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Hedging vs Stop Loss

  • #161
  • May 31, 2014 12:00pm May 31, 2014 12:00pm
Quoting lcast
{quote} I think is usefull to talk about an hedge vs SL "strategy" ... and not an hedge vs SL "trade". Hedging vs Stop Loss makes no sense, if you are discussing 1 trade long and 1 trade short in only one pair ... a flat position ... with no strategy into it ... without factoring more trades in other pairs ... with no MM ... with no risk management ... is better the Stop Loss Hedging is more than open a trade oposite to the one that is losing money ... There as to be a underlying strategy, usually on the longer TFs, with correlation among pairs...

But that's the thing though, by definition to use hedging it implies some strategy to come out of it other wise you wouldn't. Lol I don't even know why I am defending the hedgers I don't even hedge myself.
Being a trader is lonely, but being a great trader is lonelier still
  • #162
  • May 31, 2014 12:06pm May 31, 2014 12:06pm
Quoting saneblane
{quote} Lol I don't even know why I am defending the hedgers I don't even hedge myself.
He he he he ... Love is all around ...
Don't swim with the sharks ...
  • #163
  • May 31, 2014 12:11pm May 31, 2014 12:11pm
"Anyone going for the 3 pip broker is wasting money"

Here is another blanket statement that we can argue all day because you are assuming that everyone can just use any broker all willy nilly. Here in US for example good outside brokers shun us like we have Ebolla virus, all because of government bureaucracy. So we have to deal with brokers here who are not even trying to compete. So that statement is simply ignorant of others.

Anyway this could go on all day and I have things to do, may the pip be with you.
Being a trader is lonely, but being a great trader is lonelier still
  • #164
  • May 31, 2014 12:12pm May 31, 2014 12:12pm
Quoting lcast
{quote} He he he he ... Love is all around ...
I'm gonna hedge my hours in front of the screen with a visit to the beach ... the sun is shinning and I have sunglasses and a cabrio to enjoy it.

bye ...
Don't swim with the sharks ...
  • #165
  • May 31, 2014 12:41pm May 31, 2014 12:41pm
Quoting saneblane
"Anyone going for the 3 pip broker is wasting money" Here is another blanket statement that we can argue all day because you are assuming that everyone can just use any broker all willy nilly. Here in US for example good outside brokers shun us like we have Ebolla virus, all because of government bureaucracy. So we have to deal with brokers here who are not even trying to compete. So that statement is simply ignorant of others. Anyway this could go on all day and I have things to do, may the pip be with you.
I presented a scenario in which you have two brokers to choose from, exactly the same except for the spread. I didn't present a scenario that your only option is a broker with spread 3 did I?

Given the scenario, you wouldn't pick the broker with spread 3, would you? Likewise, given the option (and the option is there) you shouldn't elect to do hedging, for the same reason...you would be wasting money when there is a better option available.
  • #166
  • May 31, 2014 1:32pm May 31, 2014 1:32pm
Quoting SupraSense
{quote} I presented a scenario in which you have two brokers to choose from, exactly the same except for the spread. I didn't present a scenario that your only option is a broker with spread 3 did I? Given the scenario, you wouldn't pick the broker with spread 3, would you? Likewise, given the option (and the option is there) you shouldn't elect to do hedging, for the same reason...you would be wasting money when there is a better option available.

Except one big difference. In your example you stipulated that everything but the spread is exactly the same. And that's fine.
Then you correlate that to hedge or not to hedge. But not all factors are exactly the same. There are other reasons at play as some have tried to explain. (Now who's unwilling to be taught )
That's why you can't prove a negative. You are trying to prove the negative that hedging is NEVER of benefit.

That can't be done because no one including you can have knowledge of every possible use for hedging. Whereas someone who is trying to make the point that hedging may not ALWAYS be of no benefit, only had to come up with one example as some have.

Maybe the problem is your definition of BENEFIT. Monetary benefit is not the only reason to adopt or reject a strategy or trading tool.

Take business as an example (after all, I want my trading to be my business). In business we have tools we use that may result in greater efficiency (like hedging)...cell phones, copy machines, postage meters, calculators, automatic coffee makers for the break room, on and on. These tools cost money. Don't think anyone would argue that any of these is 100% necessary to operate a business profitably. And they definitely cost more monetarily then going without them. But we choose to use these tools because we deem the benefit in other areas, perhaps efficiency, to be worth the added cost. Let me state that again...they are of benefit even though they cost more to use.

