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  • #49,661
  • Aug 28, 2014 9:12am Aug 28, 2014 9:12am
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  • #49,662
  • Aug 28, 2014 9:58am Aug 28, 2014 9:58am
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  • #49,663
  • Aug 28, 2014 11:22am Aug 28, 2014 11:22am
Quoting Swis
{quote} Thanks, it all makes a lot of sense though, I'm not that educated in understanding what seems complex hedging strategies yet, though I've crossed looking the terminology up, I have 0 understanding or exp in actually effectively putting them into application successfully. Most of my gains were ant hill work, and one risk arbitrage opportunity I spotted recently. The thing is, I don't like thinking my account will be blown off because I lack proper padding. Nor a sub-account to be blown up. At this point little money is starting to seem not...
hi, swis,

yea the majors have been not as efficient these 2 weeks, and have been difficult to trade, so i went over to cadusd, felt more flow there.
primarily i have been testing a new mo out for these kinds of illiquid markets on demo, seems like they might do ok, but the foundation is still the same in the thread, except most of the time we just step aside and do nothing but watch the markets, so no positions on and no risk taken in uncertain periods, kind of like scalper mo, hit fast and run fast.

hmm, well i don't really mean hedging in the sense of using negatively correlated pairs, but more in terms of using options and properties of the pairs which has positive rollover interest, and sort of let time work in our favour. sort of like the usdtry pair, the interest is about 4pips per day if we short, so if we have a zero cost synthetic long, which is long put short call both atm, after paying commissions, last time i modelled it, we should start getting return on capital using interest after the 14th day, as the first 14 days are used to pay off commissions, and it hedges out perfectly all the fluctuations, so we kind of are just getting money on interest differentials, so its kind of not really trading anymore, more of income portfolio lol.

actually your idea of using negatively correlated pairs is interesting, have you tried synching it with another pair to generate a cross and sort of try riding back into the flow of the market? for example, we are long eurusd, and it is moving against us, while we see usdjpy is moving down too, and we are seeing the vols on eurjpy pick up a lot, since both eurusd and usdjpy contribute to the eurjpy pair, so our conclusion maybe that the eurjpy pair is showing the most momentum now, and we could short the eurjpy pair, and use the same scout size as eurusd + a little bit more, to try to redirect the position and guide it back to flow with the eurjpy pair, especially since if eurusd runs out of steam and usdjpy still has steam to move, the eurjpy pair's momentum will still continue. however, the key here relies heavily on how far is the market away from your eurusd scout, if it is too far then rescuing this way may prove fatal, so its more like within minutes from position entry, if you know you are wrong, and do spot an opportunity for redirecting flow then it may prove to become a way to rescue the position and do a quick exit on unfavourable terrain. sort of like if you attack a kingdom, and are trapped, you can strike another kingdom and get the foreign capital to rescue the trapped soldiers. so its kind of like redirecting and guiding the position to flow back with the markets, while keeping the position sizing exposed small. its an idea i tried, but it requires being able to dance multiple pairs at once, so i kinda can't handle so many things at once, so i decided to concentrate on just dancing 1 pair at a time.

well, about the size, i guess it takes time to get used to that risk level and slowly does it. with more experience I'm sure you will be able to build the size up along with the confidence level are at.
  • #49,664
  • Aug 28, 2014 11:37am Aug 28, 2014 11:37am
Quoting CookieMonsta
{quote} hi, swis, yea the majors have been not as efficient these 2 weeks, and have been difficult to trade, so i went over to cadusd, felt more flow there. primarily i have been testing a new mo out for these kinds of illiquid markets on demo, seems like they might do ok, but the foundation is still the same in the thread, except most of the time we just step aside and do nothing but watch the markets, so no positions on and no risk taken in uncertain periods, kind of like scalper mo, hit fast and run fast. hmm, well i don't really mean hedging...
in your example you state:
1. long eurusd
2. short usdjpy
3. short eurjpy

