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  1. #11
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    Hello Jason,

    thank you for that!

    I think I did.not explain myself fully: I would never want to buy and sell AT THE SAME PRICE... The idea is that I can buy or sell something long-term but, in case of a temporary retracement later, I can add a short-term test position in the opposite direction and if the initial trend resumes I can lock in some profit, or if it reverses then I can close the original.trade.

    This would help in choppy markets... I do not operate signals nor do I day-trade, so the only way for me to "monitor" an instrument is to be involved in trading it.



    So, in answer to my original question: where can I alter the hedging functionality on My FXCM?

  2. #12
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    Quote Originally Posted by Jason Rogers View Post
    It's my pleasure, PMH

    It sounds like you have an FXCM US demo. Note that US regulations prohibit hedging. To set up a demo that let's you hedge like your real FXCM UK account, use this link.
    Thank you but this is my original fxcm demo account from.Sep.2012, with all my trading.history, so I.will.keep.it... What about hedging on my live (UK) acccount? Sorry if I keep banging on about this

  3. #13
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    Jason Rogers is offline Verified Broker Support and Analyst for FXCM FX-Men Honorary Member
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    Quote Originally Posted by PipMeHappy View Post
    What about hedging on my live (UK) acccount? Sorry if I keep banging on about this
    No trouble. You have a live FXCM UK account, so hedging is enabled.
    Ask me questions in the Broker Aid Station:
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  4. #14
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    Quote Originally Posted by PipMeHappy View Post
    ... The idea is that I can buy or sell something long-term but, in case of a temporary retracement later, I can add a short-term test position in the opposite direction and if the initial trend resumes I can lock in some profit, or if it reverses then I can close the original.trade.
    This sounds quite a bit like what Jason mentioned early on in the thread as not being a good idea - using hedging as a kind of temporary stop. In other words, you worry that the trend you're playing has ended, but you don't want to just exit the position because the market might turn back around.

    Basically, it's two fears in one: a) Fear of giving back your gains, and b) fear of missing out.

    The problem here is that putting on the hedge position freezes your account in position just as if you'd exited the trade. If you then take the hedge off at a profit (retracement has continued) then it's just like putting the original trend trade back on again at that point.

    That's the perfect outcome.

    The less perfect ones are:

    1) The market keeps going against your initial and you eventually have to close it out. At this point you need to decide whether to keep on the hedge position, which essentially is the same as making a new trade. Because you've had both the long and short on up to this point you won't have made any net profit, and because you put on the second trade you've had to pay an extra spread.

    2) The market reverses back in the direction of your original trade to the point where it puts your hedge position in a loss. This means you've missed out on some of the original trend because you were effectively net flat. Plus you had to pay an extra spread for putting on the hedge.

    If the hedge position is entered based on a separate strategy from the one you're using for your longer term trade, fine. If, however, you're looking to use it to manage your longer term position it is not going to provide any net benefit. In fact, it will almost certainly cost you money.

    The better way to go is to refine your exit strategy.

  5. #15
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    Quote Originally Posted by rhodytrader View Post
    The better way to go is to refine your exit strategy.
    Rhodytrader is spot on, PMH

    From what you have described, it seems like you are looking to hedge not because you have two different strategies, but because you have a lack of conviction about one strategy. Don't take our word for it:


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  6. #16
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    Jason Rogers is offline Verified Broker Support and Analyst for FXCM FX-Men Honorary Member
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    Or this:



    Trade. Or trade not. There is no hedge.
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  7. #17
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    Thank you Jason and Rhody.

    The trend trading I do require periods of long drawdown (essentially it is long term investing): during this time, shorter-term retracements on the same instrument can be used to increase account balance (not equity, balance)by using counter-trend, shorter-term.trades. I am testing this method.with shorter term.trades on a trading contest demo.at present, and it has some worth. Also, I would.not call opening trades.and countertrades on the same pair hedging, but technically that is what it is called; however,keeping a long term position open at times does require some measures especially where a position is unscaleable (e.g. minimum position size). I will start using this function as it makes a lot of sense.to me and it definitely must be practised.

  8. #18
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    Interesting thoughts from another forum:

    Hedge a losing position? @ Forex Factory

  9. #19
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    Perhaps if you positioned yourself correctly and/or extricated yourself sensibly in the first place instead of hanging on doggedly to toxic trades you wouldn't need to adopt this practice in the first place.

    The proper scenario to job a position (which is kind of what you're describing) is to come at it from a position of strength, ie: face the right way first with your longer-term entry & job counter moves back against the winning position until the pullback/retrace exhausts.

  10. #20
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    Quote Originally Posted by shadowline View Post
    Perhaps if you positioned yourself correctly and/or extricated yourself sensibly in the first place instead of hanging on doggedly to toxic trades you wouldn't need to adopt this practice in the first place.

    The proper scenario to job a position (which is kind of what you're describing) is to come at it from a position of strength, ie: face the right way first with your longer-term entry & job counter moves back against the winning position until the pullback/retrace exhausts.
    Yes, that makes perfect sense to me.

    However, I have to try this for myself, so I started doing that yesterday. I will report back in Forextown.

    Thanks to all for your comments

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