It can be the same with hedging.
Cost more - Yes
100% necessary - No Way
Possibility of using for other reasons besides the cheapest way to trade - brown suits and blue suits.
  • #167
  • May 31, 2014 2:02pm May 31, 2014 2:02pm
Quoting spyderman
{quote} Except one big difference. In your example you stipulated that everything but the spread is exactly the same. And that's fine. Then you correlate that to hedge or not to hedge. But not all factors are exactly the same. There are other reasons at play as some have tried to explain. (Now who's unwilling to be taught ) That's why you can't prove a negative. You are trying to prove the negative that hedging is NEVER of benefit. That can't be done because no one including you can have knowledge of every possible use for hedging. Whereas...
Nope, the factors are all the same.

Your argument boils down to saying ' yeah 1-1=0 and 2-2=0 and 3-3=0, but you can't say for every number x-x=0.' Except that I can. That's mathematics, and so is this hedging argument. You may think the strategy or the conditions matter, but they don't. Mathematically it's the same, hedging is the same or worse...never better.

I've already stated that if you have some psychological benefit, then fine, but at least recognise it. Stated it 2 or 3 times in fact. I understand people doing things for superstitious reasons, if it makes them feel better. It's when it's suggested that there is something financial that hedging offers that can't be achieved without hedging, then I protested. It's nonsense, and you yourself know that.

You should not be encouraging it or defending it imo. I'm not sure why you are if you know better. You'll have to answer that for yourself. Even the NFA and CFTC have banned the practice. The practice doesn't exist in banks or hedge funds because they obviously know that it's nonsense and a waste of money. Are you really going to defend it and make excuses for it?
  • #168
  • May 31, 2014 2:38pm May 31, 2014 2:38pm
Quoting SupraSense
{quote} Nope, the factors are all the same. Your argument boils down to saying ' yeah 1-1=0 and 2-2=0 and 3-3=0, but you can't say for every number x-x=0.' Except that I can. That's mathematics, and so is this hedging argument. You may think the strategy or the conditions matter, but they don't. Mathematically it's the same, hedging is the same or worse...never better. I've already stated that if you have some psychological benefit, then fine, but at least recognise it. Stated it 2 or 3 times in fact. I understand people doing things for superstitious...

And you can't seem to get the point that not everyone here is talking mathematics.
And no,that doesn't mean the only other reason to use hedging is superstition or psychology, but trade system efficiency. And that can't be quantified by an algebraic formula.
And as far as the NFA and CFTC go, they also dictated that 50:1 leverage was all they would allow...how do you feel about that one?
  • #169
  • Edited 2:57pm May 31, 2014 2:45pm | Edited 2:57pm
Quoting spyderman
{quote} And you can't seem to get the point that not everyone here is talking mathematics. And no,that doesn't mean the only other reason to use hedging is superstition or psychology, but trade system efficiency. And that can't be quantified by an algebraic formula. And as far as the NFA and CFTC go, they also dictated that 50:1 leverage was all they would allow...how do you feel about that one?
I think they could have even been stricter and maybe even allowed less than 50:1. But 50:1 is more than generous enough for any trader. I never need to use more than 20:1 leverage anyway and typically I'm using 10:1. PLus I consider that already quite risky. I understand some people who don't like to leave money with their broker and so want more, but I'd guess that for the majority they're over-leveraged, undercapitalised and don't know what they're doing. Why on earth would anyone except a gambler need 100:1 leverage or more? Do they even realise the risks? I doubt it.

You're saying it's possible that it's more efficient to take more trades to get the same overall position as you'd have from less trades. If that's more efficient then I'll leave it there
  • #170
  • May 31, 2014 3:01pm May 31, 2014 3:01pm
Quoting SupraSense
{quote} I think they should have been stricter and maybe even allowed less than 50:1. But 50:1 is more than generous enough for any trader. I never need to use more than 20:1 leverage anyway and typically I'm using 10:1. I understand some people who don't like to leave money with their broker and so want more, but I'd guess that for the majority they're over-leveraged, undercapitalised and don't know what they're doing. Why on earth would anyone except a gambler need 100:1 leverage or more? You're saying it's possible that it's more efficient to...

Unreal you just keep digging hole for yourself. I heard about that fairytale book about 1.5 percent, but you think this really works in all situations? you want a trader who is trading for 7 pips with a 1:1 ratio to use that nonsense 1.5 percent and small leverage? get real, trading is about making money not following rule, a good trader would never be confined to rules that don't make sense. A trader can make a 7 pip trade with less risk than a trader look for bigger pips you know why, because the market moves back and for 7 pips a day many times, giving him more chances to cherry pick his trade, how many times a day does the EURUSD move in 20pips? once or twice right? so if you are a scalper you can make a 7 pip trade with a little more leverage and be out playing with you're dog, while I am still waiting for my +20 pip moves, to make the same amount of money because I use smaller Leverage.

