hedging

[JULIEROSE]

Does anyone hedge their positions here. I have opened two seperate accounts to do this and I'm giving this strategy a go this coming week on the EUR/USD entering the trades just before London opens and again before Stateside opens.

I had a go in the same account doing GBP/USD & EUR/USD as they tend to trade in the same direction most days. It worked. I made 80 pips on the winning trade and lost 20 pips on the looser when it stopped out.

If I short EUR/USD on one account 20-30 pip stop loss then long it on another account same pip count stop loss hopefully, one will run away at least 80-100 pips on each open.

I'm interested to hear from anyone who has tried this strategy.

 

[etherington]

Is this pairs trading - if so I would be interested to hear more experiences. I have been considering this on a short term frame ( few days) but fel I need to know more.

 

[JULIEROSE]

A hedge is when you buy the same pair say GBP/USD to short and long.You put a stop loss on both and hopefully one will stop out while the other goes in the money. You do this when are are not sure which, way the market will go in the hope that you take a small loss but alarger profit on te one that runs. To do it you have to be with a broker that will allow youto buy and sell the same pair at the same time, or just open two accounts.

I noticed that EUR/USD trades avery similiar pattern so I tried the strategy last week I longed GBP/USD and shorted EUR/USD at the beginning of US trading around 8:30am. One stopped out around 20 pips the other went into the money about 80 pips.

 

[de123]

i have demo BPH7 and cable, the thing is working good,...today i could win some money with no risk, because bph7 the cable future didnt gap up today till 10.00 AM paris time, the forex did,....so the diference was 1.9615 at future and 1.9715 at forex,...i could just bought the futures and sell the forex for 100k amount, and i would have hedge it, with no SL, now its in the level +10 pip for future
i wont sleep good today!... i would go short on forex to receive the interests & long on future...

 

[JULIEROSE]

i have demo BPH7 and cable, the thing is working good,...today i could win some money with no risk, because bph7 the cable future didnt gap up today till 10.00 AM paris time, the forex did,....so the diference was 1.9615 at future and 1.9715 at forex,...i could just bought the futures and sell the forex for 100k amount, and i would have hedge it, with no SL, now its in the level +10 pip for future
i wont sleep good today!... i would go short on forex to receive the interests & long on future...

At least it's in the demo account so smile.

 

[de123]

o...i backtested on demo,...but i am on real!!! so i slept 5 hours

 

[cronian]

Why trade GBP/USD against EUR/USD? EUR/GBP is the same thing, and you can probably get a better price just trading or lower commission trading it directly.

 

[Rhody Trader]

i have demo BPH7 and cable, the thing is working good,...today i could win some money with no risk, because bph7 the cable future didnt gap up today till 10.00 AM paris time, the forex did,....so the diference was 1.9615 at future and 1.9715 at forex,...i could just bought the futures and sell the forex for 100k amount, and i would have hedge it, with no SL, now its in the level +10 pip for future
i wont sleep good today!... i would go short on forex to receive the interests & long on future...

Don't confuse the price you see on the futures screen with where the market really is. That is just the last traded price. I guarantee that if you had tried to do a trade during that time before you saw the futures "gap" you would not have gotten a price 100 pips away from where the spot market was at.

 

[Rhody Trader]

Why trade GBP/USD against EUR/USD? EUR/GBP is the same thing, and you can probably get a better price just trading or lower commission trading it directly.

Exactly. Doing GBP/USD and EUR/USD means having the spread against you twice rather than just once for EUR/GBP.

 

[JULIEROSE]

Exactly. Doing GBP/USD and EUR/USD means having the spread against you twice rather than just once for EUR/GBP.

If you read my post you would have understood that I short euro/usd on one trade and at the same time longed gbp/usd on the other trade. You need special permission from your broker to long and short the same pair at the same time or open seperate accounts to achieve that goal. I'm aware the two pairs move in the same direction which is why I did the trade as I was testing the strategy out in my account which wouldn't allow me to long and short the same pair at the same time. I picked the pairs I knew that tended to move in the same direction. If I had short usd on both the eur/usd and gbp/usd I would not have been successful in making 80 pips and yes it would have gone the same way but that is not what I did.