why not just ...
1. short eurusd
2. short usdjpy

especially when you expect the "eurusd runs out of steam and usdjpy still has steam to move" ... what does it mean when eurusd runs out of steam? reversal/ pullback?
  • #49,665
  • Aug 28, 2014 11:39am Aug 28, 2014 11:39am
Quoting CookieMonsta
{quote} hi, swis, yea the majors have been not as efficient these 2 weeks, and have been difficult to trade, so i went over to cadusd, felt more flow there. primarily i have been testing a new mo out for these kinds of illiquid markets on demo, seems like they might do ok, but the foundation is still the same in the thread, except most of the time we just step aside and do nothing but watch the markets, so no positions on and no risk taken in uncertain periods, kind of like scalper mo, hit fast and run fast. hmm, well i don't really mean hedging...
Thank you! I will look into all the sexy synthetic stuff. That's what I've been trying to research. Do you have a book recommendation? or did you manually model this? Also that cross idea is nice I will pay more attention to them and their reactions; I haven't actually looked into crosses in heavy detail throughout my trading journey, until I was forced to recently under the circumstance of the majors. Ah, I always think to limit a single pair dance for optimum focus, but things in my trading got really intense, to where I can implement all this creativity to find solutions. It is part of the spiral, right? The ever growing Thank you for your time, and heaps of information and sincere guidance.
  • #49,666
  • Aug 28, 2014 11:43am Aug 28, 2014 11:43am
Quoting 4tiger
{quote} in your example you state: 1. long eurusd 2. short usdjpy 3. short eurjpy why not just ... 1. short eurusd 2. short usdjpy especially when you expect the "eurusd runs out of steam and usdjpy still has steam to move" ... what does it mean when eurusd runs out of steam? reversal/ pullback?
eur/usd is negative usd/jpy
so when he's long eur and it goes wrong, sometimes usd does not give risk arbitrage/latency and follows through completely. So he looks at cross(hopefully in the stage of hidden momentum) and shorts it. I haven't tried this, and can't verify the moments this happens, but the idea is out of this world. So I will be on the lookout.
  • #49,667
  • Edited 12:02pm Aug 28, 2014 11:49am | Edited 12:02pm
Quoting Swis
{quote} eur/usd is negative usd/jpy so when he's long eur and it goes wrong, sometimes usd does not give risk arbitrage/latency and follows through completely. So he looks at cross(hopefully in the stage of hidden momentum) and shorts it. I haven't tried this, and can't verify the moments this happens, but the idea is out of this world. So I will be on the lookout.
yes...
let me rephrase...
in his example he states:
1. buy eur sell usd
2. sell usd buy jpy

3. sell eur buy jpy


why not just ...
1. sell eur buy usd
2. sell usd buy jpy
= sell eur buy jpy

... if i was to play with cross pairs.. at the very least i wouldn't hedge against the original EUR order?
  • #49,668
  • Aug 28, 2014 12:06pm Aug 28, 2014 12:06pm
Quoting 4tiger
{quote} in your example you state: 1. long eurusd 2. short usdjpy 3. short eurjpy why not just ... 1. short eurusd 2. short usdjpy especially when you expect the "eurusd runs out of steam and usdjpy still has steam to move" ... what does it mean when eurusd runs out of steam? reversal/ pullback?
hi 4tiger,

sorry, the way i expressed it is confusing.

i meant to say
1. we long eurusd, but eurusd going down
2. we spot usdjpy going down
3. because of the 2 charts movements, the cross chart eurjpy's movement will have its vols exacerbated a lot more, as fti had once stated before.
4. so because we can conclude someone shorting eurjpy, and see that the relative vols between eurjpy and usdjpy, eurjpy offer us more vols and momentum to carry out a quicker rescue since momentum is with us, and try keeping the rescue period as short as possible, and hence because of how the cross charts tear when the major's chart's momentum sync, we can try tap into momentum for rescues.
5. so we end with eurusd long, eurjpy short.