It sounds good on paper doesn't it, but in the real world those rules fall apart real quick.
Being a trader is lonely, but being a great trader is lonelier still
  • #171
  • May 31, 2014 3:43pm May 31, 2014 3:43pm
Quoting saneblane
{quote} Unreal you just keep digging hole for yourself. I heard about that fairytale book about 1.5 percent, but you think this really works in all situations? you want a trader who is trading for 7 pips with a 1:1 ratio to use that nonsense 1.5 percent and small leverage? get real, trading is about making money not following rule, a good trader would never be confined to rules that don't make sense. A trader can make a 7 pip trade with less risk than a trader look for bigger pips you know why, because the market moves back and for 7 pips a day...
I'm not in a hole. Rules that make sense, lol. Ok, lets suppose someone uses 100:1 leverage. So with their 10k account, they are taking a position that's worth 1 million in a currency pair. Now a currency can move 10% in a day if there is a central bank intervention. So that's 100k they'd lose in a day, from their 10k account. The broker closes it as it hits 0 (if they can!). Slippage may be significant. And what about pure gaps. Well I've never seen one that's 10% myself, but I have seen gaps over 1%, even over 2% (even large % gaps intraday!). So if it gaps over 1%, the trader has lost more than 10k. Not just entire account gone, on one trade, but in debt! Believe it or not there are idiots who want to use 400:1 leverage!

Now if you think that it's wise to risk your entire account on one trade and actually end up in debt, then you're an amateur and don't know what you're doing. Surely you know better than that Saneblane. Surely you realise the risks of high leverage.

People post threads about why retail loses their accounts. It's nonsense like this. You don't understand that 'hedging' costs you money, you don't understand that you're over-leveraged. You don't understand what could really happen to your account. You're just playing on borrowed time.

I give up! You win. Go and waste money on nedging, go and blow your accounts by being over-leveraged.
  • #172
  • May 31, 2014 3:49pm May 31, 2014 3:49pm
Quoting SupraSense
{quote} I'm not in a hole. Rules that make sense, lol. Ok, lets suppose someone uses 100:1 leverage. So with their 10k account, they are taking a position that's worth 1 million in a currency pair. Now a currency can move 10% in a day if there is a central bank intervention. So that's 100k they'd lose in a day, from their 10k account. The broker closes it as it hits 0 (if they can!). Slippage may be significant. And what about pure gaps. Well I've never seen one that's 10% myself, but I have seen gaps over 1%, even over 2% (even large % gaps intraday!)....
It's ok I don't know a thing about trading but I am smart enough to know that not everyone is going to do things the same, and I am always trying to keep an open mind to things that make sense. You just don't get it, do you know what over leveraged mean, do you know how leverage is supposed to be calculated with expected loss and nothing else? Stop making blanket statements that you disagree with because you trade a certain way, this has got to be some of the most bias statements I have ever seen. It's these kinds of thinking that do not leave any room to grow as a trader because you are assuming that everything you do is right. I on the other hand always assume that I can learn something from anyone, and I continue to learn to this day.

There are traders who will always have an opinion and I understand that. but you have gone to the point where you are no longer open to hear anything else. Not everything I hear on here I agree with, but that doesn't really matter we are all after the same goal and we can go about it different ways. But you are here bashing people because they don't trade the same way you do. The only way I can classify this behavior is like a tantrum throne by a little kid.
Being a trader is lonely, but being a great trader is lonelier still
  • #173
  • May 31, 2014 4:01pm May 31, 2014 4:01pm
Quoting saneblane
{quote} It's ok I don't know a thing about trading but I am smart enough to know that not everyone is going to do things the same, and I am always trying to keep an open mind to things that make sense. You just don't get it, do you know what over leveraged mean, do you know how leverage is supposed to be calculated with expected loss and nothing else? Stop making blanket statements that you disagree with because you trade a certain way, this has got to be some of the most bias statements I have ever seen, these kinds of thinking do not leave any...
I'm open to hearing things. I asked if anyone had a set of trades that hedging helped. Only one person listed some trades, and that was shown to be worse than doing it without hedging.

So I'm listening again. Tell me what leverage you actually use in a trade. You got annoyed when I suggested that 50:1 is more than enough, so I guess you use leverage of more than this, right? Ok so tell me how much you use, and then tell me what happens if for some reason the market gaps 2% against you? What is the loss you have sustained? Should be easy to answer.
  • #174
  • May 31, 2014 4:12pm May 31, 2014 4:12pm
Quoting SupraSense
{quote}So I'm listening again. Tell me what leverage you actually use in a trade. You got annoyed when I suggested that 50:1 is more than enough, so I guess you use leverage of more than this, right?.

Here we go again, so you assume because I defend something that I do it Lol. If that is the kind of thinking you have then I understand why you are so bias, I am trying to get you to see that not everything is as black and white as that. I trade with 50:1 but I can appreciate someone else's style that makes sense. Unlike you I actually discovered more than one way to trade the market successfully, and they aren't mutually exclusive either, so I am happy for you if you are doing well. But I can assure you that there is a hedger that is doing well, and there are also people who use high leverage who are doing well. This is trading, it's not school, there is no rules to making money any trader should learn that rule, it would serve them well.

