Hedging is it really useful? | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Is Fundamental Analysis Really Useful For Forex Trading? 71 replies

The Really Useful Grains/Soft Thread 252 replies

Hedging System (How to really hedge) 33 replies

Are indicators useful? 28 replies

The Really Really Boring Forex System 97 replies

Attachments: Hedging is it really useful?
Exit Attachments

Hedging is it really useful?

  • #41
  • Nov 30, 2015 11:17pm Nov 30, 2015 11:17pm
Quoting skyway
Athalon hedge is position at B becos........
Yes, I understand your reasoning, although I must admit that I've never thought in terms of hunches, connection/disconnection to individual trades, locking/unlocking positions, or using psychological reasoning. My approach is simply to establish how long or how short I want to be in a given instrument, then I adjust my position as is necessary. For me, an instrument/pair is either fundamentally bullish or bearish, and I would never trade against this conviction, hence I would never have reason to hold simultaneous orders in opposite directions. The goal for me is simply to be net long while price is rising and net short while it's falling. Different order types, entries, exits, stoplosses, profit targets, etc etc are nothing more than tools for adjusting my net position.

But of course I acknowledge that all traders think differently, and have different reasons for entering and exiting the market. Each to their own.
  • #42
  • Nov 30, 2015 11:18pm Nov 30, 2015 11:18pm
Nubcake n skfx,

This purpose of this thread is to discuss if hedging is useful. Both of you think it has no use, you're telling everyone that, good for you. Stop there and no need to go personal with someone else who thinks contrary to your views. And pls don't tell the world how good a trader you are because this is not thread to do this. Start a journal with attached trade explorer will do a lot more convincing about your trading abilities which you are so more pre-occupied with than any words you type?
  • #43
  • Edited Dec 1, 2015 6:33pm Nov 30, 2015 11:28pm | Edited Dec 1, 2015 6:33pm
Quoting hanover
{quote} Yes, I understand your reasoning, although I must admit that I've never thought in terms of hunches, connection/disconnection to individual trades, locking/unlocking positions, or using psychological reasoning. My approach is simply to establish how long or how short I want to be in a given instrument, then I adjust my position as is necessary. For me, an instrument/pair is either fundamentally bullish or bearish, and I would never trade against this conviction, hence I would never have reason to hold simultaneous orders in opposite directions....
I am no different from you. Earlier on I was as dismissive to the idea of such hedge trades within a pair/instrument. Just that I explored a little what goes on in the minds of those traders who do adopt hedge trading to see if there is merit in it's application. It'd be better if practitioners illustrate with real examples the reasons behind why they hedge their trades, we may learn a thing or 2 from the other side.

edited - http://www.rahul.net/raithel/otfw/th...ofthought.html
  • #44
  • Nov 30, 2015 11:30pm Nov 30, 2015 11:30pm
Quoting hanover
1. I expect the intended target audience of this thread was retail traders, not market makers. (How many retail traders have "hundreds or even thousands of open positions?")
many (depending, of course, on what you mean by "retail"). I am not that dedicated and I commonly run 20-40 open trades in each of 4 accounts, sometimes less, sometimes more.....instruments are mostly representing a short list of equity, commodity and vix options products whose correlations are always monitored. Hedging with correlated instruments is available to spot forex traders, as well. "Hedging" can mean a lot of different things to different traders, the topic is covered vastly in print if anyone wants to learn about it.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #45
  • Nov 30, 2015 11:39pm Nov 30, 2015 11:39pm
Quoting lukeb
"You can open sub-accounts with most brokers" You just made my point - I cannot use the two strategies without special consideration to 'get around' the restriction.
Its not special consideration. There's usually no communication needed... Just go to the site and look at your settings. Takes 5 min.
  • #46
  • Edited Dec 1, 2015 3:33am Nov 30, 2015 11:41pm | Edited Dec 1, 2015 3:33am
Quoting skyway
Nubcake n skfx, This purpose of this thread is to discuss if hedging is useful. Both of you think it has no use, you're telling everyone that, good for you. Stop there and no need to go personal with someone else who thinks contrary to your views. And pls don't tell the world how good a trader you are because this is not thread to do this. Start a journal with attached trade explorer will do a lot more convincing about your trading abilities which you are so more pre-occupied with than any words you type?
Hedging is useful when done properly!
(see below for some nice examples from killian19)

Quoting Kilian19
I understand that there are a few scenarios where hedging can be useful: If you construct some kind of payout profile (e.g. options) and partially hedge risk you use another financial instrument due to lack of liquidity in one market or because of distributed money in different accounts you want to hedge against a certain type of risk / dollar neutral or sector risk etc... .
There is no edge in the 'nedge'. It is in your ability to trade!
You can get upset by this matey but that is a fact.
I never got personal by the way, just so you know.
I'm not trying to convince anybody, you could see it more as helping. No point sharing an opinion about trading if it's harmful.
Is that useful to anyone that comes here for help?

