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Why Hedging your positions ?

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  • #16
    Originally posted by BillHuppert View Post
    A losing trade is not necessarily a mistake. Nobody "knows" where the market is going, no matter what they tell you.
    If you have traded according to your plan, and the trade goes against you too far, you are wrong and should close the trade, it was a losing trade, it is done and dusted, so what. This allows you to re-focus on the next opportunity.
    I believe hedgeing the instrument in which you have an open trade is a loss aversion strategy,Traders hate taking losses and some will do anything not to take a loss. If you can't take a loss, you should not be trading.
    Again let's agree to disagree.. With how I use my personal hedging strategy, If the trade goes against you, you will be still be making money.. Which ever way it goes it doesn't matter.. The larger hedge will be making you more money than the original opened losing trades if the currency pair goes against you, and if the market turns back for you, then your original trades are gonna be back on track to making you money again.. I sometimes even use that strategy when I'm only 15 pips behind on 1 trade and it helps me get out of my small DD in no time.. So it works flawlessly for me, which is why we just have to agree to disagree..

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    • #17
      Oh, and how many times have you closed a losing trade for a loss, and then the market turns back as you close them and would've put your original trades in profit again? I know it's happened to me heaps of times before.. But not anymore.. When I use my hedging strategy, I'll never have to experience that horrible feeling again..

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      • #18
        Yes, fine by me Dan, just my personal opinion, no offence intended, but nothing wrong with a spirited debate

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        • #19
          Originally posted by BillHuppert View Post
          Yes, fine by me Dan, just my personal opinion, no offence intended, but nothing wrong with a spirited debate
          Absolutely.. We're all here to learn and share thoughts and strategies to find the best ways to make money from forex, no offence taken, I too am having a spirited debate about hedging, and I've been trying to find negatives about my own hedging strategy, but can't seem to find any reasons why it can't always be applied when things go wrong in bad trades.. I prefer to always see my account growing and never taking any losses, and from this point on, I don't think I'll need to see my account balance going up and down anymore.. Just up

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          • #20
            Originally posted by spamme View Post
            You will earn money because you will not be charged for the swap....
            Orly?

            Must be a magic broker then. On normal brokers you will still lose money daily on swap if you are fully Hedged.

            ICMarkets USDCAD Swap rate as of 6 July 2014:

            Long: -3.9
            Short: 0.9

            So even you are hedged fully, you still pay a net swap rate of -3 pips daily. Hardly a money making activity.

            If it were that easy everyone would be opening 100 lots fully hedged and making killer swap profits

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            • #21
              Hi,

              I'm just telling my view and appreciate that we can talk about our views without hard feelings.


              If you are full hedge then there is no trade on market and 0 swap should be paid.

              Remember when you trade with leverage then some part of the swap is removed/added from/to you


              Originally posted by timo View Post
              Orly?

              Must be a magic broker then. On normal brokers you will still lose money daily on swap if you are fully Hedged.



              ICMarkets USDCAD Swap rate as of 6 July 2014:

              Long: -3.9
              Short: 0.9

              So even you are hedged fully, you still pay a net swap rate of -3 pips daily. Hardly a money making activity.

              If it were that easy everyone would be opening 100 lots fully hedged and making killer swap profits

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              • #22
                Originally posted by spamme View Post
                Hi,

                I'm just telling my view and appreciate that we can talk about our views without hard feelings.


                If you are full hedge then there is no trade on market and 0 swap should be paid.

                Remember when you trade with leverage then some part of the swap is removed/added from/to you
                Really interesting topic indeed.

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                • #23
                  Originally posted by spamme View Post
                  If you are full hedge then there is no trade on market and 0 swap should be paid.
                  Of course, no hard feelings

                  But your statement above is incorrect. My example illustrated that perfectly.

                  Naturally YMMV with different brokers, but ICMarkets is a fair example.

