Hedging

[volatiliti]

This thread has been started to discuss the various hedging techniques used in Forex , Futures and Options Trading .
Hedging can include discounting , consolidating and rebating that results in a positive outcome .

 

[volatiliti]

My method that i stick to with spot fx :
Use a hedge instead of a stop and wait to see what the market is doing .
Ideally I would wait for an oversold/bought situation or even a news spike in an attempt to recoup losses .
I believe the X Factor is Time .
So if i receive a rebate of 20% per losing trade , I will be a long term winner .
By using a stop you are forfeiting all rights to use Time .
If you are using a stop you are confirming a loss and you can never ever get that particular loss back . Its gone for good .
Your next trade may infact be a loss when you consider we are in a random 50/50 game its quite possible .
FX Hedging is banned in the US .

 

[Hotch]

If you truly believe this to be completely random 50/50, then NOTHING you do, is going to help.

I see you never managed to find any difference between closing positions and opening new ones and your hedge (because they're aren't any).

/end of thread

 

[volatiliti]

If you truly believe this to be completely random 50/50, then NOTHING you do, is going to help.

I see you never managed to find any difference between closing positions and opening new ones and your hedge (because they're aren't any).

/end of thread

Well thanks for hijacking my thread .
I really dont think you understand hedging .
The difference between hedging and closing a position or determining a deficit or loss ,and then opening a new position with 50/50 odds(minus spread ,swap and rollover) is you are placing yourself at risk of 2 trades in a row going against you .
Hedging incorporates both of these trades in one which results in less risk .
Hedging Forex is more of a medium to long-term strategy as opposed to day trading .
While I am new to hedging I have found it to be a significant tool for risk and trade management ,it suits me .
I would love to hear some quality input to this thread .

X Factor = Time

 

[TheBramble]

I think you should carry on doing exactly what you're doing.

 

[Hoggums]

FX Hedging is banned in the US .

Eh? Tell me this is a joke.

 

[TheBramble]

Eh? Tell me this is a joke.

No, no, you don't understand.

This is a cool new way of 'hedging'.

 

[Hotch]

Well thanks for hijacking my thread .
I really dont think you understand hedging .
The difference between hedging and closing a position or determining a deficit or loss ,and then opening a new position with 50/50 odds(minus spread ,swap and rollover) is you are placing yourself at risk of 2 trades in a row going against you .
Hedging incorporates both of these trades in one which results in less risk .
Hedging Forex is more of a medium to long-term strategy as opposed to day trading .
While I am new to hedging I have found it to be a significant tool for risk and trade management ,it suits me .
I would love to hear some quality input to this thread .

X Factor = Time

I really don't think you understand much at all, but I am far too selfless for my own good, please, provide us all with a wonderful hedge trade you have done, and I'll try not to make you look too foolish.

 

[volatiliti]

As of May 2009, hedging was banned by the NFA (National Futures Association).

Most reputable US brokers are members of this association which regulates forex as well as and other financial trading brokers. This means that if you try to operate a hedging trade, your broker will close it out. Usually this happens automatically.

A way around this if you like to use forex hedging systems within the same account is simply to set up with a broker in another country where it is still allowed by the regulatory bodies.

This includes the UK at the time of writing. Many of the larger brokers have a UK branch since London is the biggest currency trading floor. So you can simply ask them to transfer your account to their UK office. If they cannot do this, you may have to switch to a new broker.

If trading with forex hedging was your main way of making money it is probably worth doing that.

 

[Barramundi]

The difference between hedging and closing a position or determining a deficit or loss ,and then opening a new position with 50/50 odds(minus spread ,swap and rollover) is you are placing yourself at risk of 2 trades in a row going against you .
Hedging incorporates both of these trades in one which results in less risk .

I'll ignore the 50/50 for thing for now.

But please educate me on how you are not opening yourself up to further risk - beyond the 'paper' loss at the point that the hedge was first initiated - when you remove the hedged position?

If it's a 50/50 proposition as you suggest, which it may be for you if you are totally inept at analysis, then you can close one of the two positions and have half a chance of losing again. No?

 

[volatiliti]

I think you should carry on doing exactly what you're doing.

thanks for the feedback

 

[volatiliti]

I'll ignore the 50/50 for thing for now.

But please educate me on how you are not opening yourself up to further risk - beyond the 'paper' loss at the point that the hedge was first initiated - when you remove the hedged position?

If it's a 50/50 proposition as you suggest, which it may be for you if you are totally inept at analysis, then you can close one of the two positions and have half a chance of losing again. No?

You dont remove the hedge and until you believe conditions are more favourable .

 

[Barramundi]

You dont remove the hedge and until you believe conditions are more favourable .

That is, until you believe you have a better than 50/50 chance of winning?

 

[TheBramble]

You dont remove the hedge and until you believe conditions are more favourable .

What, conditions are favourable just like they were with the original trade, that went wrong, when you first went into that?

 

[volatiliti]

That is, until you believe you have a better than 50/50 chance of winning?

Highly volatile news announcements in particular

 

[Hotch]

Seems you again refuse to answer my request. Maybe you know you're spouting BS.

 

[volatiliti]

What, conditions are favourable just like they were with the original trade, that went wrong, when you first went into that?

You wouldn't place a trade unless you thought conditions were favourable .
Unfortunately every trade you place is not a winner .

 

[Barramundi]

Highly volatile news announcements in particular

So why not just close, rather than hedge the initial (losing) trade, and open a new one during the 'volatile news announcement'?

 

[volatiliti]

Seems you again refuse to answer my request. Maybe you know you're spouting BS.

Cheer Up ,
What is the request ?

 

[volatiliti]

So why not just close, rather than hedge the initial (losing) trade, and open a new one during the 'volatile news announcement'?

This would confirm a deficit .
Your options are greater when you have a hedged position .
News announcements can be tricky to trade .
Your trade is already open and you can take the profit from one position at the desired time while you wait for the retracement .
Hedging also provides you with more confidence when you place the initial trade as you know you will have a second chance .
It's dealing with one trade at a time over a longer period of time .