Yup, hedging is great and I sometimes use it in lieu of a stop loss. In a volatile market and your main bet goes in the wrong direction you can catch a profit from your hedge and hold onto your loosing position for longer. Then (if it’s volatile) your losing position swings back and becomes a profitable one, so you’ve made money while waiting and you’ve not been stopped out. That is, if it all goes according to plan…
That’s how it works!
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Good in v up and down, zig-zaggy conditions.
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Stop this nonsense, what profit are you going to catch?there is no profit.
You open a trade, it goes against you, you hedge, you lost money, your equity will drop and at no point will you have a profit.
Test it for yourself, look at your equity while you do your trades and hedge them, you will always be in a loss.
You can’t close one hedge and call it catching a profit because you also have a loss, this is what I’m trying to explain, when you close one of the hedges, your balance will grow, but your equity will remain the same, and your equity will always show the true balance of your account.
If you look at the past example, he closed is hedge trade, is balance went up, but it’s irrelevant because is equity always remained with a 4 pip loss.
I get what you’re saying - if your position goes against you and you have a hedge bet on the other direction, even if the hedge makes a “profit” you still lose money and you might as well have just had a stop-loss.
However, in choppy market conditions I’ve found that if you are careful about when you cash in the hedge, the market will often come back and your original losing position will be back in profit again. Works for me. However, you neee to be v careful not to rack up bigger losses. It’s like throwing tourself a life-line to avoid being stopped out. However, if it works then you accelerate your profit
I think whether this works or not depends on what your trading strategy is, what market conditions are like, what you are trading and how deep your pockets are to wait for the direction to change (and if you think it’s likely to change)
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Or you can close your trade and then open a new one when you feel the market will come back to your ( original losing position).
Anyway, if someone prefers to hedge instead of using a sl, that’s up to them, I’m not against hedging, anyone should do it as they prefer.
It’s more of a style of doing things, i can get why some people might prefer to hedge.
Just say, i hedge my positions because i like do do things this way, there’s no problem with that.
But this thing, that someone buys, market goes against him, he hedges, then markets drops x pips and then he banks profits, this is not correct.
And there’s no advantage you can have with hedging regarding a sl.
Their heads will start to hurt by reading this, but in the market there are only two ways in wich you can make (or lose) money, you either are net long, or net short, the more you are net long the more money you will make/lose, the same for net short, it’s impossible to make/lose (excluding commissions) any money while being net flat.
So you can increase/decrease your exposure (net long/short) the same way whether you use a sl or hedge,
If you buy 1 lot and partially close your position for 0.30 with a sl, you are now 0.70 net long.
If you do the same, buy 1 lot and hedge with 0.30 sell your are 0.70 net long.
It’s this 0.70 net long position that will determine the money you make/lose.
Buying 1 lot, then selling 1 lot, and being net flat, and then telling i bank profits after a drop, it’s not just stupid, you need to be retarded to say something like this if you have some experience with the markets.
Im mt4 at least, it takes more work/time to partially close your positions, so hedging or partially hedging can be a good solution at times, can be faster to do, specially when markets start to move fast.
But yeah, that’s why people that have some experience go away from here,
There is always the idiot that wastes is time here instead of doing the work and learning something, and even gives the attitude off, look I’m leaving, that guy doesn’t agree with me. And then comes is buddy, it’s the same in every forum.
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Once again @TP89, you don’t read what is posted… Where did I say I was leaving in this thread… I just stated that I no longer maintain my threads or post strategies…
And while I’m on the subject of bothering to read… Here is another thread from about 18 months ago were @TP89 lost his shite over the Hedging concept…
It’s Deja vu… Almost word for word repeat… I thought this carrying on had a familiar tone to it…
You’ll see once again (right here) this spiteful little character just doesn’t understand or bother to read what is demonstrated… Enjoy
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I don’t understand how your version of hedging works. Why would you close the buy position?
