hedge forex positions with no loss

Sep 25, 2016 at 07:43
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76 Replies
Участник с Apr 10, 2016   2 комментариев
Sep 25, 2016 at 07:43
Hello. Please excuse me for my newbie question. I want to hedge my forex positions (i.e buy or sell ) with other financial instruments with no loss to my capital. Is it possible anyway ? How i can do this if this possible ? Thanks.
Участник с Feb 22, 2011   4862 комментариев
Sep 26, 2016 at 09:48
It is possible but it cant be profitable
e.g. you buy EURUSD
so you would need to sell e.g. EURJPY
and buy USDJPY
Участник с Nov 21, 2011   1718 комментариев
Sep 26, 2016 at 12:29
And if the day afer... both USD & JPY get weak... You have 3 loser trades.

Try it demo... you will see that you won't close any loser trade manually... but it will be automatic at some point (margin call)
Участник с Feb 22, 2011   4862 комментариев
Sep 26, 2016 at 13:43
CrazyTrader posted:
And if the day afer... both USD & JPY get weak... You have 3 loser trades.

Try it demo... you will see that you won't close any loser trade manually... but it will be automatic at some point (margin call)

Nope you dont get it .
If you do such triangle it is like hedge on the same pair.
Equity wont move anywhere (just swaps)
Участник с Nov 21, 2011   1718 комментариев
Sep 26, 2016 at 13:48
Lol

Do you know something about trading after al this years?

Have you ever noticed than Market in pratice has nothing to do with such theory?
Market is real, wild, nasty and unpredictable.

Open straight away a demo account!
Open long EurUsd... as soon as 10 pips down, Open long UsdJpy & Short EurJpy.
Then screenshot 3 days in row at interval time.

Trust me you will be surprised!
I really wonder your knowledge about fx market? only theory like this?
Участник с Aug 20, 2009   266 комментариев
Sep 26, 2016 at 14:18 (отредактировано Sep 26, 2016 at 14:21)
CrazyTrader.....IMHO vontogr is correct. As long as you do the correct lot sizing, you can hedge using the method he mentioned.

I used an ea that used to trade EURGBP synthetically using EURUSD & GBPUSD because the spreads would be lower using the more liquid currencies. The lot sizing is key.....the EURJPY lot needs to be slightly bigger since you get more yen for a EUR than for a USD.

@ilqarsadiqov200, I also believe that there is no point in hedging. You can make opposite trades as much as you like but you will end up with the same constant loss. As a matter of interest, any hedge position can be broken down into a single position, without the consequent build up in negative swaps and commission costs(brokers love hedge traders for a reason........)
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forex_trader_25447
Участник с Dec 21, 2010   131 комментариев
Sep 26, 2016 at 19:42
SaltyWaters posted:
This one is hedging and is profitable: ...
No one can say anything like this ... with hidden history
forex_trader_25447
Участник с Dec 21, 2010   131 комментариев
Sep 26, 2016 at 20:36
Please explain, how YOU understand that this account is :
... anything you said, when there in HIDDEN history ???
Участник с Nov 21, 2011   1718 комментариев
Sep 27, 2016 at 07:31
I know you won't do it... I'll show you it doesn't work

Actual rates:
EurUsd: 1.1250
EurJpy: 112.94
UsdJpy: 100.40
Участник с Feb 22, 2011   4862 комментариев
Sep 27, 2016 at 07:35
Keep your insults for yourself.

The triangle I did describe is working, not in theory but in real.

Even you could be able to understand it.

As

you buy/sell the same amount of EUR
you buy/sell the same amount of USD
you buy/sell the same amount of JPY.

Even it is beyond your forex knowledge it is working :)
Участник с Feb 22, 2011   4862 комментариев
Sep 27, 2016 at 07:37
compuforexpamm posted:
CrazyTrader.....IMHO vontogr is correct. As long as you do the correct lot sizing, you can hedge using the method he mentioned.

I used an ea that used to trade EURGBP synthetically using EURUSD & EURGBP because the spreads would be lower using the more liquid currencies. The lot sizing is key.....the EURJPY lot needs to be slightly bigger since you get more yen for a EUR than for a USD.

@ilqarsadiqov200, I also believe that there is no point in hedging. You can make opposite trades as much as you like but you will end up with the same constant loss. As a matter of interest, any hedge position can be broken down into a single position, without the consequent build up in negative swaps and commission costs(brokers love hedge traders for a reason........)