This is where I am going to leave it, there is nothing that I am going to learn from you and I don't think you will learn anything from anyone, so this conversation is not serving any of us any good.
Being a trader is lonely, but being a great trader is lonelier still
  • #175
  • May 31, 2014 4:18pm May 31, 2014 4:18pm
Quoting saneblane
{quote} Here we go again, so you assume because I defend something that I do it Lol. If that is the kind of thinking you have then I understand why you are so bias, I am trying to get you to see that not everything is as black and white as that. I trade with 50:1 but I can appreciate someone else's style that makes sense. Unlike you I actually discovered more than one way to trade the market successfully, and they aren't mutually exclusive either, so I am happy for you if you are doing well. But I can assure you that there is a hedger that is doing...
I don't want to get into a debate about what other people may or may not use. I am already aware there are people wanting to use 400:1 leverage. Lets just get down to numbers.

You use 50:1 leverage, I don't mean you broker offers you that, I mean when you take a position, you are leveraged at that ratio or not? Example, I have 10,000, in an account, my broker offers 100:1 leverage, I open up a forex position size 200,000. I am using 20:1 leverage even though my broker allows more. I'm in fact only using 20:1, ok? Now Just to clarify again, if you are using 50:1 leverage, and the market gaps 2% against you, how much have you lost from your account? Just the number please.

You criticise me for not listening, yet every time I've asked for someone to put actual numbers on things, they fail and make excuses or go on about irrelevant things and being open-minded. I'm one of the few that's actually backing up what they say with numbers.
  • #176
  • Edited 4:39pm May 31, 2014 4:22pm | Edited 4:39pm
Quoting SupraSense
{quote} I don't want to get into a debate about what other people may or may not use. I am already aware there are people wanting to use 400:1 leverage. Lets just get down to numbers. You use 50:1 leverage, I don't mean you broker offers you that, I mean when you take a position, you are leveraged at that ratio or not? Example, I have 10,000, in an account, my broker offers 100:1 leverage, I open up a forex position size 200,000. I am using 20:1 leverage even though my broker allows more. I'm in fact only using 20:1, ok? Now Just to clarify again,...

That's the most stupid argument I have ever seen, do you know what leverage is? it's a factor of multiplication, I have been trying to explain that to you for how long now, it's is a multiple of what I trade, you don't even know how much I trade, for all you know I trade 1 dollar every trade. Stop asking stupid questions a broker can offer me leverage of 1000:1 and I still wouldn't be over leveraged, because I would compensate by trading smaller positions. Stop digging hole for yourself.

Do those numbers make sense for you?
Being a trader is lonely, but being a great trader is lonelier still
  • #177
  • May 31, 2014 4:23pm May 31, 2014 4:23pm
Quoting saneblane
{quote} That's the most stupid argument I have ever seen, do you know what leverage is? it's a factor of multiplication, I have been trying to explain that to you for how long now, the ratio is only a multiple of what I trade, you don't even know how much I trade, for all you know I trade 1 dollar every trade. Stop asking stupid questions
Just stick to the numbers and answer the very simple question. If you USE 50:1 leverage, and the market gaps 2% against you, how much of your account have you lost?
  • #178
  • May 31, 2014 4:25pm May 31, 2014 4:25pm
I have actually used 400:1 leverage (I had to ask it from FXCM, since the default is 200:1).

I used it to load up on EUR/CHF when it was close to the peg (as in 5 pips close). Let's just say that I won 300% in a single day when it finally took off. How much could I have lost if the market gapped down 0.25%? That was a calculated risk, a bet that the peg would hold.
  • #179
  • May 31, 2014 4:28pm May 31, 2014 4:28pm
Quoting Adal
I have actually used 400:1 leverage (I had to ask it from FXCM, since the default is 200:1). I used it to load up on EUR/CHF when it was close to the peg (as in 5 pips close). Let's just say that I won 300% in a single day when it finally took off. How much could I have lost if the market gapped down 0.25%? That was a calculated risk, a bet that the peg would hold.
Lol that looks like good numbers Adal. Just keep on pounding them.
Being a trader is lonely, but being a great trader is lonelier still
  • #180
  • May 31, 2014 4:30pm May 31, 2014 4:30pm
Quoting SupraSense
{quote} Just stick to the numbers and answer the very simple question. If you USE 50:1 leverage, and the market gaps 2% against you, how much of your account have you lost?
hHAAH. What a waste of time, all of this because you just can't see beyond the mental blocks you put up for yourself. Have a good day.
Being a trader is lonely, but being a great trader is lonelier still
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