I was curious what you all think about it and if any one has adopted this kind of trading technique before. Here is what I propose-
I can buy and sell a pair for example E/U at the same time-it will either go up or down from here. Then later may be sell it at a certain level say 200 pips up- and then at that point in time short and long again. and later on I can close the short trade at a retrace?
Is anyone using this kind of technique profitably?
R
This is just not possible.
Let’s say you go long first, so you BUY one lot.
Now you have open trade.
Then you want to open another trade in the other direction, so you want to go short for one lot.
So you SELL one lot.
What happen here? Well, you just close your fist open positon “the long one”.
As you can see. You just can’t have 2 open trade going in opposite side.
You can have 2 trade or more open, but, they have to be in the same direction.
straddle, straddle up the creek without a paddle!!
:eek:
why not, i can have an open long and an open short same time…my platform allows that 
Well, actually some brokers do offer the option of having open positions in both directions in the same currency pair. It’s great for them, not so great for you.
What would be the point?
Pay a double spread just to basically be flat isn’t that smart, which many experienced traders will back me up on.
I suggest you shelf that idea for now and continue learning. In time you will see that it’s not a good idea.
thanks but I am a swing trader, I trade off the daily weekly charts.
Ah no, you can open a new trade in any direction you want. They effectively cancel each other out, until you close one of them, but you definitely can do it.
Hedging from what i’ve seen dosent work for most people over the long run.
But try it out and see.
Hi Random,
can you please tell me who’s your broker?
And, does someone know some other brokers allowing the same thing? (Open two trades in opposite side)?
Thanks!
Melisky I use a fxcm standard account. check this link, you may need to request your broker to turn it on—
To Random and anyone else thinking about “hedging”:
Do the math on what you’re proposing.
If you are simultaneously long and short you cannot make any profit at all ever while both those positions are active. Actually, it will cost you money in at least one if not two ways. First of all, you’ve got two spreads against you. Second of all, the net carry interest will at best be zero and probably will be negative (bid/ask on the carry interest works against you too).
Here’s an example:
Go long and short USD/JPY when it’s trading at 100.00/01. That means short from 100.00 and long from 100.01. You automatically have a 0.02 loss. Assume USD/JPY rises to 105.00/01. The long gain is 4.99. The Short loss is 5.01. In other words, you’re still at -0.02. In other words, it doesn’t matter where the market goes. So long as you still have both the long and short open you’re net p&l is -0.02.
Let’s say you take profits on your long at that 105 mark. So you book that 4.99 gain (bought at 100.01, sold at 105.00). Now you’re left with a short position that’s 5.01 to the negative. At this point, since you’re short, you’ll be able to profit from a decline in the market - but of course you’ll also be at risk of a continued rise.
Basically, with this “hedge” trade the net-net is that all you did was spend a pip (and probably carry interest) waiting for the market to reach 105 so you could short it there.
[B]Bottom line:[/B] So long as you have both the long and the short position on all you’ve done is locked in a double spread loss.
why not ???
i have a short position @gbp/usd 2.00
and its allready keep going
and i have a long position @1.37 and its keep going too
and many of positions @ this pair i opened and closed they are all only cracker and intraday money for me 
I know their are many traders that hedge. Don’t really do it myself. I don’t see the point. If, as a trader, you don’t believe strongly in the direction and the entry you shouldn’t take the trade, at least IMO.
Here is the reasons I’ve read behind hedging.
The trader isn’t sure about where direction will go next. So, he puts both a long and a short order on either side of price. Once one enters, he cancels the other.
Leave both. When one trade is tripped, take profit as soon as you can (or at least set the SL to Be as soon as you can… When price bounces (reverses) back and goes the other way you are out of the other trade at BE or profit (if everything goes as hoped), Then the second trade enters and you do the same thing. If either trade just keeps going, you’ve found the direction and just keep setting your SL more and more postive.
Both 1&2 would be in a RANGING market. That is, when price is ping ponging between S/R very iradically.
IMO, the above are not good trading methods and lead to lots of frustration as you are trying to guess direction with open trades instead of technical or fundamental anaylisis. I tried the above and it gets very mentally taxing as you are constantly switching your mental bias for direction and can easily overlook signals that are contrary to what is currently best for your trade.
Anyone else have better hedging strats?
I don’t see much of a point in hedging with the same currency pair. Is that even hedging?
I can see a purpose for hedging with multiple currency pairs though, for example.
If you think EUR/USD will be bullish and you want to hedge. Put in a long order with EUR/USD and a short order with USD/CHF. Because of the currency correlation you will have a hedge and you could close either order as the session rolls out. It would be interesting to see a system based on hedging and currency correlations.
It depends on your broker… some brokers let you hedge, and others will simply cancel your first position if you enter an opposite one.
Thanks Phoenix and all for constructive answers-
The way I meant it was that, if you look at USD/JPY it is locked near a very strong resistance at about 101.50. It is also on a daily upside. I am very good at trades in which I go for the retraces against the dominant trend. I was thinking that if I enter 1 lot long and 1 lot short here at this time, and if it goes up from here, I make money on the long and sell it at next strong resistance around 102 levels. I am very certain that it will retrace to at least 98 levels (and if this current equity rally fizzles this week, it is going to 96 levels) Even if I close one trade at an x fraction loss I make money.
I wont try this on my live account, but am trying this technique for e/u and u/j on a demo.
Let see.
Actually, if you are long EUR/USD and short USD/CHF you have pretty much doubled your position. You’ve got a double USD short with a EUR long and a CHF long.
I think you meant long EUR/USD and long USD/CHF. The problem is when you do that kind of trade you actually change your position. If you do the same $ value for each then you end up with a net position of long EUR/CHF. That means your main exposure is to the relationship between the EUR and CHF with no exposure left to the USD.
It’s these sorts of exposure switches that are the reason why I generally suggest new traders steer clear of having multiple positions on at the same time.
See my earlier example. In this strategy you would end up netting out with more profit if you just wait to sell at 102 because the loss on the short from 101 would cancel out the gains on the long from there and you’d be out the spread.
That’s not the “hedging” that’s being talked about here, which is being both long and short at the same time. This kind of bracket order your talking about would only result in one position entered, unless of course the market whipped back around and also triggered the other too.
To your wider point, though, proported “hedging” strategies were quite popular during the low volatility period into about 2007. Once the markets got more directional you stopped hearing about them as much, no doubt becuase many of the users of them were blown out by markets that never retraced.
I think he means say opening one position for say 3 lots, and an opposite one for 1 lot… you would make less profits but your risk and losses would also be lower
Why would he do that instead of just opening 2 lots (3-1)? Love of paying unnecessary spreads?