Anyways, all the best with your trading
rgds
SK
  • #47
  • Nov 30, 2015 11:50pm Nov 30, 2015 11:50pm
Quoting skyway
Nubcake n skfx, This purpose of this thread is to discuss if hedging is useful. Both of you think it has no use, you're telling everyone that, good for you. Stop there and no need to go personal with someone else who thinks contrary to your views. And pls don't tell the world how good a trader you are because this is not thread to do this. Start a journal with attached trade explorer will do a lot more convincing about your trading abilities which you are so more pre-occupied with than any words you type?
The answer is a resounding "no". There's nothing left to say on the matter. Everything else is demented masturbation. Go back to your corner and put your hat back on.
Congratulations ScalaFX for coming out of the closet!
  • #48
  • Dec 1, 2015 1:06am Dec 1, 2015 1:06am
Quoting skyway
Nubcake n skfx, This purpose of this thread is to discuss if hedging is useful. Both of you think it has no use, you're telling everyone that, good for you. Stop there and no need to go personal with someone else who thinks contrary to your views. And pls don't tell the world how good a trader you are because this is not thread to do this. Start a journal with attached trade explorer will do a lot more convincing about your trading abilities which you are so more pre-occupied with than any words you type?
  • #49
  • Dec 1, 2015 1:16am Dec 1, 2015 1:16am
Quoting skyway
Nubcake n skfx, This purpose of this thread is to discuss if hedging is useful. Both of you think it has no use, you're telling everyone that, good for you. Stop there and no need to go personal with someone else who thinks contrary to your views. And pls don't tell the world how good a trader you are because this is not thread to do this. Start a journal with attached trade explorer will do a lot more convincing about your trading abilities which you are so more pre-occupied with than any words you type?
I agree with you HOWEVER i think what they are trieng to say is you shouldnt have to hedge in any case if you use proper money and risk management. I.E using proper stops and not opening large positions where you should even have to hedge in the first place to protect your capital. Trade smaller if you cant afford to hang on when reversals happen etc.

With that said i did "hedge" once(EURUSD) by having buy order above my sell stop(which was btw in profit) and then when yellen(i think this was in feb or march when everyone thought she would raise rates didnt ) i not only closed my shorts in profit but i also caught 250 of the 400 pt move upward. Is that hedging or careful planning or even both?
  • #50
  • Dec 1, 2015 4:21am Dec 1, 2015 4:21am
Interesting thread. Many opinions. Every opinion is part of essence.
What hedging gives? Insurance against unexpected losses?
Keep in mind that insuring that way we reduce our profits.
If you think in the direction of the losses is whether to enter the market?
I don't deny positive side, which is indicated.
The sharp change in prices in the news or a psychological comfort.
Earlier I used the lock - it hasn't brought me the desired profit.
On the contrary, I noticed some unpleasant notes:
1. Without Lock I began to lose the ability to control emotions in the market.
2. I'm constantly thinking about the correct way out of Lock
3. swaps if long hold open trades
Why look at negative transactions, even if they're frozen
More action, more control and little profit. I believe hedging only be used in exceptional circumstances and only when fixing profit in both directions
  • #51
  • Dec 1, 2015 4:47am Dec 1, 2015 4:47am
Hedging is like no trading at all in my opinion.
It doesn't change a profit/loss picture.
Almost got it or far far away. Result is the same - you didn't get it!
  • #52
  • Dec 1, 2015 4:54am Dec 1, 2015 4:54am
Quoting mxer4
{quote}Is that hedging or careful planning or even both?
This planning) and very good because you focus on profit, not on insurance losses
  • #53
  • Dec 1, 2015 6:53am Dec 1, 2015 6:53am
Quoting MarkRox
Hedging is like no trading at all in my opinion. It doesn't change a profit/loss picture.
Picture changes.
It's becoming clearer picture of the losses.
And we're here for profit supposed
  • #54
  • Dec 1, 2015 7:11pm Dec 1, 2015 7:11pm
Hedging is an an investment to reduce the risk of adverse price movements. I understand it being used on news, whae strong impulse can take it all from you. You are minimising your profit and risks of losing deposit at the same time, but at the end you get a positive result regardless the outcome. On normal market or with long term strategies it is(as it was said) "just a masturbation" with the terminal.
  • #55
  • Dec 1, 2015 7:30pm Dec 1, 2015 7:30pm
Hedging = We are talking about opening a long and short in the same currency pair in MT4 ? say no more
  • #56
  • Dec 2, 2015 7:29am Dec 2, 2015 7:29am
Quoting Kilian19
What am I missing here? The only reason I can see here is that it simplifies your order management if you have multiple positions open in different directions with different sls and tps. This also could be achieved by using a little bit of math and partially closing or adding positions on the fly. It does not matter at what price you entered a position as long as the time you hold your net exposure is the same.
The markets go up and down every single day. Yes, every single day. There is nothing wrong with playing both sides of the fence at the same time.

