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Trading Without a StopLoss

  • #1,881
  • May 3, 2014 6:49am May 3, 2014 6:49am
Quoting nanningbob
Here is a better way of explaining it so some of you understand the basic concept of trading like this: Think of it this way. There are traders who do not use their entire lot size in one entrance. They break it up into 3 parts and enter on multiple levels. Let us say you like trading 3 lot sizes. Instead of entering all three at once you enter them as 1 lot size at 3 different spots. This allows you the flexibility to find the spot you want to enter in. Let us say you enter one lot but some sudden news story breaks and give a pair a 2 or 3 day...
good post! If you have committed all you can in one move, there is nothing left for you to commit, and the maximum rate for you to lose if you do. With smaller entries you can put more in the more certain you are of the correctness of the move, the one part may have already paid the risk for the other, They can overlap so you double the risk temporarily and also the reward. Many such subtleties exist with the intention of maximizing the potential reward and minimizing the risk. Not just the size of the risk, but the time over which you endure the risk is to be considered.
  • #1,882
  • May 3, 2014 7:29am May 3, 2014 7:29am
Why don't you Hedge instead of using stop loss. Instead of SL order, put a pending Stop Order. If your original trade is a Buy, and your intended stop loss is 50 pips down, you can put a Sell Stop Order 50 pips down.

Now you have limited your loss (to the original stop loss you had in mind), and protected your margin. And in many cases you have profit on both trades.

Managing the two positions now depends on your view on the market, bullish or bearish. If your are still bullish, once your sell trade is in reasonable profit, and reached a support level, you can either buy again to lock the profits of the sell trade, or close the sell trade and see if the support holds. If you are not sure what is happening you can put a stop loss on the sell trade to break even.

I am sure managing the trades like this will not be easy, but you don't have to take a loss, while you can hedge, and we all see how price keeps going up and down, and many of the trades that were closed at loss, would've been closed profitably if left open.

Regards,

Khalil
No guts, no glory
  • #1,883
  • May 3, 2014 10:31am May 3, 2014 10:31am
Quoting abokwaik
Why don't you Hedge instead of using stop loss. Instead of SL order, put a pending Stop Order. If your original trade is a Buy, and your intended stop loss is 50 pips down, you can put a Sell Stop Order 50 pips down. Now you have limited your loss (to the original stop loss you had in mind), and protected your margin. And in many cases you have profit on both trades. Managing the two positions now depends on your view on the market, bullish or bearish. If your are still bullish, once your sell trade is in reasonable profit, and reached a support...

When my country foolishly decided to forbid hedges of this sort, I stopped doing that very sort of thing.

You seem to be doing well enough with it that it is difficult to argue against such a system and it certainly is an alternative to fixed stop loss, where it is allowed.
(Of course, you can start a different account and hedge using that account and no one is the wiser...-such a foolish rule!)

Hedging is a wide practice in many markets and a time-honored way to protect an investment.
  • #1,884
  • May 3, 2014 11:37am May 3, 2014 11:37am
Quoting JensG
I set a stop loss, but I'm not using it I'm scalping the 3 min chart and I'm sitting by my trades, the stop loss is just some measure of disaster insurance (power outage, network problems). I think we're way to relaxed regarding large infrastucture outages, they can happen even in highly developed places. It's not that long ago we had some serious power outages here in that area (just 30 km from dusseldorf, germany) involving not only my home, but also the distribution boxes for telephone/internet and I'm not so sure I could rely on my cellphones...
What level of stop loss are you using when scalping 3 min charts ?
  • #1,885
  • May 3, 2014 11:42am May 3, 2014 11:42am
For the pro and con of stop losses, what about during news and government reports ? Yesterday the US released strong NFP numbers and unemployment figures. There were 40-60 point spikes in all USD crosses.
  • #1,886
  • May 3, 2014 12:01pm May 3, 2014 12:01pm
Quoting freundr
For the pro and con of stop losses, what about during news and government reports ? Yesterday the US released strong NFP numbers and unemployment figures. There were 40-60 point spikes in all USD crosses.

and in the GBP/AUD which would seem to be independent of the USD...

It is very hard to get whipsawn when you do not use a fixed stop loss.

Now very much the same group of people who advocate using tight fixed stop losses advise their listeners to stay out of the market during news events.

But isn't that where a lot of the money to be made in the forex exists?

There is a large group of people out there who trade only during news events.

