General Hedging strategies, which ones do you recommend?
Personally I don’t like hedging. If I’m wrong I’m ok with that, I will review, learn and wait for the next best trade.
Very few private retail traders use hedging - because they don’t need to use it. So this enquiry stands out from the crowd. Why and how have you decided you need to hedge?
Hi,
I hope I do not take this out of context, but my entire investment of time and funds in Trading is the hedge. What I mean by that is that I am fortunate enough to have both earned and investment cash flow. In deciding to Trade, as one of many uses of my personal time, the high level “Money Management” decision was to ensure that all funds I invested in Trading I could afford to lose. I set this last year as a maximum of 5% of assets, but started with allocating funds at only 1% of assets. From that “hedge decision”, I allocated my time to achieve the following plan within 12 months - “learn how NOT to lose money trading, as a basis of quantifying a measurable “edge” to be improved by continuous development”. With a documented money management plan that prevents me from allocating more than 2% of Trading funds to each trade and an overall open trade risk of no more than 10% of Trading funds, I consider that to be a fully hedged trading plan. Did I miss something? Is your plan to hedge individual trades, or applying some kind of insurance against losing trades?
There are TONS of retail traders hedging…what do you mean??? All the grid traders they are hedging the whole day and night :D:D:D Traditional traders too.
How else would you get out of a bad trade? Eat stop losses all day?
I am hedging with different grid EAs.
I open up small hedged positions, against my main trade…if it goes wrong, the hedges start chipping away at the bad trade.
So you’re doing this successfully already? I’m sure you’re in the minority but it would be more than interesting to understand better how you’re making it work.
There’s one of several that @Trendswithbenefits has laid out Here. It uses a hedge in place of a SL. The idea is to hold until the position reverses, or until another trade opportunity comes up with that pair.
I have had success with grids, but not using EA’s. They can take days to fully play out.
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I am using an EA called Grid Fusion, you can check it out here:
https://forexrobotslab.com/index.html
You can use this EA for quite a few things, and I find the hedging set up very useful.
It contains the risk of the hedge itself by building a grid (you can decide if you want it to increment the lot sizing as the price advances). It has quite a lot of other really nice gimmicks, like linked grids.