Do the math and prove this. Because this is a net zero position.
No, this is a very false and misleading statement. Please do the math and prove this.
TWB as provided a number of sources demonstrating how people have made it work. Time to put up your own proof of work if you want to prove your point.
In fact, here’s an example:
Trader 1 has a buy and sell position for 1 lot each at 135.00
Trader 2 has a buy position for 1 lot at 135.00 with a SL 50-pip SL
When the price moves to 134.25 how are they the same?
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I was explaining that when you enter the sell position trade 2 you are closing the first position
Buy 1 lot= 1 lot net long
Sell 1 lot= you are now at 0 net long, net flat
That’s what im saying, yes zero net position.
Well you are giving different stops sizes so it will never be the same.
One you are giving a 0 pip stop loss, the other you are giving a 50 pip sl.
But do it this way, you trader 1 buy and sell 1 lot at 135.00,
You are net flat in the market,
Me trader 2 don’t do anything, im net flat in the market also,
Price moves to 134.25, you have lost 2 spreads, and you are still net flat
I didn’t lose anything, and am also net flat
Im exactly in the same position as you are, get it?
Your mom can’t help, your dad can’t help you, your broker can’t help you, i can’t help you.
Let’s face it you’re dumb and there’s nothing we can do about it.
This is to to simplify the example to focus on the hedging aspect of it.
How? You (as trader 2) just got stopped out at 134.50 from the 50-pip SL. Your equity is down by 50 pips worth of whatever your quote currency is, while I, as trader one, still have a net zero position.
What i said is if you hedged your position at 135.00, you are net flat.
I trader 2 never entered any position, i am net flat, same as you, at 135.00 and at 134.50.
But you payed 2 spreads to be net flat, while i that never entered any position will be also net flat without paying spreads once price get to 134.50.
You PAY 2 spreads for nothing, to be in the same position as i am while doing nothing.
No. this isn’t the case scenario for trader 2. It’s as folls:
Edit: To summarize it another way:
- Both have open buy positions @ 135.00
- Trader 1 has a sell position also @ 135.00
- Trader 2 has a 50-pip SL (@ 134.50)
You can’t give a fair example with different sl sizes.
If you said trader one buys 1 lot at 135.00 then enters a hedge sell at 134.50.
And trader 2 enters a buy at 135.00 and has a sl at 134.50.
That’s a fair example, its a similar situation.
I think there’s a misunderstanding b/w us. Here’s the edited bit for clarity.
Edit: To summarize it another way:
Both have open buy positions @ 135.00
Trader 1 has a sell position also @ 135.00
Trader 2 has a 50-pip SL (@ 134.50)OK. I think I understand now. Trader 1 is basically opening the sell position at the same position as the SL for trader 2, which is why you’re claim is they have a net 50 pip loss both in that case.
Why would you pay 2 spreads to be net flat? Are you crazy???
That’s what im telling you, you gain nothing from buying and selling at the same price.
You are giving an example where trader 1 is net flat, trader 2 is net long, of course the trader 2 will have a loss, but what I’m saying is that you become net flat at 135.00 and stay net flat until price drops to 134.50 and you gained nothing, you payed 2 spreads for nothing, why won’t you not enter the trade and wait for price to get to 134.50.
There’s no option of staying away from the trade. You’re adding a new variable.
The goal of the example was to establish both parties entering at identical buy positions. One hedging and the other employing a SL.
Well, here’s the result at 134.25
- Trader 1 incurs loss of spread for 2 trades
- Trader 2 incurs loss of 50-pips worth in quote currency
In trader 1 example, if he buys first at 135.00, and then he sell right after at 135.00, that second trade is is stop loss, he stopped himself out of the position.
Then they would also have to exit at identical positions to be a fair example.
But that’s the point isn’t it? Trader 2 had a forced exit as a result of the SL.
Trader 1 still has the option of managing his exit.