I suspect that you tend to get good at reading tick screens when you are one of those.
  • #1,887
  • May 3, 2014 10:14pm May 3, 2014 10:14pm
I think we all agree that some SL, whether a covert one or an implicit one, is needed and is preferable to the ultimate forced liquidation of positions by the brokers and it is of course further preferred that it would be the absolute last resort one has to take to protect his/her capital as liquidating positions on SL unnecessarily and foregoing potentially large profit is just as detrimental as incurring unrecoverable losses due to the absence of a SL. So the question is really not whether we should trade with a SL or not but rather HOW to trade with SL. One doesn't want to set the SL to exit the position too early nor too late. Ideally, SL should be set and taken immediately when a complete reversal of the price trend is certain and the price is absolutely not coming back to the position-open price or going into profit and that sometimes makes one question the necessity of the SL in a ranging market.

So ultimately setting SL really becomes more of a trading strategy issue rather than a money management one because the ultimate money management is really making profit every single time one trades and if one can make profit every single time he/she trades, then money management becomes not that absolutely crucial. It is still prudent to have sound money management of course but it would not be that absolute and if always setting the SL at the correct PA and/or time would allow one to make profit overall then that would be something that one would need to concentrate on.
Make your losses in demo. Earn your profits live.
  • #1,888
  • Edited 7:21am May 4, 2014 7:00am | Edited 7:21am
Quoting abokwaik
Why don't you Hedge instead of using stop loss. Instead of SL order, put a pending Stop Order. ......
Hedge and SL achieve the same thing, except you pay more swap if hedged, hence it's better to be out of the market.

All same pair 'hedge' systems can be replicated by using a conventional system (it is easy to work around the NFA's no-hedge and FIFO rules). If you think about it, the reason is obvious: you can only ever be net long, net short or net zero, at any given point, and both hedge and conventional methods of placing orders allow this.

This topic has been discussed on these forums many times. Here is an example demonstrating how both hedging and counter hedging can be replicated by conventional buying/selling (i.e. having only one order in the market at any given point). There are other explanations and examples I've given, up to post #164 of that thread.

Merlin offered a $100,000 bet to anybody who could demonstrate how a hedge based system could return more pips than conventional buy/sell. Nobody took up the challenge. Merlin also showed how hedging can incur additional spread costs (here). He calls hedging in the same pair "nedging": explanation here.
  • #1,889
  • May 4, 2014 7:42am May 4, 2014 7:42am
Quoting hanover
{quote} Hedge and SL achieve the same thing, except you pay more swap if hedged, hence it's better to be out of the market. All same pair 'hedge' systems can be replicated by using a conventional system (it is easy to work around the NFA's no-hedge and FIFO rules). If you think about it, the reason is obvious: you can only ever be net long, net short or net zero, at any given point, and both hedge and conventional methods of placing orders allow this. This topic has been discussed on these forums many times. Here...

My idea of using hedging is only in situations where the trader has a firm sentiment (Bullish or Bearish) on a specif pair or currency, but he's not sure when exactly the market will turn in his favor (during a pullback or a rally). However if he is sure that the market direction has changed he should exit and accept the loss.

For example, I am Bullish on USD/JPY, current price is 102.22, I am expecting demand on 101.50, so I buy, then market breaks support and I see it going toward next support at 101, now if I am still Bullish, I can hedge (fully of partially) in order to reduce my exposure temporary until I see the reaction at 101, if I support holds and market starts moving in my original direction, I can close the sell at profit, and wait for my original trade to close also in profit. Or I can put a stop loss on the sell to make it break-even.

This is how I am using hedging, specifically to reduce my risk temporary while I am still having the same sentiment.


The worst case scenario, when the market is crazy and doesn't have direction, I can at any time use "Close-By" function and close at any price, having the Original planned loss.

PS: As for Swap I am using a swap-free account.


Regards,
No guts, no glory
  • #1,890
  • May 4, 2014 7:46am May 4, 2014 7:46am
Quoting hanover
{quote} Hedge and SL achieve the same thing, except you pay more swap if hedged, hence it's better to be out of the market. All same pair 'hedge' systems can be replicated by using a conventional system (it is easy to work around the NFA's no-hedge and FIFO rules). If you think about it, the reason is obvious: you can only ever be net long, net short or net zero, at any given point, and both hedge and conventional methods of placing orders allow this. This topic has been discussed on these forums many times. Here...
Thank you Hanover: I could vaguely remember your argument against hedging in this market ( the argument seems to make sense in any liquid market) , but would not want to repeat it here and get it wrong.

