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Why is hedging not discussed as much?

  • #61
  • Jun 9, 2014 10:18am Jun 9, 2014 10:18am
Quoting Adal
{quote} Why is it so hard to believe that I trade manually? I am working on an HFT system. But it's not done yet. I believe HFT are the superior form of trading. BUT I AM TRADING MANUALLY ON THIS ACCOUNT Anyway, since you believe I'm a lier and a deceiver, there is no point in this discussion anymore. Good luck to you
manually but what's your system? lol

why only buys and not sells?

what other accounts do you have that you're possibly hedging usdchf or eurusd alongside eurchf? etc etc
  • #62
  • Jun 9, 2014 10:27am Jun 9, 2014 10:27am
I only short gold and have been for the last 3 months or so... what's wrong with manually executing positions in one direction???

There's no conspiracy here lol
  • #63
  • Jun 9, 2014 10:57am Jun 9, 2014 10:57am
Quoting Adal
{quote} Justin, to understand why I only take longs on EUR/CHF you need to understand the history of this pair in the last 3 years. It's a heavily manipulated pair (by theirs central bank). This is why my trading is "riskless". Because I have a central bank backing me up.
Hello Adal,

can you please tell us more about EUR/CHF trading. How do you know that this is heavily manipulated pair? How do you take advantage from this?

thanks, Lapras
  • #64
  • Jun 9, 2014 11:15am Jun 9, 2014 11:15am
Quoting justin7
{quote} it's capitalizing off of price data feed inefficiencies. using scripts and programs to take advantage of slow broker feeds or data for quick in and out scalps over and over with hardly ever if any minimal losses. or it could be longer term who knows but yeah basically it's like a hacker or computer programmer type of stuff.
Quoting Adal
{quote} Here's an actual arbitrage that I've done a few years back, one Sunday evening when the markets had just opened. Bought EUR/USD from Tradeville (big blue boxes) at 1.3794 and at the same time sold EUR/USD at Oanda (gray in the background) at 1.3812. After 30 minutes the prices aligned, closed both positions and end up with a risk-free (true arbitrage) 18 pips profit. {image}
I see, but in this sense as you guys defined it its pretty much impossible, since all MM brokers front-run their clients, its commonly known.

Unless you trade directly in an exchange, otherwise every mediator will front run you

Even if you got the price feed faster than others, you still cant place the order fast enough...
"There's a sucker born every minute" - P.T. Barnum
  • #65
  • Jun 9, 2014 11:37am Jun 9, 2014 11:37am
If anyone makes money with hedging so why not just keep doing it, where is the problem?
  • #66
  • Jun 9, 2014 1:33pm Jun 9, 2014 1:33pm
Quoting Adal
{quote} Here's an actual arbitrage that I've done a few years back, one Sunday evening when the markets had just opened. Bought EUR/USD from Tradeville (big blue boxes) at 1.3794 and at the same time sold EUR/USD at Oanda (gray in the background) at 1.3812. After 30 minutes the prices aligned, closed both positions and end up with a risk-free (true arbitrage) 18 pips profit. {image}
first thanks to talk a little bit about " be flat " ,
i've even followed a schooling in which it was teached to use that and i've told that was non-sens, told to professor and others students there is not advantage,
if you are at 0, it's like if you are not in the market , seems logical but nodoby wanted to believe me, i've never understood,

second i was asking to me if it was possible for a retail to play with arbitrage ?

i earned my life 2 years with arbitrage on bookmakers but at the end i was excluded directly each time,

so are you not excluded too fast ? No fear to don't see again your money because you're cheating ?
and in 2014 there is yet a lot of delay between certain brokers, plateforms ?
i thought that was surely really more complicated than with betting sites
  • #67
  • Jun 9, 2014 3:47pm Jun 9, 2014 3:47pm
Quoting lapras
{quote} Hello Adal, can you please tell us more about EUR/CHF trading. How do you know that this is heavily manipulated pair? How do you take advantage from this? thanks, Lapras
http://www.rttnews.com/1906294/snb-l...ncy-gains.aspx

and you're welcome
  • #68
  • Jun 9, 2014 3:52pm Jun 9, 2014 3:52pm
everybody will manage to place a hedge, but the tricky part is to de-hedge the hedge.
could not find books or in-depth articles on this subject and I`m sure there will be all kind of clever ways to do this.

