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  1. #1
    Registered User santo504564's Avatar
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    Default Hedging instead of SL?

    I am wondering…
    If we put pending hedge order instead of SL, we could earn some additional stability of account.
    So, if market is nice with us, we can earn big amounts using bigger orders. If market is hostile, we get hedged orders that we can close part by part with smaller risk. Let's say, when closing order, we do close just a part - ¼ or 1/8.



    What do you think?

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  3. #2
    Registered User Numero16's Avatar
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    Anything implace of SL is good for forex trade and hedging an open position that went against us is one such ways! The argument against this strategy is that it requires a large bankroll and could blow up an account, but not making the subsequent trades progressional as in Martingale system is a better option.

  4. #3
    Registered User luke1's Avatar
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    We can do hedging, and not to put Stop Loss, if we have so much money in our Forex Account. So, we are more than strong to stand when the price is going the wrong way.

  5. #4
    Registered User Numero16's Avatar
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    People are always looking to improve on previous concepts and the advancement in the internet technology has really been some leverage to this effect. These days, it is possible to hedge an open position without necessarily having a large margin.

  6. #5
    Registered User luke1's Avatar
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    Quote Originally Posted by Numero16 View Post
    People are always looking to improve on previous concepts and the advancement in the internet technology has really been some leverage to this effect. These days, it is possible to hedge an open position without necessarily having a large margin.
    This is correct, we are still able to do hedging in Forex without necessarily having a huge amount on the margin. But it will be much riskier than if we can have large amount in our margin. We have to be really careful.

  7. #6
    Registered User Numero16's Avatar
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    One of the effective ways advanced and institutions traders hedges the market is to turn the stop loss into a binary option or a derivative. This is a great strategy and very idea for trading news.

  8. #7
    Registered User luke1's Avatar
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    Quote Originally Posted by Numero16 View Post
    One of the effective ways advanced and institutions traders hedges the market is to turn the stop loss into a binary option or a derivative. This is a great strategy and very idea for trading news.
    Now, the strategy is not fixed, and always flexible. I see many traders sometimes still move the Price of the Stop Loss, and even, combine it with the hedging. It is depending on the market situation now.

  9. #8
    Moderator bulastika's Avatar
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    Quote Originally Posted by Numero16 View Post
    People are always looking to improve on previous concepts and the advancement in the internet technology has really been some leverage to this effect. These days, it is possible to hedge an open position without necessarily having a large margin.
    Its possible. But how can you get out of it? In hedging you really need to have lots of funds to get out in hedging. Because hedging only minimize loss but you are still at loss. Now if you don't have extra funds you have no choice but to close one open position and accept a loss than to keep the two trade locked. Second. if you don't do that you will just going to pay two swap interest. So you don't make a loss in trade but you loss in swap.

  10. #9
    Registered User Numero16's Avatar
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    Quote Originally Posted by bulastika View Post
    Its possible. But how can you get out of it? In hedging you really need to have lots of funds to get out in hedging. Because hedging only minimize loss but you are still at loss. Now if you don't have extra funds you have no choice but to close one open position and accept a loss than to keep the two trade locked. Second. if you don't do that you will just going to pay two swap interest. So you don't make a loss in trade but you loss in swap.
    I think you are still with the old concepts of hedging an open position, but there is a step ahead and you would not need to unlock the hedge at any point in time, your profit would and it matters not the make goes up or down. The critical thing here is timing!

  11. #10
    Moderator bulastika's Avatar
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    Quote Originally Posted by Numero16 View Post
    I think you are still with the old concepts of hedging an open position, but there is a step ahead and you would not need to unlock the hedge at any point in time, your profit would and it matters not the make goes up or down. The critical thing here is timing!
    Open position? I really don't get your point in here. How can you do hedging if you don't have open position? The main reason you do hedging is to protect your open position by farther loss by doing hedging.
    What do you mean by not unlock the hedge at any point in time? The more you can get out of hedging the better. Because even though you're not losing any more pips in hedging but you also pay swap interest. So the more you stay in the more you pay interest.
    And it does matter if the price goes up and down. that's what hedging is all about.
    Just one question. How can you end your hedging strategy? Its easy to get in in hedging but how can you complete the whole process?

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