so this is in the assumption that we already have a long eurusd position and am already in need of a rescue as the long eurusd is against the current direction, and we do want to try to get out of the long position, and re-evaluate our read of the market, and momentum is available for us to use in a cross pair.

so technically it is to try to redirect with momentum to flow back with the markets, so even if the pair is not correlated, as long as vols and momentum exist it should still hold, however this part needs verifying.

what i meant by eurusd run out of steam is that it may start to range and slow in momentum while the usdjpy is still moving downwards, and because the price for crosses is simply eurusd / usdjpy or something like that, because if usdjpy moves with a slower lag, momentum may still exist within usdjpy even after eurusd has slowed and is bottoming for the current leg, that is when the eurjpy may still move abit further on because of their relationship, and once we can take a small loss or gain and exit the market we can just quickly exit the markets. however, it may also be the case where eurusd retraces while usdjpy moves down, where our loss on eurusd would lessen, while the short eurjpy would still be holding steady, as when both are in sync, the cross ranges, with a small bias depending on their relative strength. or that when eurusd and usdjpy both retrace at the same time, thats when we may decide to exit the markets, or implement other damage control or rescues which you may develop in the future.
  • #49,669
  • Aug 28, 2014 12:08pm Aug 28, 2014 12:08pm
Quoting 4tiger
{quote} yes... let me rephrase... in his example he states: 1. buy eur sell usd 2. sell usd buy jpy 3. sell eur buy jpy why not just ... 1. sell eur buy usd 2. sell usd buy jpy = sell eur buy jpy ... if i was to play with cross pairs.. at the very least i wouldn't hedge against the original EUR order?
Sometimes you're caught off guard in a move, and sometimes the road is not linear
so what he is saying is to look past two roads in a sense
redirect the flow
Sometimes the move is out of steam and the timing is too off to make a play on the second pair successfully with my hedge idea.
So he is only saying to try and catch momentum while hot for profit in detour.

Say you're long eur, and it goes wrong, but you've been wrong for minutes. And can clearly see the move is dying.
You can't catch up with time and hedge with the usd since it is running out of steam successfully without overleveraging yourself.
How do you rescue your loss? His idea: Eyes on the cross.
  • #49,670
  • Aug 28, 2014 12:14pm Aug 28, 2014 12:14pm
Quoting Swis
{quote} Thank you! I will look into all the sexy synthetic stuff. That's what I've been trying to research. Do you have a book recommendation? or did you manually model this? Also that cross idea is nice I will pay more attention to them and their reactions; I haven't actually looked into crosses in heavy detail throughout my trading journey, until I was forced to recently under the circumstance of the majors. Ah, I always think to limit a single pair dance for optimum focus, but things in my trading got really intense, to where I can implement...
hi swis,

i think this book is a good one, which jacque recommended to me,

Alexander C. Market risk analysis III.. Pricing, hedging and trading financial instruments

however, some of the information regarding like characteristics of the pairs can keep changing like interest rates, depends entirely on how the central banks decide their policy, so if they open it to us, we can try modelling it and see if it works and then implementing it.

well, I'm not sure if its part of the spiral, but the idea is to try to redirect and flow with momentum, and sort of try to keep in tuned with the markets, while keeping exposure and sizing small, so that the capital at risk as well as the time that the positions are exposed to the market is kept as small as possible so that on top of keeping losses small, we also try to not short change ourselves opportunity cost, because if momentum ensues, while busy rescuing for quite a long time, it is also hurting opportunity cost we could be engaging in as well.

glad to help out swis.
  • #49,671
  • Aug 28, 2014 12:17pm Aug 28, 2014 12:17pm
Quoting CookieMonsta
{quote} hi 4tiger, sorry, the way i expressed it is confusing.
...confusing to who?