how do you hedgers do your de-hedging?

an example:
buy 1.2000
drops to 1.1900: hedge previous buy and sell 1.1900 - DD is -100 pips
price drops to 1.1840 and starts rising and nears 1.1900.

what do you do: stop out your hedge trade (sell order) @ 1.1900 and hope price continues to rise to 1.20000?
what about if price after hitting 1.1900 returns to 1.1840 but now without your hedge trade?
  • #69
  • Jun 9, 2014 4:03pm Jun 9, 2014 4:03pm
Yes, that's a problem I was facing every time i tried to "hedge"..apparently you have to wait for price to hit some strong S/R level and then "de-hedge". Of course, price may never return to the level where it was so you will have to see what to do next. Best to liquidate with a loss if price continues moving against you after you close your opposite order. But I am looking at it from a new perspective now. Your DD will be locked at the level where you would normally put Stop Loss order, and from there you could try to fix it somehow and if you can't then you close it with an expected loss.

You can also try some Martingale methods to recover but if you f*ck up you will lose more or create a really deep s*it hole. And it's not a pleasant place to be.. Needs more practice in demo
  • #70
  • Jun 9, 2014 4:05pm Jun 9, 2014 4:05pm
Quoting yonnie
everybody will manage to place a hedge, but the tricky part is to de-hedge the hedge. could not find books or in-depth articles on this subject and I`m sure there will be all kind of clever ways to do this. how do you hedgers do your de-hedging? an example: buy 1.2000 drops to 1.1900: hedge previous buy and sell 1.1900 - DD is -100 pips price drops to 1.1840 and starts rising and nears 1.1900. what do you do: stop out your hedge trade (sell order) @ 1.1900 and hope price continues to rise to 1.20000? what about if price after hitting 1.1900 returns...
The way I trade uses hedging and I will try to explain it is in a simple as possible way I can.
I use a form of MTF for a directional bias first to determine the long term trend and then scale down to 1H time frame to make trades in that same direction and will keep adding trades based on that direction with my signal entry triggers, if trades are not triggered into profit, trend on larger tf will eventually switch where then trades in the opposite direction will be added and held for a long TP as orders build up so price will eventually move so far the other way that you will either be able to get out at BE, smaller loss or profit if you want to wait long enough. That, is how you get out of a de-hedge successfully. The key is to know what to use for your triggers and how to determine your trend. Which I will not tell you
All posts are my personal opinion
  • #71
  • Jun 9, 2014 4:12pm Jun 9, 2014 4:12pm
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?
Most people here at FF don't know what hedging is, so having a discussion about hedging is pretty difficult. The "FF Hedge" involves having a buy trade and a sell trade open at one time, in the same or statistically similar pair. In this case you have paid the spread twice, and are using valuable margin on both trades, simply to achieve a flat position. In most examples I've seen on FF, this "FF Hedge" is established when the first trade is under water, so opening the second position locks in the loss. Basically, any perceived benefits of this strategy can be duplicated by just closing the negative trade and opening trades with the market move. The "hedging" approach is an inefficient use of resources.

To Adel, well done on the trading approach. I am still laughing at the comments that your approach is not really trading. I guess if you have a strategy that works,and are capable of executing that strategy, it's not fair or involves some kind of trickery. Lol -- you should stop it now and give all the money back -- lol.
  • #72
  • Jun 9, 2014 4:35pm Jun 9, 2014 4:35pm
Quoting GEfx
{quote} I guess if you have a strategy that works,and are capable of executing that strategy, it's not fair or involves some kind of trickery. Lol -- you should stop it now and give all the money back -- lol.
Yes, if you find a statistical bias in the market and you exploit it, it's not fair. You're not supposed to have an edge. You're not supposed to exploit the market. You're cheating!!! You're making money!!! A real trader would trade all the markets, all the time, in all directions.