I had made the decision not to hedge (not to bet both for and against a single currency at any one time) some time ago, and have this tendency to let arguments for and against a decision I have made fade from memory. I welcome Mr. Abokwaik to this discussion: he will find much good advice from people such as yourself.

No trade should be made on other than its own merits.
  • #1,891
  • May 4, 2014 7:59am May 4, 2014 7:59am
Quoting Rap Skallion
{quote} Thank you Hanover: I could vaguely remember your argument against hedging in this market ( the argument seems to make sense in any liquid market) , but would not want to repeat it here and get it wrong. I had made the decision not to hedge (not to bet both for and against a single currency at any one time) some time ago, and have this tendency to let arguments for and against a decision I have made fade from memory. I welcome Mr. Abokwaik to this discussion: he will find much good advice from people such as yourself. No trade should be made...
I don't know if you red my last post.

Other uses of Hedging, I use some sometimes:

1. When in Profit, and price is reaching a resistance/support. I hedge partially, and in most of situations I collect some pips, on the hedged position before price continues in the original direction.

2. At news time :

  1. By opening two trades before news (specially speeches), with no SL and small TP.
  2. Or by fully hedging my position, until the situation calms down, and market direction gets clearer.

3. On week ends, or when I am not available to closely follow-up my trades.

No guts, no glory
  • #1,892
  • May 4, 2014 8:52am May 4, 2014 8:52am
Several recent posts discussed the merits of breaking a normal size trade (using a stop loss) into several smaller positions (and trading without a stop loss). Going back to my example, the normal trade (1 standard lot with a stop loss) was broken down into smaller positions (.3 standard lots with no stop loss), so the trader with no stop losses could put on 3 trades. I will use my example from last Friday to make a point. In that example, the market reverses by 80 pips after entry, then recovers the entire 80 pips. The no stop loss trader enters with one trade at $3 per pip. Once this trader is down 80 pips, they enter another trade at $3/pip, and somewhere along the ride back to the opening price on trade number 1, enters another trade that captures 40 pips, for a total of 120 pips (trade 1 nets zero, while trade 2 captures 80 and trade 3 captures 40). That totals $360. The trader who uses a stop loss enters their first trade that results in a 25 pip loss, but enters a second trade with the move against the first trade to capture 30 pips. When the market reverses itself and heads for the original entry price, this trader enters an order and captures 80 pips, and, as with the first trader, pick up an additional 40 pips on a second trade. The trader has a total of 125 pips (-25plus 30 plus 80plus 40), and at $10/pip, comes away with $1250 for the day. In addition, it should be noted that the guy trading with a stop loss never risks more than 1% of their margin on a single trade.

If, for some reason, both traders were forced to account for their trading at the point in time that the market reaches its low, the stop loss trader has made $50, but the traders not using stop loss is down $240. Even if the no-stop loss trader manages to enter a trade against their first position and manages to pick up 30 pips (just as the other trader did), for a profit of $90, they are still down $150 at the low.

The conclusion I reach in this discussion is that trading without a stop loss is a fine strategy. But when compared to proper trading with a stop loss, trading with no stop loss is defensive trading (which is okay when done properly). However, you are one terrorist attack away from a margin call. And if you have multiple negative trades running at once, something far less than a terrorist attack can result in a closed account.

Finally, the notion of trading without a stop loss seems to place a lot of significance in the single trade. It seems to be a "I'd rather sit on negative trades until they reach break even or wipe me out" kind of thinking rather than "what is the market doing, where is it likely to go, what are my risks, and how can I make the most money with this opportunity" kind of thinking. Like I said, one trader is thinking about a trade, the other about trading.
  • #1,893
  • May 4, 2014 8:58am May 4, 2014 8:58am
Quoting GEfx
Several recent posts discussed the merits of breaking a normal size trade (using a stop loss) into several smaller positions (and trading without a stop loss). Going back to my example, the normal trade (1 standard lot with a stop loss) was broken down into smaller positions (.3 standard lots with no stop loss), so the trader with no stop losses could put on 3 trades. I will use my example from last Friday to make a point. In that example, the market reverses by 80 pips after entry, then recovers the entire 80 pips. The no stop loss trader enters...
Great post GEfx
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #1,894
  • May 4, 2014 9:26am May 4, 2014 9:26am
Quoting abokwaik
{quote} I don't know if you red my last post. Other uses of Hedging, I use some sometimes: 1. When in Profit, and price is reaching a resistance/support. I hedge partially, and in most of situations I collect some pips, on the hedged position before price continues in the original direction. 2. At news time : By opening two trades before news (specially speeches), with no SL and small TP. Or by fully hedging my position, until the situation calms down, and market direction gets clearer. 3. On week ends, or when I am not available to closely follow-up...
I understand the sophisticated use you have of hedges: entering on both sides of a currency before a news event is a popular, though tricky maneuver. I have found that it weakens my position as often as it brings me profit. You have been profiting from the practice, so why discontinue it on my say so?

