newbie needs advice on reducing exposure

[grumpyoldman]

Hi all, I’m fairly new to trading...and using forums, so if I’m posting in the wrong place please let me know.

My question is, what are the best ways to reduce exposure when too many hedging positions are opened and the opened positions prices range is widening.

Does it make sense to cut losses by closing equal amount of points exposure in long and short positions, or is this a bad plan of action for most if not all situations

What is the best strategy to use if the price continues to fall (ie the price gap is widening), and what strategy should be used if the price starts to rise (ie the price gap is closing)

Thanks

 

[NVP]

Hi all, I’m fairly new to trading...and using forums, so if I’m posting in the wrong place please let me know.

My question is, what are the best ways to reduce exposure when too many hedging positions are opened and the opened positions prices range is widening.

Does it make sense to cut losses by closing equal amount of points exposure in long and short positions, or is this a bad plan of action for most if not all situations

What is the best strategy to use if the price continues to fall (ie the price gap is widening), and what strategy should be used if the price starts to rise (ie the price gap is closing)

Thanks

if you are new to trading you shouldnt be playing hard ball with Hedging etc etc

simple trades and simple rules first ....use limited leverage, solid MM and realistic stop losses............

that way you learn to walk before you can run......or at least stay in the game for a few more rounds .....

N

 

[grumpyoldman]

if you are new to trading you shouldnt be playing hard ball with Hedging etc etc

simple trades and simple rules first ....use limited leverage, solid MM and realistic stop losses............

that way you learn to walk before you can run......or at least stay in the game for a few more rounds .....

N

Thanks for the reply N,

In fairness I wasn’t playing hardball, I just got caught out with June contracts that expired with losses. I was trying to hedge the losses until the market changed...but it hasn’t. You are correct about walking before running, but I am new to contracts and admit my stupidity!

All of trading is a learning experience, even when trading with the utmost caution losses are incurred. And the only way to learn is to dip your feet in...I just did it at the wrong time....Grrrr!

If you have any advice on how I might reverse my situation that would be really appreciated.

Thanks again

 

[pboyles]

Thanks for the reply N,

In fairness I wasn’t playing hardball, I just got caught out with June contracts that expired with losses. I was trying to hedge the losses until the market changed...but it hasn’t. You are correct about walking before running, but I am new to contracts and admit my stupidity!

All of trading is a learning experience, even when trading with the utmost caution losses are incurred. And the only way to learn is to dip your feet in...I just did it at the wrong time....Grrrr!

If you have any advice on how I might reverse my situation that would be really appreciated.

Thanks again

Did you hedge against an existing position or just close it with a loss and then open another position in the hope it would make money, cause that's not hedging, that's hoping.

 

[grumpyoldman]

Did you hedge against an existing position or just close it with a loss and then open another position in the hope it would make money, cause that's not hedging, that's hoping.

Thanks again for taking the time to reply N,

No I had the positions already open. I have had them open since around the beginning to middle of May (when the markets were carrying on northbound relentlessly). I was concerned about where the markets may go after whatever Ben Bernanke decided whether he was going to continue or start reducing the liquidity levels from $85bn to $55bn etc...and realise I should have cut my losses at this pointI...but stupidly I didn’t, and since have been hoping....no praying! that there might me some form of reversal in order to exit my positions with as little loss as possible. But with each week the international news, market news etc has just got worse and worse. And each week I got myself into more and more trouble as I pay the overnight charges on all open positions (long and short). I had other contracts, but closed them all after incurring the losses I did from the ones expiring. I am now just watching my account slowly dwindle away with each day, and have lost a lot of confidence in what to do now...so any advice will be most welcome.

Basically, if I was to close all my positions now, I would not be able to recover, so I have no choice but to hold try anything until any form of rally no matter how short allows me to try and salvage what I can.

Thanks again N,

Jameson

 

[pboyles]

Thanks again for taking the time to reply N,

No I had the positions already open. I have had them open since around the beginning to middle of May (when the markets were carrying on northbound relentlessly). I was concerned about where the markets may go after whatever Ben Bernanke decided whether he was going to continue or start reducing the liquidity levels from $85bn to $55bn etc...and realise I should have cut my losses at this pointI...but stupidly I didn’t, and since have been hoping....no praying! that there might me some form of reversal in order to exit my positions with as little loss as possible. But with each week the international news, market news etc has just got worse and worse. And each week I got myself into more and more trouble as I pay the overnight charges on all open positions (long and short). I had other contracts, but closed them all after incurring the losses I did from the ones expiring. I am now just watching my account slowly dwindle away with each day, and have lost a lot of confidence in what to do now...so any advice will be most welcome.

Basically, if I was to close all my positions now, I would not be able to recover, so I have no choice but to hold try anything until any form of rally no matter how short allows me to try and salvage what I can.

Thanks again N,

Jameson

Nobody knows if/when the market will reverse, how much worse will your financial position be if you get completely wiped out, or worse still end up owing money? I'd tend you say get out now and have something left to salvage, you gambled and lost, no point in adding to your losses, expensive lesson I suppose.

 

[pboyles]

Another point, have you figured out when your account will get a margin call? How much breathing room do you have before that happens? If you don't know you should probably get out now and not trade again until you understand all of this properly.

 

[Mr. Charts]

"Basically, if I was to close all my positions now, I would not be able to recover, so I have no choice but to hold try anything until any form of rally no matter how short allows me to try and salvage what I can."

You might or might not be "lucky" this time doing that but counting on "luck" is a guarantee of long term failure as even if you reduce your losses on this occasion you will have created negative reinforcement in your mind and the following time you won't just get your fingers burnt, you'll lose an arm and a leg.

 

[pboyles]

Thanks again for taking the time to reply N,

No I had the positions already open. I have had them open since around the beginning to middle of May (when the markets were carrying on northbound relentlessly). I was concerned about where the markets may go after whatever Ben Bernanke decided whether he was going to continue or start reducing the liquidity levels from $85bn to $55bn etc...and realise I should have cut my losses at this pointI...but stupidly I didn’t, and since have been hoping....no praying! that there might me some form of reversal in order to exit my positions with as little loss as possible. But with each week the international news, market news etc has just got worse and worse. And each week I got myself into more and more trouble as I pay the overnight charges on all open positions (long and short). I had other contracts, but closed them all after incurring the losses I did from the ones expiring. I am now just watching my account slowly dwindle away with each day, and have lost a lot of confidence in what to do now...so any advice will be most welcome.

Basically, if I was to close all my positions now, I would not be able to recover, so I have no choice but to hold try anything until any form of rally no matter how short allows me to try and salvage what I can.

Thanks again N,

Jameson

I'm still not clear, did you hedge with an equal and opposite position or did you add to an existing position in the same direction? In other words if you bought at 1500 and it dropped to 1400 did you buy more?

 

[Hoggums]

Many of us have been there. Get out now and start again with a clear head. You won't have enough margin left to make back those losses and your account is likely to suffer further as I don't believe the pullback is anywhere near finished yet.

 

[timsk]

Basically, if I was to close all my positions now, I would not be able to recover, so I have no choice but to hold try anything until any form of rally no matter how short allows me to try and salvage what I can.

Hi Jameson,
Welcome to the forum and I'm sorry to read that your motive for joining appears to be a negative one. As Hog's rightly says, most of us have been in your position - so we can feel your pain. I hope you live to fight another day and, when you do, that you learn from this experience to become a better and wiser trader.
Tim.