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Hedge a losing position?

  • #61
  • Apr 22, 2013 6:19am Apr 22, 2013 6:19am
Quoting BackTestDummy
you cannot apply your 10 page pdf to my trading because you don't know when MY trends start and stop, and when MY consolidation starts and stops, therefore what rules I'm applying and when.
Forgot this one. I told you the text deals with the general case, independently of both the strategies and the market conditions. Your trend and consolidation definitions are therefore irrelevant.
No greed. No fear. Just maths.
  • #62
  • Apr 22, 2013 6:27am Apr 22, 2013 6:27am
Quoting PipMeUp
{quote} Forgot this one. I told you the text deals with the general case, independently of both the strategies and the market conditions. Your trend and consolidation definitions are therefore irrelevant.
Your model doesn't know my rules or their parameters or when and how applied - if you want to think that it does, that's fine by me - I'm not here to argue, you're welcome to your opinion and I will stick with what I know works for me. Good luck.
I've got my pips - go get yours!
  • #63
  • Apr 23, 2013 3:20am Apr 23, 2013 3:20am
Quoting Gumrai
Well, nobody has been able to show one example where opening an additional trade in the opposite direction instead of closing the trade adds even a miniscule amount of benefit. I knew that nobody would be able to offer a valid example because such a scenario does not exist. You people who do not understand the principles of hedging can continue to live in your fantasy hedging world where you can convince yourselves that you are being clever will never accept that any time you have 2 opposite trades open at the same time, you are just treading water...
Anybody could make 100 of hypothetical examples... but you would contest them all as non valid ..even they "hypothetical".
I think that is why no one bothers .

It is about the strategy you use and the perception you have of the market. If you are right about the market you will make more money
hedging when your perception calls for it. If you are wrong about the market, you would loss the same. This is a very simple advantage.

Hedging is not suitable for all strategies... but for many works great. It is a matter of knowing the difference.

J
  • #64
  • Oct 23, 2014 8:57pm Oct 23, 2014 8:57pm
Quoting Gumrai
Well, nobody has been able to show one example where opening an additional trade in the opposite direction instead of closing the trade adds even a miniscule amount of benefit. I knew that nobody would be able to offer a valid example because such a scenario does not exist. You people who do not understand the principles of hedging can continue to live in your fantasy hedging world where you can convince yourselves that you are being clever will never accept that any time you have 2 opposite trades open at the same time, you are just treading water...
thanks, it never made any sense to me, but I keep reading people using it...so I lost a lot of time searching for why they use it, only to find out that like i thought it makes no sense.

there is one situation though when it makes sense to open an oposite position: there is no way to close a position with a limit order in MT4. So to close a position with a limit order, you can make a limit order in the oposite direction, wait to get filled, and than use "close by" to close both positions against each other while paying comission only for one of them.
  • #65
  • Aug 30, 2015 1:43pm Aug 30, 2015 1:43pm
I am still new to the trading and holding a germany30 for almost minus 20000 and hedging it in between fir almost two weeks, still not going find a way out.
  • #66
  • Aug 31, 2015 9:26am Aug 31, 2015 9:26am
I used hedging last week during this flash crash/correction, so I could go to bed before my eyes fell out.
  • #67
  • Aug 31, 2015 5:49pm Aug 31, 2015 5:49pm
Well. I understand that the burying position we get a zero - it's obvious. But if we are able to capitalize on the size of the spread. In general, choosing nuzhy variation in prices on the market and you can make a profit with hedged positions if to close them in the correct order.
  • #68
  • Oct 10, 2015 1:30pm Oct 10, 2015 1:30pm
Why I not come to this page one month before to save my $2000. Great stuff that no account mange every taught me.
  • #69
  • Oct 11, 2015 12:29am Oct 11, 2015 12:29am
Same pair hedging, and exiting a losing trade, are merely two different ways of returning to being net flat. There's no advantage in same-pair hedging; in fact it is disadvantageous in that the trader incurs additional swap costs. For more detailed explanations, worked examples and mathematical proofs, start here and here. This contentious and polarizing topic has been done to death, and I have no wish to engage in yet another lengthy debate. The math involved is inviolable, and people either understand it, or they don't.
  • #70
  • Oct 11, 2015 1:39pm Oct 11, 2015 1:39pm
This type of "hedging' in the same account and the same market just doesn't make any sense..... I mean it's not just ridiculous, it's impossible in the first place. This is something(deceptive practice?) the retail fx brokers invented so they can collect more commissions and swaps from stupid traders, who think this is some type of money management or strategy........ . Think, people, THINK!
If you are long 1 lot EURUSD and then open short 1 lot EURUSD = you are FLAT!(exposure = 0). It's just your platform showing 2 "virtual" opposite positions open at the same time.
So far only In the US the regulators fixed and banned this " practice"...... other regulators must be ignorant or just lazy. Of course some people in US found ways around this "problem" - by using 2 different brokers or accounts....(stupidity is endless after all....)

