1000$ account, now with a free margin of 194%..... so a decision was made to add second long trade...... the second trade will use much of that free margin.....

the third picture shows 1 bar after that second long.... with just a couple pip fall, the accountfreemargin() fell below 100% and the account was hit with a margin call..... even though it remained over 58% profitable......

//-----

i'll run a private ea at todays market opening and post a picture ...... it should shed some light......h
Attached Image(s) (click to enlarge)
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to trade and code, keep both simple... no call to impress....h
  • #15
  • Dec 30, 2013 4:25am Dec 30, 2013 4:25am
Quoting hayseed
{quote} the safest option is to close the trade and reopen next week.....h
Thanks for the PM's h...
Memories caught in time but never forgotten
  • #16
  • Last Post: Dec 31, 2013 9:50am Dec 31, 2013 9:50am
Quoting hayseed
i'll run a private ea at todays market opening and post a picture ...... it should shed some light......
//----

mentioned to ja that i'd never experienced a weekend gap or spread that would have blown or caused any real damage to any account of mine..... usually manage that myself during the week without any weekend help.....

spreads usually widened the most during the week.... far more than at the sundays markets opening.....

over the past few hours the nzd and gbp pairs average spread have been moving up.... that should be expected....

one picture below shows the max pure perfectly hedged loss per pair, highlighted blue, of the max lots figure to the left..... 1000$ balance , standard account, 50 to 1 leverage.....

the other non colored picture shows sundays opening....

to put things in perspective, the nzdchf has a 200$ max loss on a 1000$ balance even though it is perfectly hedged.... there was only a 90$ loss sunday....

the next few days will be very interesting.....h
//----
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to trade and code, keep both simple... no call to impress....h
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