@tokyotrader1 Not 70%… 80%… Trading these markets full time… Experience, trading LIVE for the past 4-5 years.
The mindset I have now compared to when I started trading real money… I don’t panic when a trade goes against me… I don’t panic when carrying Drawdown… I don’t panic when watching SWAP rise…
Technical Analysis… Using Lot Sizes, Levels, Currency Strengths and a range of other risk management strategies before I ever allow a guaranteed Loss using a Stop.
Fundamental Analysis… Why are the EUR, GBP, CHF Currencies so strong…? Why are the USD, JPY so weak…? Why did Oil go up last month?.. Why did Oil go down this month? Why is Gold going up?
It’s all out there if you bother to look…
Read back through the previous posts of members in this thread over the last 3-4 years… I have displayed, demonstrated and posted in real time, many, many ideas and examples of how to make profit out of these markets…
If the system was based on analysis of the market to say it’s going to go up. But it moves down. You’re confident that it will ultimately move up but don’t want a large drawdown, then I completely agree that hedging has value.
To open 2 trades simultaneously because you don’t know what it’s going to do says to me that you won’t be able to call the top or bottom anyway and will lose bigger than the win.
But this system would ultimately be a case of price returning to an average assuming you did it correctly, and we know that works most of the time. I just think you can do it without having to take an almost guaranteed losing position
No, I’m the one opening two trades simultaneously because I don’t want to wait for price to reach some point ( resistance or support or otherwise ) where we assume it will reverse
@chesterjohn look at the time you spend waiting for a trade set up. Thinking about stop losses etc. believing it’s going up, only for it to do the complete opposite.
You can only capture the next movement by being open to both sides simultaneously.
Because in reality we have no guarantee it will reach that point or it may reverse and we get stopped out etc
The fact that I open two trades simultaneously, at any time at any point in the chart … does not mean that my managing of the losing trade will not end in a profit …
I understand this… I think until you actually watch a few of his (Nick Shawn’s) demonstration’s, his alternate version of hedging is lost on you… He applies a similar hedge strategy to your proposed version and applies it in a cleaner, safer and more profitable way…
You should be watching and reading all the information on hedging you can get your hands on… The good and the Bad… His channel also provides proof of concept in his video’s many, many times…
@tokyotrader1 If you are opening two simultaneous opposing positions…
How are you getting stopped out?? The concept is to render stops redundant…
@Trendswithbenefits sorry I was referring to entering a trade normally and how we feel mentally about it / also waiting for a set up , stop order , where to put the stop loss … I don’t think about any of that
Nick enters a hedge when the trade goes against him
at a S or R area .
I simply enter a buy/sell simultaneously at any time and without any reference to where price is on the chart….then later after probe has moved, close the winning trade and let the losing trade get smaller …
technically, that’s correct - only technically, though, because those orders have different names: a sell order above the price is a “sell limit” not a sell stop, and a buy order below the price is a “buy limit” not a buy stop
I don’t use hedging. but be aware that some brokers dose not allow hedging. and they consider the time you open and you close the positions.so they say it is considered as scalping.
it depends where, by whom and how they’re regulated: some regulators and governments don’t allow it, and brokers subject to their regulations effectively have no choice about it
but in principle, counterparty market-maker “brokers” love retail traders who hedge, because they earn extra commissions and spreads from them without any additional risk of paying them out
I have only watched the first of these. Of course, the hedging example in the video is totally different to the hedging method described by the thread owner. In the video, he starts with a directional trade that goes against him and instead of closing it he takes an equal and opposite position and locks in the loss between the two open positions. This buys time to assess the situation and wait for a suitable set up and then opens a third directional position. Once (and if) this third trade eventually makes enough profit that exceeds the amount of loss locked into the first two hedged trades, he then closes them all simultaneously for an overall net profit.
But the OP is suggesting opening a hedged position at any time with essentially no locked in loss (apart from maybe a pip or two from spread, slippage etc) and then waiting for a suitable set up and closing the winning leg and running the other one with the current loss for an undefined time.
I don’t see any advantage in either of these approaches apart from a psychological effect of not actually booking the loss directly, but “debiting” it from a separate gain - if a gain does actually succeed!
In the video version the loss is actually booked when those two hedged positions are closed, it is just that the third, independent position is closed with a profit simultaneously and thus cloaking the loss behind a net overall gain. I.e. precisely the same as closing the original position with the loss at the time of the loss and then a later trade gains a bigger overall gross gain.
I don’t really understand the phobia about taking losses. They are just the overheads in doing our business just like in any and every other business. Making profits always incurs costs in any business. Some are fixed, some are floating.
The success of any business rests on efficiently managing its costs with respect to its gross profits. In our business we do that by weighing up the potential cost of a trade compared with the potential profit and ensuring these are optimal as part of the trade decision. And then we also work on maximising our win rate.
I do not, personally, see any advantage at all in this hedging approach, only a headache trying to work it off - which can easily be multiplied if and when that third trade actually also turns negative
But this is just me and my way of thinking. Others, i am sure, see benefits beyond my radar.
True, so why doesn’t @tokyotrader1 just apply his hedge concept on a demo account and post on going real-time results and demonstrate the concept and answer his own question…
So much chatter and no actual demonstrations or proof of concept… I’ve posted many real time examples of hedging methods over the years…
It’s one of the reasons I post very little trading/strategy content these days… Most demonstrations become waffle fests and the main principle behind the post is lost to noise…
Discussions here remind me of the recruitment scene in the Wolf of Wall Street…
@SovoS Well thought out and articulate post… I pretty much agree with all of your points…
Hedging techniques are such a contentious issue here and in most forums in the Trading space. Many don’t understand the concept and want to argue without the knowledge or any practical or LIVE experience.
I use it and have demonstrated it in quite a few posts over the past 3-4 years. I’m sick and tied of looking for the links to those posts over and over again, so that won’t be happening… Those that are really interested in understanding alternative risk management concepts will no doubt eke them out…
Back before I was even on BP (~2012-2015) there was an actual professional trader who posted a few demonstrations on how to apply hedging techniques in these markets… It was a game changer when I started to apply his methods…
This is where I first learned to use this strategy for limiting losses… Unfortunately his charts and diagrams were lost when the forum platform was updated a few years back… (Myself and another member linked his posts years ago)
Most new traders accounts erode due to Stops being hit 90% of the time… Most here are totally naive to the algorithms that operate in these OTC Markets. Price action is designed to move up and down (Whipsawing), gaining liquidity before moving any great distance over and over until price eventually makes it’s way most of the time to a predetermined level…
Stops being hit over and over again and no confidence in Market direction (Psychology) are definitely the biggest issues for traders, new and experienced. Hedging concepts if applied with knowledge and experience will alleviate most of these issues…
I’d rather lose a few pips to spread than have to cover five stop outs in a row, any day of the week and twice on Sundays…
I am not going to post anymore information of researchable content on the subject…