I will say this: I certainly think of it as a preferable alternative to using an arbitrary, fixed stop loss.
  • #1,895
  • May 4, 2014 9:56am May 4, 2014 9:56am
Quoting hanover
{quote} Hedge and SL achieve the same thing, except you pay more swap if hedged, hence it's better to be out of the market. All same pair 'hedge' systems can be replicated by using a conventional system (it is easy to work around the NFA's no-hedge and FIFO rules). If you think about it, the reason is obvious: you can only ever be net long, net short or net zero, at any given point, and both hedge and conventional methods of placing orders allow this. This topic has been discussed on these forums many times. Here...
Thats not true. I called Merlin's offer a fraud and a fake. That is why he put the caveat conventional buy/sell in there so he could always say he won the debate. He never answered my challenge so I can say the same thing.

Example #1 of successful hedging strategy: The truth is and you completely missed my point earlier that you can hedge yourself into a permanent DD which never changes once you get the highest high and lowest low in place. That can take years to get to that point. Every single trade is a winner from then on out and you are winning while the permanent DD is being put into place. Swaps in trading are insignificant if you trade low leverage. If you trade 1:1 you dont even pay a swap. Swap is only an issue with traders who trade high leverage. I trade low leverage so swaps are insignificant and I dont even consider them in any strategy. But yes you can hedge yourself to a point where your DD wont get any bigger but you can constantly be taking winning trades. 100 pips up profit, 100 pips down profit, 200 pips up double profit, 300 pips down triple profit. That is 1500 pips total profit and that can be had in a week or two. Any DD from any one position would be covered within a couple of weeks and then your in profit from then on.

Example #2 of successful hedging done in the marektplace. BANKS. Banks must keep an xxx amount of each currency on hand for exchange with their customers. If they have too much of one currency over another they could lose a lot of money if they keep too much of one over another. Banks always keep that delicate balance of different currencies so as not to lose money by not having their currency supplies hedged out.

Example #3 COT and no one has ever answered this one. Anyone who has ever read a COT report will notice that the number of buyers to sellers is usually around the 45% and 55%. sometimes it gets to 60/40. The only way big traders dont lose tons of money is they hedge out and balanced their trades. No one has ever been able to convince why 40-45% of COT traders seem to be always on the wrong end of a trade. They certainly arent using 30 pip SL either.

Example #4 Varying strategies. A trader can have a long term buy and a short term sell and both become profitable. Traders who do multiple levels of trades do this quite often. They stack their trades and keep adding to their positions but they also counter trade which also hedges their winning positions and take profit with the sell. So keeping their open buy trades and adding a sell to protect the profit plus adding to their account with a short term sell is far better trading than closing the buys and going with a sell.

Hanover you are a smart guy but you amaze me that you still dont seem to comprehend the benefits of multiple positions over the one in and one out philosophy of one dimensional trading. Whether you want to call it multiple levels, stacking, millipede, or whatever, it is a superior form of trading over the one in one out so vigorously promoted by a certain vocal group here at FF. Anyway here are 4 versions of hedging that I have discovered that traders around the world have done with varying degrees of success.

I will say it one more time and I am not afraid of Merlin at all. His offer is fraudulent and his terms have made it so no one can ever collect.
  • #1,896
  • Edited 10:09am May 4, 2014 9:56am | Edited 10:09am
Quoting GEfx
Several recent posts discussed the merits of breaking a normal size trade (using a stop loss) into several smaller positions (and trading without a stop loss). Going back to my example, the normal trade (1 standard lot with a stop loss) was broken down into smaller positions (.3 standard lots with no stop loss), so the trader with no stop losses could put on 3 trades. I will use my example from last Friday to make a point. In that example, the market reverses by 80 pips after entry, then recovers the entire 80 pips. The no stop loss trader enters...