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                  • #24
                    @Timo. If you are full hedged on one pair. lots Buy = lots Sell then there is no trades on the forex market.
                    So there is no swap.
                    I'm full time trader and on my broker I have 0 trades on the market - in the back office - if I put one full single pair hedge but metatrader show me 2 trades and swap are paid and charged.
                    What will then happens is that my BO is off sync with mt4 and when my account is flat the broker "sync" BO with MT4.
                    BO is what I have.
                    Mt4 do not show the reality.

                    This thread was a head up but if you do not believe me then fine for me

                    Have a nice Sunday


                    Originally posted by timo View Post
                    Of course, no hard feelings

                    But your statement above is incorrect. My example illustrated that perfectly.

                    Naturally YMMV with different brokers, but ICMarkets is a fair example.

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                    • #25
                      @spamme - who is your broker?

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                      • #26
                        Hi,

                        I'm not here doing any advertisement of my broker so will not answer in forum.
                        My or other broker will have no trade on market when single trade hedge.

                        Ok I think my view about hedging is clear and I will not comment more about this.

                        Cheers ....

                        Originally posted by timo View Post
                        @spamme - who is your broker?

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                        • #27
                          Originally posted by spamme View Post
                          Hi,

                          I'm not here doing any advertisement of my broker so will not answer in forum.
                          My or other broker will have no trade on market when single trade hedge.

                          Ok I think my view about hedging is clear and I will not comment more about this.

                          Cheers ....
                          Uhm, okay.

                          I think it's safe to assume you are with a bucket shop broker that pays a positive swap when you hedge a position. Lollerskates.

                          Good luck with that!

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                          • #28
                            not really I trade at http://www.cfhclearing.com/ and my account is not small.

                            Good luck to you to

                            Originally posted by timo View Post
                            Uhm, okay.

                            I think it's safe to assume you are with a bucket shop broker that pays a positive swap when you hedge a position. Lollerskates.

                            Good luck with that!

                            Comment


                            • #29
                              Originally posted by spamme View Post
                              @Timo. If you are full hedged on one pair. lots Buy = lots Sell then there is no trades on the forex market.
                              Just to clarify. Are you stating that if, for example, I opened a long position in EURUSD for 1 lot, and then later opened 1 lot short, even though MT4 will show two open trades, I am actually flat with my Broker?

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                              • #30
                                Originally posted by BillHuppert View Post
                                Just to clarify. Are you stating that if, for example, I opened a long position in EURUSD for 1 lot, and then later opened 1 lot short, even though
                                MT4 will show two open trades, I am actually flat with my Broker?
                                *When you initiate a long position on the EUR/USD (let's say 1 standard 100K lot), this is what happens:
                                - You lend 130KUSD from your broker
                                -You buy 100K Euros for 130K USD (if EUR/USD trades at 1.3000).
                                -When you close your position (for example after EUR/USD rose to 1.4000), you sell back the 100K Euros for 140K USD and you make a 10K USD profit (=1000 pips) because you bought them at only 130K USD.

                                *When you initiate a short position on the EUR/USD (let's say 1 standard 100K lot), this is what happens:
                                -You lend 100K Euro's from your broker.
                                -You sell these 100K Euro's for let's say 130K USD (if EUR/USD trades at 1.3000).
                                -When you close your position (for example after EUR/USD fell to 1.2000), you buy back the 100K Euro's you bought at 130K USD for only 120K USD.
                                -The 100K Euro's you just bought back are returned to your broker and you make a 10K USD profit (=1000 pips) because you sold 100K Euro's for 130K USD and then bought them back for only 120K USD.

                                So if you now lets mix those 2 scenarios together
                                Open one buy at 1.30 and one sell - hedge - at 1.30 also
                                -You buy 100K Euros for 130K USD (if EUR/USD trades at 1.3000). ( Close this position at 1.30 will be "you sell back the 100K Euros for 130K USD" that exactly what a short is )
                                -You sell 100K Euro's for let's say 130K USD (if EUR/USD trades at 1.3000).

                                That means you are "flat" on the market do you follow @BillHuppert ?

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