GBP/USD
Long or Short: hedge
Entry Point: long 1.58270, short 1.58278 (cover the spread)
Stop Loss: long 1.5782 (low 30th August 2012)
Profit Target: short 1.58159 (+.00119), long 1.58800 (+.00530)
Trade Explanation:
Firstly I must say I use psychological analysis, I do not read the news, I check the calendar for events and avoid trading around them… that is it. With that said, similar to the MA being a centre of gravity in bolingerbands, I have a “what goes up, is ‘more likely’ to come down” mentality… GBP/USD has been going down for a while and was heading towards a double bottom so I felt up was due.
Cable (GBP/USD) was heading towards a previous low (8am, 22nd Jan), I call this a Bull pen coz its where bulls usually hang out, not always, but usually.
I waited for a dip in the market then bought long (long being my desired direction, thus the safest hedge entry in my eyes), once the spread was covered i bought equally short (hence, hedge, for those who don’t know the term).
I set my short to take profit at the low of 8am on the 22nd Jan. I figured a lot of bulls would accumulate here as its both the best place to be if your going long, and because a lot of time has passed since this bottom; every market trader in the world has had time to see this bottom and place their orders (herding the bulls, hahaha). The long position, I set TP at 1.5880 (high of 12.30pm 22nd Jan) again its a double top which is where bears like to hang out, and plenty of time has passed. I got one pip away from the long TP, then closed the trade, because I’m a coward!
If these trades hadn’t of gone down first, I still would of TP at 1.5880 and waited for a retrace, which it currently seems to be doing. Where to come out of the retrace would require further analysis, but since Im out, i wont be doing that. As it is, I managed to fall asleep and wake up with a TP short and 1 pip off the long TP.
Very happy with this trade 
Hahaha… Whoops!
Two things.
First, GBP/USD is cable, not fiber (which is EUR/USD).
Second, your “hedge” is basically the same as entering long at your “sell short” point (and the correct terminology would be “close short”). Effectively, you’ve got two trades. The first is a sub-pip gain on the quick long/short. The second is a nice long position gain.
To put it more bluntly, “hedging” is not a strategy and can have no positive influence on your performance since it is nothing more than an accounting method.
Yes I Noticed, my second post made light of that error, I also made a typeo.
As for hedging, I find it positive, if you don’t find merit in it that’s fine.
thanks 
It’s not about not finding merit in hedging. It’s a simple mathematical fact that hedging provides no advantage, and in some cases is detrimental because of the costs.
Though you are correct; The fact that no-one can ever know for absolute certain which way the market is going to swing I find far more daunting, to pay less than 1 whole pip for the extra security, i feel is worth it. I’m yet to find it working to my detriment, and I shall eat my words the day it does in this particular trade, since I covered the costs of both spreads in my entry, I made slightly more money than I would have otherwise.
Since there was an 8 minute lag between entering your initial long and “hedging” it with the short, it looks from the outside like you either got long and then got nervous about it, or intentionally legged into a kind of straddle trade, which could easily have blown up in your face rather than worked in your favor (ask anyone who’s done that enough times).
If you were indeed taking the latter strategy then basically what you did there was a scalp trade. That was then followed later by a long day-trade when the market reached the point you really wanted to get long. You cannot do an actual straddle (play both directions simultaneously) without using options.
If it was the former, then all you really did was get out of a position you felt uncomfortable with and re-entered at a better price.
As we seem to agree, “hedging” offers no P&L advantage. That means any perceived benefit is psychological. But that’s a trap because it leads to misattribution. The reason you made money on this trade is because you picked a good point to get net long (and subsequently get out of that long), not because of “hedging”. To the extent that you credit “hedging” for your success (or failure had that been the case) you hamper your learning and development.