Also, just from strategic point of view, If you have losing position and strongly believe the market will continue to move against you - just reverse the position.
  • #71
  • Oct 11, 2015 2:53pm Oct 11, 2015 2:53pm
Quoting alphaomega
This type of "hedging' in the same account and the same market just doesn't make any sense.....
Some traders seem to be under the illusion that same-pair 'hedging' a losing position gives them two trades, which can then eventually and separately be closed out at a profit. Hence they end up with two wins instead of one loss. Of course exactly the same pips can be captured without the 'hedging', but curiously even some very knowledgeable and experienced traders apparently can't see how. I assume it's partly because they view their success in terms of trades, and win rates, instead of pips (or $) being harvested.

This is a similar mentality used by those who refuse to close out losing trades, because they believe that floating losses are inconsequential -- that a loss is not a loss until the position is closed -- and that given enough time all losses will eventually return to profit.

When the US regulators banned same-pair hedging, for the reason that you said -- br0kers were exploiting these traders to gain extra swap -- there was an outcry, with angry FF members adamantly stating that 'big brother' was out to get them, by banning their most profitable 'strategy'. And then when folk tried to point out the reality of the situation, some of these conspiracy theorists accused them of being commissioned by the regulators for endorsing the latter's view. LOL
  • #72
  • Oct 11, 2015 3:09pm Oct 11, 2015 3:09pm
Quoting hanover
{quote} Some traders seem to be under the illusion that same-pair 'hedging' a losing position gives them two trades, which can then eventually and separately be closed out at a profit. Hence they end up with two wins instead of one loss. Of course exactly the same pips can be captured without the 'hedging', but curiously even some very knowledgeable and experienced traders apparently can't see how. I assume it's partly because they view their success in terms of trades, and win rates, instead of pips (or $) being harvested. This is a similar mentality...
Actually I find this whole thing very interesting from psychological point of view. This is just another one of those "bugs" in human "logic" that Is worth investigating. All these little flaws in human psychology that prevent people from winning the game are very interesting because without these flaws this business will look very different. (Or maybe will not exist at all??).
  • #73
  • Oct 11, 2015 3:17pm Oct 11, 2015 3:17pm
Hedging a losing position is pointless.

Hedging a profitable long term position for a time makes sense on occasions.
  • #74
  • Oct 11, 2015 3:20pm Oct 11, 2015 3:20pm
Hedging a losing position? why on earth would you do that? If you are in a loss if you get out or get stuck with it. There is no point of hedging . You add transactin fees on top of your loss.
  • #75
  • Oct 11, 2015 3:38pm Oct 11, 2015 3:38pm
Quoting verv
Hedging a profitable long term position for a time makes sense on occasions.
Sorry to disappoint you, but NO, It doesn't make sense.
  • #76
  • Oct 11, 2015 3:44pm Oct 11, 2015 3:44pm
Cut your losses short.
The only system that will work is one designed by and for yourself.
  • #77
  • Oct 11, 2015 3:45pm Oct 11, 2015 3:45pm
Quoting alphaomega
{quote} Sorry to disappoint you, but NO, It doesn't make sense.
Yes it does. You just can't see it.

I made a post on this recently.
  • #78
  • Oct 11, 2015 3:54pm Oct 11, 2015 3:54pm
Quoting alphaomega
{quote} Sorry to disappoint you, but NO, It doesn't make sense.
for sure, it make sense to hedge a winning position!


it's simple...
a 100 pips profit position (be) ---- hedge open at the profit 100 pips with tp 90 opposite !
so you profit from a retrace, OR you just fixed your 100 pips proft !
  • #79
  • Oct 11, 2015 4:05pm Oct 11, 2015 4:05pm
Quoting verv
{quote} Yes it does. You just can't see it. I made a post on this recently.
Well, shit, with an argument like that then of course you must be right. Your posts exude confidence that can surely - SURELY - only be an extension of your intelligence.

These threads go round and round with the same tired stupid arguments by people too stupid to understand some pretty critical concepts.

All of you muppets who think a same pair "hedge", which isn't a hedge of any sort at all, should go and have a good hard think about what it is that you are doing... exactly... when you open and close a position. What's the underlying mechanism that your tickets represent!? What currency are you exchanging for another, and then back again. Then compare this to your stupid nedging garbage and tell us all what you discover.

Maybe then, but not likely, you may open your brain bucket just a little to let some of the shit tip out and make room for some actual intelligence and knowledge on the matter. How any of you expect to be successful... IN LIFE... with such poor cognitive abilities truly astounds me.
Congratulations ScalaFX for coming out of the closet!
  • #80
  • Oct 11, 2015 4:07pm Oct 11, 2015 4:07pm
Quoting nubcake
{quote} Well, shit, with an argument like that then of course you must be right. Your posts exude confidence that can surely - SURELY - only be an extension of your intelligence.
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