Why is hedging not discussed as much? | Forex Factory

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Why is hedging not discussed as much?

  • #1
  • First Post: Jun 9, 2014 1:29am Jun 9, 2014 1:29am
Why are the mathmatics and ideas behind possible hedging concepts discussed? Every strategy is about entering a trade. Finding a signal to enter a trade is the easiest thing in the world. The problem is dealing with losses. Why is hedging not as discussed of a topic as macd or MA's or MTF's and trend entering or scalping strategies?
  • #2
  • Jun 9, 2014 3:02am Jun 9, 2014 3:02am
Quoting justin7
Why are the mathmatics and ideas behind possible hedging concepts discussed? Every strategy is about entering a trade. Finding a signal to enter a trade is the easiest thing in the world. The problem is dealing with losses. Why is hedging not as discussed of a topic as macd or MA's or MTF's and trend entering or scalping strategies?
I use hedging and i think its very useful to minimize risk and maximize profit, but i dont think its 100% necessary to be profitable, there are many ways to be profitable.

But i find trades that are hedged to be more efficient than those which are not.
"There's a sucker born every minute" - P.T. Barnum
  • #3
  • Jun 9, 2014 3:47am Jun 9, 2014 3:47am
Quoting Proximus
{quote} I use hedging and i think its very useful to minimize risk and maximize profit, but i dont think its 100% necessary to be profitable, there are many ways to be profitable. But i find trades that are hedged to be more efficient than those which are not.
In what way do you hedge? there are different forms and variables and ways to hedge..
  • #4
  • Jun 9, 2014 4:16am Jun 9, 2014 4:16am
Quoting justin7
{quote} In what way do you hedge? there are different forms and variables and ways to hedge..
Buying selling the same currency, or different currencies to minimize risk and uncertainty ,and to maximize profit.
"There's a sucker born every minute" - P.T. Barnum
  • #5
  • Jun 9, 2014 4:26am Jun 9, 2014 4:26am
Quoting Proximus
{quote} Buying selling the same currency, or different currencies to minimize risk and uncertainty ,and to maximize profit.
On demo accounts when trading high risk volumes i used to buy or sell equal amounts of the same currency when my trade went wrong as a circuit breaker allowing me to keep my original trade. I found that if I took the loss i did not have enough capital to place large enough trades to recover as quickly. Sometimes that strategy worked sometimes not. At least I could walk away for a couple of hours of days if needed. On real accounts with the higher stress it was not as successful.
  • #6
  • Jun 9, 2014 4:36am Jun 9, 2014 4:36am
Hedging is discussed for 52 page here, starting at post 4:
http://www.forexfactory.com/showthread.php?p=6594368
  • #7
  • Jun 9, 2014 4:56am Jun 9, 2014 4:56am
Quoting surfbeach253
{quote} On demo accounts when trading high risk volumes i used to buy or sell equal amounts of the same currency when my trade went wrong as a circuit breaker allowing me to keep my original trade. I found that if I took the loss i did not have enough capital to place large enough trades to recover as quickly. Sometimes that strategy worked sometimes not. At least I could walk away for a couple of hours of days if needed. On real accounts with the higher stress it was not as successful.
I dont place high risk orders, everything is kept classic 3% risk , 3:1 RR, and so on, but the key is in frequency, because i hedge, i can place many orders with the same risk, and the trade portfolio will be diversified.

So because i can place 15 orders with small risk, i can make nice % growth /day and not inverse, the loss would be minimal.
"There's a sucker born every minute" - P.T. Barnum
  • #8
  • Jun 9, 2014 5:04am Jun 9, 2014 5:04am
Quoting TheMaxx
Hedging is discussed for 52 page here, starting at post 4: http://www.forexfactory.com/showthread.php?p=6594368
I understand there are some topics here on it but it's a shame that it isn't discussed more and the mathmatics of it aren't discussed more to newbies instead of teaching only a trend following system without emphasizing low risk strategies
  • #9
  • Jun 9, 2014 5:09am Jun 9, 2014 5:09am
Quoting justin7
{quote} I understand there are some topics here on it but it's a shame that it isn't discussed more and the mathmatics of it aren't discussed more to newies instead of teaching only a trend following system without either emphasizing low risk strategies
What mathemathics are you interested in, hedging doesnt give any edge, its just a form or a tool of trading.It's primary role is to minimize risk and exposure to the market while not touching the profitability, and to diversify your positions, so in this sense its very useful.But if you dont knwo how to use it it can be very bad too.
"There's a sucker born every minute" - P.T. Barnum
  • #10
  • Jun 9, 2014 5:52am Jun 9, 2014 5:52am
The problem here seems to be people think buying and selling the same asset is called "hedging" when it's simply not. An education in finance is the prescription here and then they can move onto derivative hedging.
  • #11
  • Jun 9, 2014 6:15am Jun 9, 2014 6:15am
@Trance, real "hedging", for example delta hedging, is so way over the head of retail traders....