Exactly trade size is the key.
You cannot simply open 1 lot of each pair.
BTW crazytraders advises is not worth it as he doesn't posses single profitable account

Приложения:

Участник с Feb 22, 2011   4862 комментариев
Sep 27, 2016 at 07:37
compuforexpamm posted:
CrazyTrader.....IMHO vontogr is correct. As long as you do the correct lot sizing, you can hedge using the method he mentioned.

I used an ea that used to trade EURGBP synthetically using EURUSD & GBPUSD because the spreads would be lower using the more liquid currencies. The lot sizing is key.....the EURJPY lot needs to be slightly bigger since you get more yen for a EUR than for a USD.

@ilqarsadiqov200, I also believe that there is no point in hedging. You can make opposite trades as much as you like but you will end up with the same constant loss. As a matter of interest, any hedge position can be broken down into a single position, without the consequent build up in negative swaps and commission costs(brokers love hedge traders for a reason........)

Thanks,

the only point could be to hedge your open loosing positions before main event like NFP and close both sides when they become profitable, there could be risk though at the moment you close one side.
Участник с Nov 21, 2011   1718 комментариев
Sep 27, 2016 at 07:37
It works for EurGbp

Another good example would be to trade AudNzd while hedging with AudUsd and NzdUsd

These 2 are correlated triangles.


Unfortunately trading EurUsd while hedging UsdJpy and EurJpy doesn't work.
Участник с Oct 15, 2014   54 комментариев
Sep 27, 2016 at 07:44
yup, its not just a 'theory', its pure mathematics.
EUR/USD x USD/JPY x JPY/EUR => EUR/EUR x USD/USD x JPY/JPY = 1.
key principle of forex pairing, it would be useless without.
Elena_Chopin
forex_trader_332302
Участник с May 28, 2016   211 комментариев
Sep 27, 2016 at 07:52
Or you open an islamic account and a normal account.
You open a position with positive swap with normal account and you hedge this position on your islamic account.

You will earn swap interest each day without take any risk !

Elena Chopin
Участник с Dec 10, 2015   21 комментариев
Sep 27, 2016 at 14:08
yes average trader 50 cent per day :)
i am user in bestforexrebates dot com
Участник с Feb 22, 2011   4862 комментариев
Sep 28, 2016 at 09:51
5astelija posted:
yup, its not just a 'theory', its pure mathematics.
EUR/USD x USD/JPY x JPY/EUR => EUR/EUR x USD/USD x JPY/JPY = 1.
key principle of forex pairing, it would be useless without.

@5astelija

Yeah thats the principle.
I am afraid @CrazyTrader is still not able to understand ;)
Участник с Oct 15, 2014   54 комментариев
Sep 29, 2016 at 06:39
SaltyWaters posted:
Hedging works very well and you don't have to go against other financial instruments. Pick a pair, any pair (except pairs that don't move much) go in regardless of the market's direction find a mathematical formula that works for you and apply it (lot size). Just go with the flow. Of course this is not for the faint at heart, because you cannot use stop loss with this strategy. Synchronize timing and lot size to exit. You are going for the gold and want to come out with it. Fear and you will lose. You can be very successful if you find the right equation. It's in the numbers you choose.

That's quite profitable method, I have made many eas like this.
Thing is, it is not 'hedgind' as the word means protecting for potential losses - it more like betting 'I bet another 0.5 lots the trend will not go further' and so on.. You will get nice steady profits, until one day you bet wrong too many times. Like a fancy martingale.
Участник с Aug 20, 2009   266 комментариев
Sep 29, 2016 at 18:45
@SaltyWaters ,

Just to be clear, I believe you are talking about some sort of grid strategy, and I don't have an issue with that......each to their own, but I would like to make the following observations. This requires some form of asymmetrical lot sizing. Assuming I am correct.....

1. This is not hedging per se.......you still have to take a direction in the market.

2. One of my points is that a strategy like this can be devolved into a single one sided trade......eg... 1 lot buy and 1.1 lot sell is the same as 0.1 lot sell, but without the commission and swap charges.

My comments were not really aimed at grid trading as a strategy, but rather at the futility of trying to protect your capital via a hedge once you are starring a loss in the face. A $100 drawdown is just that.....once it is there, you can open a hedge trade but you simply postpone the problem until a later stage......but you cannot eliminate the problem. You have to take a position again, which implies that you may as well close your losing trade and take your new position........same same as hedging but without commission and swap charges.
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Участник с Oct 15, 2014   54 комментариев
Sep 30, 2016 at 07:36
@SaltyWaters Wise words, seems we have very similar understanding of forex :)
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