Quoting Swis
{quote} Sometimes you're caught off guard in a move, and sometimes the road is not linear so what he is saying is to look past two roads in a sense redirect the flow Sometimes the move is out of steam and the timing is too off to make a play on the second pair successfully with my hedge idea. So he is only saying to try and catch momentum while hot for profit in detour. Say you're long eur, and it goes wrong, but you've been wrong for minutes. And can clearly see the move is dying. You can't catch up with time and hedge with the usd since it is...
okay, but i'm saying that even if you wanted to do a rescue by going to the eurjpy cross, hedging is not the way to do a rescue....
  • #49,672
  • Edited 12:37pm Aug 28, 2014 12:22pm | Edited 12:37pm
Quoting 4tiger
{quote} ...confusing to who? {quote} okay, but i'm saying that even if you wanted to do a rescue by going to the eurjpy cross, hedging is not the way to do a rescue....
Oh, that's just an immediate rescue idea. Like a quick bail out move. Very quick.
There are tons of ways to rescue, more than I realized at first.
In a sense, we are only describing moments where there is a good tear/lag and where to find possibilities.
  • #49,673
  • Aug 28, 2014 12:28pm Aug 28, 2014 12:28pm
Quoting CookieMonsta
{quote} hi swis, i think this book is a good one, which jacque recommended to me, Alexander C. Market risk analysis III.. Pricing, hedging and trading financial instruments however, some of the information regarding like characteristics of the pairs can keep changing like interest rates, depends entirely on how the central banks decide their policy, so if they open it to us, we can try modelling it and see if it works and then implementing it. well, I'm not sure if its part of the spiral, but the idea is to try to redirect...
I was talking about enhancing further logistics based on experience. Character, ever reaching spiral<3 Thanks for the book. I will try to best understand. Jacque is a math wizard afterall, but after getting this far, I'm sure I can tackle anything.
  • #49,674
  • Aug 28, 2014 12:29pm Aug 28, 2014 12:29pm
Quoting 4tiger
{quote} ...confusing to who? {quote} okay, but i'm saying that even if you wanted to do a rescue by going to the eurjpy cross, hedging is not the way to do a rescue....
hi 4tiger,

what we are sighting is momentum on 2 majors and their cross relation and because of the specific way the 2 momentum interacts, the cross produces momentum as well, in our example, we spot eurusd's momentum is to the downside, as well as usdjpy's momentum is also to the downside, and the eurjpy cross tears, which offer us the most amount of momentum, so although shorting usdjpy is also valid, but we want more momentum to work in our favour thats why we chose eurjpy, however if the eurusd is downwards while usdjpy is upwards, we would be inclined to long usdjpy, while the momentum still exist, as going to the cross will be suicidal, so it isn't to say we are going to crosses, but we are going with momentum, so the respective charts must indicate momentum before we can use it in this way, otherwise it would be suicidal to even try this method if momentum does not exist in the other pair we are trying to use as a rescue, as it could easily end up as both pairs in heavy loses.
  • #49,675
  • Aug 28, 2014 12:37pm Aug 28, 2014 12:37pm
Quoting Swis
{quote} I was talking about enhancing further logistics based on experience. Character, ever reaching spiral<3 Thanks for the book. I will try to best understand. Jacque is a math wizard afterall, but after getting this far, I'm sure I can tackle anything.
hi swis,