This is a good and reasoned argument for the use of a fixed stop loss and I welcome such in this thread. What I find strange to my experience is the notion that those who trade without a fixed stop loss do so with a fixation on the individual trade. My experience was that, when I focused on the individual trade, I was using a fixed stop loss, trying to reason where best to put it for this trade, etc. etc.

So we are coming from different ball fields to the same game.

Now the scenario pits a very, very talented trader who correctly picks several lucky trades against one unlucky one, in a time frame that best suits him against one with perhaps another time frame that suits him not.

How much more likely is it that the guy with the stop loss sees it hit, walks away with disgust, only to see the price come back to what would have been to his profit. I think the term for that is "being whip-sawn".

I propose defining a movement in price one way and then quickly the other with no really lasting significance as a "Sashay". Sashays happen all the time and during news events , commonly get to be this size. If you must use a stop loss, make it so deep a sashay will not take it out. And it just makes good sense, when you see the price return to mean as it frequently does, to put an additional entry on its own merits to make you additional profits on what could now be your profitable trade.

I have nothing against a stop loss put far enough down the scale that it does not get hit. You not really trading with that stop loss.
That one is there to try to prevent loss of your ability to trade at all. (remember it is not operative over the weekend, when the broker is closed for business. and if the catastrophe is severe enough to take him out as well....

Never put money in this market that you cannot afford to lose.

No dicussion of this would be complete without viewing nanningbob's post #1895.

There is no such thing as a complete, consistent description of the Forex market and how to play it. But do not despair, you do not need that!
  • #1,897
  • May 4, 2014 11:39am May 4, 2014 11:39am
"Example #4 Varying strategies. A trader can have a long term buy and a short term sell and both become profitable. Traders who do multiple levels of trades do this quite often. They stack their trades and keep adding to their positions but they also counter trade which also hedges their winning positions and take profit with the sell. So keeping their open buy trades and adding a sell to protect the profit plus adding to their account with a short term sell is far better trading than closing the buys and going with a sell."

USDJPY is currently at 102.16 and was at 104.05 or so on April 2nd. What would be wrong with having a bullish bias and going long with 1 lot and a target of 104, but hedging short during a news event/government release or some other event that causes a temporary dollar weakness ? Why close the original position if you are still looking for 104 price ? It would seem to be the best of both worlds..(caveat, I have never traded this way).
Likewise, I have read other traders who largely trade negatively correlated pairs as an artificial hedge. If the original position takes a beating, then open a negative correlated position and take profits on each.
  • #1,898
  • May 4, 2014 11:52am May 4, 2014 11:52am
Quoting Rap Skallion
{quote} This is a good and reasoned argument for the use of a fixed stop loss and I welcome such in this thread. What I find strange to my experience is the notion that those who trade without a fixed stop loss do so with a fixation on the individual trade. My experience was that, when I focused on the individual trade, I was using a fixed stop loss, trying to reason where best to put it for this trade, etc. etc. So we are coming from different ball fields to the same game. Now the scenario pits a very, very talented trader who correctly picks several...
Hi Rap, just a quick response about news events. Of course, there are the unexpected news events that we must ready for during the trading day. As for the known, planned news events, I make it a habit of not trading the news event, unless my positions are well in the money. The reaction to a news event can be unpredictable, so for me, I let the dust settle until the predictable patterns and tendencies re-emerge. If I see the possibility of the market whipping around, I tighten stops or head for the sidelines. It's one way to avoid/manage risk.
  • #1,899
  • Edited 3:55pm May 4, 2014 3:44pm | Edited 3:55pm
In general, for humans I would say it is better to use a SL when trading. Why? Because no matter how rational we may be, when the moment comes to pull the plug, often emotions will cloud our judgment - it happens involuntarily. We will start using discretion to override our beliefs and rules. Ofcourse an excellent trader will be able to pull-off trades without a hard-SL because he/she can react quickly while accessing judgement and intuition accurately; most of us simply can't - our intuition is mostly faulty when under stress and when we face fear/greed/emotions.