Yes, hedging can indeed make order management easier. Here in the US, hedging is technically not allowed. However, some traders have figured out that, by keeping a second set of books on top of the broker's accounting of your positions, you can very simply have opposing trades opened in the same pair to be opened and closed based upon their own criteria...and with no additional trading costs...and no additional swap implications. Let the broker take care of the back office accounting, while the trader can trade the "true" positions as he sees fit.

Mathematically speaking...it all boils down to net positions and what the account equity is at any given time. But there is much more to trading than pure mathematics.

Quoting The Fool
hedging is the essence of trading for market makers and professional traders. It's one thing to think about "hedging" an open position with an opposing position in the same instrument. What if you have hundreds or even thousands of open positions? in different time horizons? maybe many different instruments? this is inevitably what a market maker has to deal with. Do you know who "always" makes money in trading?
It is a shame more people do not think this way.
  • #57
  • Dec 2, 2015 8:55am Dec 2, 2015 8:55am
Quoting zznbrm
{quote}However, some traders have figured out that, by keeping a second set of books on top of the broker's accounting of your positions, you can very simply have opposing trades opened in the same pair to be opened and closed based upon their own criteria...and with no additional trading costs...and no additional swap implications.
This... doesn't sound correct - at all. Who are these "some traders" and how is it that they have figured-out how to game the system such that they are able to somehow magically have orders that apparently have no negative consequence?

I smell bullshit and fantasy.
Congratulations ScalaFX for coming out of the closet!
  • #58
  • Dec 2, 2015 12:09pm Dec 2, 2015 12:09pm
Quoting nubcake
{quote} This... doesn't sound correct - at all. Who are these "some traders" and how is it that they have figured-out how to game the system such that they are able to somehow magically have orders that apparently have no negative consequence? I smell bullshit and fantasy.
Not sure what to say...everyone is free to draw their own conclusions. But...I am one of those traders. There is no gaming the system...nothing sinister going on...just two sets of books and trading both sides of the market at the same time...

I sell 1000 EU and then later buy 1000 EU. My broker thinks I have 0 net position and so do I. My calculation of my account equity is the same as the broker's calculation of my account equity. But in my order book I still have 2 trades open: sell 1000 EU and buy 1000 EU. And I trade them independently (or, to put it a better way, as part of other trading sets). I paid commission on the buy and I paid commission on the sell...same as a trader with a SL....thus no additional cost. In this situation there is no swap because of the 0 net position...thus no additional cost. These two trades will later be "absorbed" by other trade sets and closed as the strategy dictates.

Nobody said anything about "no negative consequences". Every transaction can have positive and/or negative consequences.

No magic...no fantasy...no bullshit...just a different way of organizing trades. In fact...this trade management strategy by itself has no advantage/edge...but when combined with the right trading strategy (utilizing the two most important factors in Forex trading: leverage and efficiency of price movement) is very effective.
  • #59
  • Dec 2, 2015 12:29pm Dec 2, 2015 12:29pm
Quoting zznbrm
{quote} Not sure what to say...everyone is free to draw their own conclusions. But...I am one of those traders. There is no gaming the system...nothing sinister going on...just two sets of books and trading both sides of the market at the same time... I sell 1000 EU and then later buy 1000 EU. My broker thinks I have 0 net position and so do I. My calculation of my account equity is the same as the broker's calculation of my account equity. But in my order book I still have 2 trades open: sell 1000 EU and buy 1000 EU. And I trade them independently...
So what you are saying is... you close your position.

Am I reading this right? Have we now gone full-circle and the new secret nedging technique is all about closing a position? For years and years it has been argued that nedging is just masturbatory nonsense that equates to being flat. And now this new secret technique that "some traders" use is... BEING FLAT! That's not a technique that some traders use - ALL traders use it.

Being out of the market is a position, but holding 2 opposing tickets on your terminal is just a wank and a half that's costing swap (except for the unicorn currency pairs that pay out net positive swap, but without taking into consideration spread costs to get into that mess in the first place).

Holy shit I've been nedging all of this time and never new
Congratulations ScalaFX for coming out of the closet!
  • #60
  • Dec 2, 2015 1:42pm Dec 2, 2015 1:42pm
yes nubcake, even you don't know everything - we learn every day - hopefully you do too.....
0 traders viewing now