If they can't understand the simple concept of a flat position, what chance is there for them to understand delta, covariance matrices, dispersion or market/factor neutral trading....
  • #12
  • Jun 9, 2014 6:31am Jun 9, 2014 6:31am
Maybe I'm wrong but didn't Paul Rotter also opened hedge positions (in the same pair) to get a better market feeling?
  • #13
  • Jun 9, 2014 6:32am Jun 9, 2014 6:32am
The complete lack of any financial knowledge across these types of threads no longer surprises me but what does surprise me is the non existent appetite to understand these topics. The time wasted in pursuit of riches using the garbage across this forum... you'd think it could be put to better use by just simply learning & understanding finance and the markets in general.

Quoting Adal
@Trance, real "hedging", for example delta hedging, is so way over the head of retail traders.... If they can't understand the simple concept of a flat position, what chance is there for them to understand delta, covariance matrices, dispersion or market/factor neutral trading....
  • #14
  • Jun 9, 2014 6:44am Jun 9, 2014 6:44am
Quoting Adal
@Trance, real "hedging", for example delta hedging, is so way over the head of retail traders.... If they can't understand the simple concept of a flat position, what chance is there for them to understand delta, covariance matrices, dispersion or market/factor neutral trading....
what good does your boasting do? anything can be learned and understood. These ideas and concepts are spawned from creativity
  • #15
  • Jun 9, 2014 6:44am Jun 9, 2014 6:44am
Quoting TranceTrader
The problem here seems to be people think buying and selling the same asset is called "hedging" when it's simply not. An education in finance is the prescription here and then they can move onto derivative hedging.
I thought hedging was simply making an investment that will reduce a loss that may be incurred from a current investment. I am sure there are many educated and uneducated ways of doing this. You made me smile and wonder why you bothered to make a comment on this forum but thanks anyway.
  • #16
  • Jun 9, 2014 6:46am Jun 9, 2014 6:46am
Quoting TranceTrader
The complete lack of any financial knowledge across these types of threads no longer surprises me but what does surprise me is the non existent appetite to understand these topics. The time wasted in pursuit of riches using the garbage across this forum... you'd think it could be put to better use by just simply learning & understanding finance and the markets in general. {quote}
Pretty sure the appetite is there. The problem is people that boast or brag without actually telling anyone the real information
  • #17
  • Jun 9, 2014 6:52am Jun 9, 2014 6:52am
Quoting justin7
{quote} Pretty sure the appetite is there. The problem is people that boast or brag without actually telling anyone the real information
The information is out there. On these forums, on wikipedia, in books, in academic papers.

Real information: hedging is worse than not hedging because you pay extra spreads.

Now see how this real information as you called it is ignored.

BTW, this is me boasting and bragging. I live (very well) from trading, unlike most people here: http://www.myfxbook.com/members/adal...lsLpLx1FpOZ1s5
  • #18
  • Jun 9, 2014 6:57am Jun 9, 2014 6:57am
Quoting Adal
{quote} Real information: hedging is worse than not hedging because you pay extra spreads.
then what about delta hedging that you just mentioned??
  • #19
  • Jun 9, 2014 7:00am Jun 9, 2014 7:00am
Quoting justin7
{quote} then what about delta hedging that you just mentioned??
When I say "hedging" I mean this stupid trading in the opposite direction that retail forex traders do. This is not real hedging, as understood by a finance professional. They would laugh two days at you if you told them that you "hedge" by putting the same trade in the opposite direction.

http://en.wikipedia.org/wiki/Delta_hedging
  • #20
  • Jun 9, 2014 7:03am Jun 9, 2014 7:03am
Quoting Adal
{quote} The information is out there. On these forums, on wikipedia, in books, in academic papers. Real information: hedging is worse than not hedging because you pay extra spreads. Now see how this real information as you called it is ignored. BTW, this is me boasting and bragging. I live (very well) from trading, unlike most people here: http://www.myfxbook.com/members/adal...lsLpLx1FpOZ1s5
lol i see your myfxbook all buys on eurchf. nothing else. broker arbitrage eh?
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