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| Author: | seanyd [ Sun Jul 14, 2013 10:10 pm ] |
| Post subject: | Re: Hedge trading |
I have analized this twice today  , very headfrying stuff but this is what I have come up with I hope you`s can understand its a bit messy to say the leastThis 1st one I ended up taking 850 pips profit then when I stopped I had a deficit of minus 450 pips for a total profit of 350 pips . Left is buys right is sells , yellow is profit taking On the second attempt this is the result , hope I understood the concept correctly Kwanann ? |
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| Author: | kwanann [ Sun Jul 14, 2013 10:18 pm ] |
| Post subject: | Re: Hedge trading |
Oh yes you are right, jeuro thought my unhedged was at the end turns out I've been unhedged for quite a while @gary, the maths is confusing me at this point as well, but I know it ain't a zero sum game, that's cos when I was doing this, my equity went down initially and then it started to go up even before I unwittingly unhedged myself This is not a simple 2 to 3 pairs hedged process, that doesn't work, it's the dynamics of how at least 4 pairs of hedged trades in tandem makes a profit. I can't really explain to you yet cos I.m still trying to figure it out, it's close, I.m just missing something that flicks the lightbulb All I know now is 1. Price always revisits areas 2. Profits comes when price changes direction 3. Entry and exit are crucial but where do I take them? |
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| Author: | kwanann [ Sun Jul 14, 2013 10:39 pm ] |
| Post subject: | Re: Hedge trading |
LOL sean, i have yet to grasp the concept and there are you showing it can be done! One thing though the exits and entrance should be when price stabilizes not when its moving (or it could be.. why waste that 200pip move hedging) Oversall YES thats the trade imbalance that i'm talking about, and the whole reason for hedging. You take your profits, add in something to the mix to PROTECT your profits and continue riding on Now is my turn to analyze your trades! |
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| Author: | garyfritz [ Sun Jul 14, 2013 11:19 pm ] |
| Post subject: | Re: Hedge trading |
Until you can explain it, I'm sticking with my analysis. Each hedge is a flat position. Exiting two legs of two hedges increases the balance (closed profit) but decreases the open P/L equivalently, so the equity is unchanged. A single hedge is zero, and 2 or 3 zeroes is still zero. Plus if this actually worked, everybody on the planet would be trading it... |
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| Author: | kwanann [ Sun Jul 14, 2013 11:30 pm ] |
| Post subject: | Re: Hedge trading |
@gary Agreed on all points. I'm not sure i can even explain it myself. Sean seems to have proven it but it begs further analysis Why i know it works is because i know of people doing this and earning 1 to 10% per month. Its their business so they aint sharing how they did it, but the workings come from this: buying and selling at the same time. Why it wont work for everyone because it is a "head frying" exercise, if it was as simple as just those steps, like you said everyone on the planet will be doing it. In all aspects, it doesnt make sense at all. AND that is the one main point that triggered a red flag for me. Same like naked trading, deception is the key and this stinks of a really high level of deception. |
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| Author: | mjws00 [ Mon Jul 15, 2013 1:37 am ] |
| Post subject: | Re: Hedge trading |
Didn't look at your trades. IMHO this will boil down to whether there is an edge psychologically, and/or if it disrupts the usual tricks the market plays on retail traders. I believe there may be an advantage in how this shifts a traders usual perception of time as well. The keys are in how this effects fear, greed, patience, boredom, sleep deprivation etc. It in no way diminishes the necessity to place good trades. Somehow you must end up with sells at the top of the chart and buys at the bottom. But it does allow one to mix up the order, and bias analysis towards management, and exits vs entries. If those playing against us expect us to be manipulated by spikes, crosses, and indicator signals. Perhaps if we are just "IN" with no stress and simply take profit when the time is right, it changes the game. Potentially the change in viewpoint might benefit some or play to one's strengths. That is what I am exploring. I have been meaning to do a thorough analysis for a while. But have been running a GBPAUD, EURAUD, EURGBP hedge for a while (6 weeks). The weighting gets shifted to suit my intra-day or intra-week views. Long ways to go on this one. Biggest mistake I've made trading this style has come from getting frustrated or bored and punching out early. There is also plenty of opportunity to die a death by 1000 cuts. Your balance rises, but your equity can get whittled away. Both must be managed carefully. I wish I applied this more often to winners/runners. Normally, I start in the hole and then dig out. Just writing that has inspired me to do the opposite. The downside is complexity. The upside is a state where one is very connected to the market and that sense of having to "wait and watch for entries" almost goes away for me. I see something peaking and turning, I take profit on the profitable side. No rush. If it doesn't turn I can typically get a better or similar entry, or just stick a limit order out there. If I punch out or take the stop, with intent to re-enter often I miss the re-entry, sleep through it, or get busy. I've never been great at entering via limit. But taking profit or trailing suits me. We all have our strengths, this game is about knowing one's self. Hopefully we get some good discussion on the topic. Mike |
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| Author: | tex [ Wed Jul 17, 2013 6:14 pm ] |
| Post subject: | Re: Hedge trading |
Hi Kwanann, i did some backtesting regarding your hedge idea with some minor changes to the strategy. As long as the sentence : "what goes up must come down and vice versa" stands true, there is a chance to make some profit with this hedge strategy. I used the following rules for the hedge : 1. Open a buy and a sell with limit/stop orders exactly at a round number E.G. 1.3100 -> Our first level 2. Open new buys/sells at every new touched round number. 1.2950 -> second level below, 1.2900 -> third level below... 1.3150 -> second level above, 1.3200 third level above and so on... 3. Now if price reaches a third level up or down close the trade with +100p from level one and the -50p trade from level two. 4. Now replace the closed out hedge trades of the levels one and two with limit/stop orders. 5. Now while price action is evolving keep closing the trades when they reach +100 and its -50p partner and keep reopening the limit/stop orders until price changes the direction and our account reaches the green zone. Voila we made some profit. |
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| Author: | Jeuro [ Wed Jul 17, 2013 6:32 pm ] |
| Post subject: | Re: Hedge trading |
Question.. #4... Reopen missing hedge trades with Stop/limit orders??? at what price/level should be placed? J. |
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| Author: | tex [ Wed Jul 17, 2013 6:38 pm ] |
| Post subject: | Re: Hedge trading |
At the levels the closed ones were opened. You close one open position with +100p and the other one with -50p. Now place limit orders at the levels the closed ones were opened in the beginning. You basically want a buy and a sell sitting at every round number at any time. |
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| Author: | Jeuro [ Wed Jul 17, 2013 6:45 pm ] |
| Post subject: | Re: Hedge trading |
OK.. then when price hit one of them, the system is no longer hedged ..because you would be "net" long or short whichever hits first... right? I would say if it is this way, the profit or loss would come from when un-hedged. Is my thinking correct? J |
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