no probs, however for the quick rescue method, do only demo it and not use it on live accounts until you can prove the method works really well and also complements with the rest of your mo, since introducing something new may offset the balance you have created for yourself with fti's method, because i can foresee that when you decide your logistics, to rescue as a quick rescue method or fti's rescue method, you may get tied up between choosing 1 of them and switching 1 from the other half way into rescue can prove to be fatal and damage your account.
  • #49,676
  • Aug 28, 2014 12:42pm Aug 28, 2014 12:42pm
Quoting CookieMonsta
{quote} hi swis, no probs, however for the quick rescue method, do only demo it and not use it on live accounts until you can prove the method works really well and also complements with the rest of your mo, since introducing something new may offset the balance you have created for yourself with fti's method, because i can foresee that when you decide your logistics, to rescue as a quick rescue method or fti's rescue method, you may get tied up between choosing 1 of them and switching 1 from the other half way into rescue can prove to be fatal...
Thanks for the concern. It isn't too new to me, this information got to me at the right point in time. :-) Oddly, I get lucky when I receive information, always in a timely manner. I will just be keeping in mind the crosses, and pay close attention and find rhythm before I make moves based on what the chart tells me.
  • #49,677
  • Aug 29, 2014 2:33am Aug 29, 2014 2:33am
Quoting Swis
There are tons of ways to rescue, more than I realized at first.
not really...
  • #49,678
  • Edited 5:47am Aug 29, 2014 2:51am | Edited 5:47am
Quoting CookieMonsta
{quote} hi swis, no probs, however for the quick rescue method, do only demo it and not use it on live accounts until you can prove the method works really well and also complements with the rest of your mo, since introducing something new may offset the balance you have created for yourself with fti's method, because i can foresee that when you decide your logistics, to rescue as a quick rescue method or fti's rescue method, you may get tied up between choosing 1 of them and switching 1 from the other half way into rescue can prove to be fatal...
you are going into the mud.

no one rescues with cross legging, thats quick way to..... quicker than quicksand.
The idea seems there, the practise ............suicidal.
no one should keep positions small.
Big and small is relative.
Maybe you peeps have big small concepts all wrong.

Mine is BIG, relative to ??????....ya of course, to when its small.
Big , bigger , biggest, fast, faster, fasting.


regards

For those who cannot get it.
The reason why the kill will be faster is because if you trying rescue with legging into crosses is because when 1 does that.
You start with 1 side of the leg of the cross already on wrong side and you need to leg the other leg of the cross.
So your cross will also be on wrong side of the cross.
The effect is a double wammy wrong side of the flow positions.
NEVER do this. NEVER NEVER NEVER.
Fastest road to the dark place.

There is only 1 way save book, but i will not show you because if you cannot understand and manage 1 legged animal.
You will die play with 3 legged animal.
And if you know how handle 1 legged animal.
Then you already know how manage 3.
If you introduce cross legging then you introduce 2 addition knifes cut you. risk+cap. and your bro triples for same risk profile.
You only teach peeps cut their own throat this way, if you broking.
2 legged animal you are dead. very dead book.
This the BIGGEST mistake any trader can make. BIGGEST
is worst than martingaling positions.
  • #49,679
  • Aug 29, 2014 6:01am Aug 29, 2014 6:01am
Quoting fti
{quote} you are going into the mud. no one rescues with cross legging, thats quick way to..... quicker than quicksand. The idea seems there, the practise ............suicidal. no one should keep positions small. Big and small is relative. Maybe you peeps have big small concepts all wrong. Mine is BIG, relative to ??????....ya of course, to when its small. Big , bigger , biggest, fast, faster, fasting. regards For those who cannot get it. The reason why the kill will be faster is because if you trying rescue with legging into crosses is because when...
hi fti, thanks for correcting me,

is the mistake i made residing in the assumptions i had about the pairs, and the characteristics in how the crosses interact with the majors?
so is the problem with the assumption in that by flowing with the momentum with another pair, we can try to use the momentum in the other pair to get foreign caps to help cushion the original position, but since the first pair's legging is wrong, the tri arb's legging is totally wrong in the first place?
so the mistake was in the assumption of how majors and their crosses act?

also, when you mentioned the 3 legged animal is it triangular arbitrage?
  • #49,680
  • Aug 29, 2014 6:03am Aug 29, 2014 6:03am
Quoting Swis
{quote} Thanks for the concern. It isn't too new to me, this information got to me at the right point in time. :-) Oddly, I get lucky when I receive information, always in a timely manner. I will just be keeping in mind the crosses, and pay close attention and find rhythm before I make moves based on what the chart tells me.
hi swis,

yep well, i guess i been proven wrong, so, please throw away the method i told you about.
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