Hedging

The purpose of this thread hedging is useful or not. In order to me, hedging is an investment to reduce the risk of adverse price movements. Practically hedging brings no profit because of your intention. When I open a trade, I always try to support my trade even the trend is going against me. So better to close the trade and open a new one when it seems to be in right trend.

I seem, hedging is the most complicated trading style; it’s not the style for the mass people! I have never seen any retail good trader with the hedging trading style.

'Hedge money are dead money' - a man was telling me that many years ago :)

After over many decades of history data back testing with more then 30 forex pairs, my opinion is that hedge is functioning same as stop loss. It freeze the stop loss amount in unfavorable time and waiting until the favorable time returns, then react the trading. Instead of loss money by close the loss trade with stop loss. Also, when hedge trading, while unfavorable direction trading is frozen, the other direction start making money. Anyway, it's not new in trading and there are job title called 'Hedge fund manager'😄

YuTsai posted:
After over many decades of history data back testing with more then 30 forex pairs, my opinion is that hedge is functioning same as stop loss. It freeze the stop loss amount in unfavorable time and waiting until the favorable time returns, then react the trading. Instead of loss money by close the loss trade with stop loss. Also, when hedge trading, while unfavorable direction trading is frozen, the other direction start making money. Anyway, it's not new in trading and there are job title called 'Hedge fund manager'😄

Imagine the situation that your position is becoming loosing.
You can either close it or hedge (or it can hit sl and close)
If you hedge it you got 2 positions and your equity drop is fixed.
So it seems there is no advantage to hedge position, the only exception could be when market moves a lot in both directions like during NFP. And in such situation you are able to close both hedged position without loss.
On the other hand it is risky as hell to close one side of hedged positions during such news :)

I agree. I have tried hedging and it just doesn't seem like it is worth the effort

One more vote for ' I don't think it is worth the effort ' . Maybe hedging is good only for the most experienced professional traders using this style.

At present I am not willing to hedging at all , because I have bad experience when work using hedging , loss more wider than recover loss, hard part using hedging when should open lock hedging , this is like as dilemma, if good in analysis might possible become profit , but if wrong the way also will making loss more.

You can create a new way to trade in ForEx if you know how to use hedging. If the market reverses and goes against you, you can not only freeze the loss of a bad trade, but you can earn more than you lose, and close the whole sequence of trades with added profit. See an example in my profile, the N&N Financial's manual trading account.

BaldoN posted:
'Hedge money are dead money' - a man was telling me that many years ago :)

So true! I have no idea how retail traders can make money by using hedging strategy.

How if hedge + martiangle

Hedging is a waste of time and only for people who don't know what direction to trade and those shouldn't be trading in the first place.

TMAs posted:
Hedge in MT4 is Locking Temporary your Equity. You can do other Profit traders and if close that new profit traders - you will receive New + to Balance.

Profit = Equity > Balance.

Usually Martingaile collect new balance but not Equity. Equity go Down when Balance Up
I use Additional balance to kill part of orders from Drawdown - OverLap

In MT5 you cannot Hedge - there if you have 1 sell and you add 1 buy - platform close 1 sell and open Buy at current price
So in Mt4 you have mo possibilities to survive with temporary Hedging.
You can develop a lot of strategies with locked Equity / But for unlock that you need open new orders and use proportion to reduce Locked Lots by new profit.

Not exactly. Especially you can now hedge even in mt5.

I kind of agree but I thought that a lot of pro traders in bank hedge their positions using the options market

It depends on how you define hedging, what you know about hedging, how you use hedging, what type of hedging and what is your basic trading system upon which you are using hedging.

Just hedging doesn't mean anything without a solid base trading system. But hedging can be a very powerful tool to minimise overall risk exposure of your account if you are trading many currency pairs. Also, hedging is useful to make the equity curve smoother for many profitable strategies.

Buddah5698 posted:
I kind of agree but I thought that a lot of pro traders in bank hedge their positions using the options market

As per my understanding, hedging would make sense more or less for business, which is in general 'long' with their products - for example producers and etc. or long term financial investment in given asset, aiming to benefit with option trades from mid - or short term price decline and keeping on the same time original investment.

Me personally, I do not like hedging (long and short in the same asset) or taking position in the same direction in opposite correlation assets. :)

Mohammadi posted:
The purpose of this thread hedging is useful or not. In order to me, hedging is an investment to reduce the risk of adverse price movements. Practically hedging brings no profit because of your intention. When I open a trade, I always try to support my trade even the trend is going against me. So better to close the trade and open a new one when it seems to be in right trend.

I would like to close my trade, then I understand that I opened a trade agilest the trend instead of hedging; hedging is not any solution to me.

leo23 posted:
It depends on how you define hedging, what you know about hedging, how you use hedging, what type of hedging and what is your basic trading system upon which you are using hedging.

Just hedging doesn't mean anything without a solid base trading system. But hedging can be a very powerful tool to minimise overall risk exposure of your account if you are trading many currency pairs. Also, hedging is useful to make the equity curve smoother for many profitable strategies.

Thats right. However, all broker don't allow it. So, traders should choose broker carefully.

Mohammadi posted:
The purpose of this thread hedging is useful or not. In order to me, hedging is an investment to reduce the risk of adverse price movements. Practically hedging brings no profit because of your intention. When I open a trade, I always try to support my trade even the trend is going against me. So better to close the trade and open a new one when it seems to be in right trend.

To be honest I never understood the concept of hedging and how it works well for any trader. As per the concept, you place buy and sell order simultaneously on the same instrument with same lot size. You earn when one of your trades start going into profit. But the other one is surely going in losses. Yes, you surely earn from the difference from the magnitude of either direction, but their are spreads as well. So how does it actually work for a retail trader? I never understood this.

Its such a vague strategy for me as per my past experience.