I would say trading is mostly about striking a delicate balance between using intuition/judgment and following rules. (which is why machine and algo trading can never replace humans - they simply can't deal with context well enough.) My personal belief, and how I trade is that I split the two up very clearly. I trust myself and fully allow my intuition to take over when it comes to identifying trading opportunities/zones/context but when it comes to execution of entry, exit, trade management, I don't rely on my intuition/judgment and instead just follow mechanical steps and use a hard SL. I play to my strengths; I understand my limitations and I work around them; I don't try to swim against the current because it rarely works. You have to find your own limits. There is no right answer to this question - it depends on your psychological make-up.

p.s. don't forget to collect data - because at the end of the day, trading is a game of induction; you can only see if your system works by looking at the rear-view mirror and without data you will find it hard to improve.
Build good relationships with others.
  • #1,900
  • Edited 9:26pm May 4, 2014 4:05pm | Edited 9:26pm
To all those who answered my post (#1888):

I will give two examples to explain my position. I’m NOT talking about banks, COT or pyramiding into some kind of millipede. I’m simply talking about being long and short in the same pair simultaneously.

I’m NOT saying that you can’t make money hedging. What I am saying is that you can make exactly the same amount of money (pips) by not hedging. Do you understand the difference between these two statements?


Example #1
Trader ‘A’ has a buy position of 3 lots, and a sell position of 2 lots in EURUSD. His account is in USD, so each pip moved equates to $10. Price rises 10 pips. Ignoring br0ker costs, what is his net profit?

Being long 3 lots and short 2 lots nets out to being long 1 lot. Trader ‘B’ has a buy position of 1 lot in EURUSD. His account is also denominated in USD, and price rises 10 pips. Ignoring br0ker costs, what is his net profit?

Here is the answer.

Trader ‘A’
 On his buy position, he gains 3 lots x $10 per pip x 10 pips = $300.
 On his sell position, he loses 2 x $10 x 10 = $200.
Hence his net gain is $100.

Trader ‘B’
 On his buy position, he gains 1 lot x $10 per pip x 10 pips = $100.

Both traders have made the same money, but ‘B’ managed to do it without hedging. And ‘B’ pays spread on only one position.

Now what happens if price had fallen 10 pips?
Trader ‘A’ loses $300 on his buy position, and wins $200 on his sell position, for a net loss of $100.
Trader ‘B’ loses $100 on his buy position, again without hedging.


Example #2
Let’s look at something that’s arguably more complex. This is the type of scenario described by abokwaik in post 1882 (if I understand him correctly).

EURUSD is at 1.3000. Both ‘A’ (a trader who likes to hedge) and ‘B’ (a trader who doesn’t hedge) are bullish. Both buy 1 lot.

i) Price falls 50 pips to 1.2950. ‘A’ hedges his position by opening a sell for 1 lot. ‘B’ simply closes his $500 loss.

ii) Now price rises 70 pips to 1.3020. Both traders are now bearish. So ‘A’ closes his buy position for a $200 win, leaving himself net short 1 lot. ‘B’ replicates this by opening a sell position of 1 lot.

iii) Price then falls 100 pips to 1.2920. Both traders close their sell positions.

Now let’s see who made the most money, ignoring br0ker costs.

‘A’ made $200 on his buy position, and another $300 on the sell position that he kept open until the end. Net result: 2 wins for a total gain of $500.

‘B’ made a $500 loss on his buy position, and a $1,000 gain on his sell position. Net result: a total gain of $500, and all without hedging.

Why did ‘A’ and ‘B’ make the same profit? Because:
 whenever ‘A’ was net 1 lot long, ‘B’ was also 1 lot long
 whenever ‘A’ was net 1 lot short, ‘B’ was also 1 lot short
 whenever ‘A’ was hedged (the gain on one position exactly offsets the loss on the other), ‘B’ was out of the market

From these examples, we can see that:
(1) when hedged, two opposing positions cancel each other out, and it’s effectively the same as being out of the market
(2) any hedged position nets itself out to a single position, and therefore the single position makes the same pips/money as the hedged combo
(3) both hedged and single-position traders are effectively adjusting their net positions along the way. The single-position trader can always open a single positions that’s the exact equivalent of the trader that’s hedged, AT EVERY POINT ALONG THE WAY.

Therefore it’s always possible for the single-position trader to achieve the same P/L as the hedged trader. Therefore hedging IN ITSELF offers no actual benefit. QED. Either people can do the math in the above examples, or they can’t.

Now, I will offer the same challenge as Merlin’s. If you think the above examples weren't sophisticated enough, give me your own fully worked example, stating the actions taken (buy/sell) and at what price, by a hedged trader, and I’ll show you how it’s possible to make the same pips/money by not hedging. I’ve already done this several times, anyway; the link in my previous post (replying to Kiads) is one such example. Did you read and understand it?

David
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