Just like Rafael Nadal is a cheat. Why is he playing mostly with his left hand???? It's because he's a cheat, that's why. He's taking advantage of the other players who are playing mostly with their right hand. If he were a true tennis player, he would play with both hands. And he wouldn't have favorite shots. You're not supposed to hit your adversary where he is weak. You're supposed to hit it where he is strong, so that you can lose.
  • #73
  • Jun 9, 2014 6:30pm Jun 9, 2014 6:30pm
Quoting Adal
{quote} Yes, if you find a statistical bias in the market and you exploit it, it's not fair. You're not supposed to have an edge. You're not supposed to exploit the market. You're cheating!!! You're making money!!! A real trader would trade all the markets, all the time, in all directions. Just like Rafael Nadal is a cheat. Why is he playing mostly with his left hand???? It's because he's a cheat, that's why. He's taking advantage of the other players who are playing mostly with their right hand. If he were a true tennis player, he would play with...
about the "cheating" part, that's not us who tell that, that's the persons who have your money ! That's why i think it's important to talk about that ! that was not a personal attack but a simple question

don't victimize you like that ahah
  • #74
  • Jun 9, 2014 6:35pm Jun 9, 2014 6:35pm
Quoting thomasz1
{quote} about the "cheating" part, that's not us who tell that, that's the persons who have your money ! That's why i think it's important to talk about that ! that was not a personal attack but a simple question don't victimize you like that ahah
I was not referring to you. And you are right, my broker has a clause in the contract which forbids arbitrage with them. If you do it, they are allowed to revert the trades.

It's not possible to do arbitrage on retail platforms. If you want to do arbitrage, you need to go to true ECNs, like LMAX, HotspotFX or EBS. Of course, you'll compete with the arbitrage HFTs there (and probably lose).
  • #75
  • Jun 9, 2014 6:39pm Jun 9, 2014 6:39pm
ok thanks for the answer Adal

have a good night
  • #76
  • Jun 10, 2014 2:17am Jun 10, 2014 2:17am
I also hedge sometimes and it pays off big.
Find instruments in different asset classes that are highly correlated (or better: "rebuild" prime instruments through other) and exploit differences.
Only the amounts must be calculated precisely.

Adal, congratulations. Well done!
  • #77
  • Jun 10, 2014 3:31am Jun 10, 2014 3:31am
- You need huge capital and patience to hedge your trades effectively. Since currency pair correlation isn't always perfect, you may end up with double loss and with these $500 accounts, that may translate into a margin call
  • #78
  • Jun 10, 2014 5:02am Jun 10, 2014 5:02am
Quoting Adal
{quote} I was not referring to you. And you are right, my broker has a clause in the contract which forbids arbitrage with them. If you do it, they are allowed to revert the trades. It's not possible to do arbitrage on retail platforms. If you want to do arbitrage, you need to go to true ECNs, like LMAX, HotspotFX or EBS. Of course, you'll compete with the arbitrage HFTs there (and probably lose).
How do they detect if you arbitrage, lets say you buy at broker A and look at broker B's chart which is 5 min faster than broker A ?
"There's a sucker born every minute" - P.T. Barnum
  • #79
  • Jun 10, 2014 5:18am Jun 10, 2014 5:18am
Quoting Adal
{quote} I was not referring to you. And you are right, my broker has a clause in the contract which forbids arbitrage with them. If you do it, they are allowed to revert the trades. It's not possible to do arbitrage on retail platforms. If you want to do arbitrage, you need to go to true ECNs, like LMAX, HotspotFX or EBS. Of course, you'll compete with the arbitrage HFTs there (and probably lose).
why don't you just admit you're arbitraging
  • #80
  • Jun 10, 2014 5:26am Jun 10, 2014 5:26am
Quoting Proximus
{quote} How do they detect if you arbitrage, lets say you buy at broker A and look at broker B's chart which is 5 min faster than broker A ?
5 min faster? Maybe 5 millisecond faster.

It's extremely easy to detect arbitrage. You just do a simple correlation analysis between the time your feed was out of out of sync with the times that the trader suspected of arbitrage traded. You'll find a perfect match.
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