"Hedging" in Forex trading -Why do it? - page 3

 

I think we are all on the same line, or very close, so I will not argue more.

Just one point (from Bunny post ;-)

Words have the meaning that we, as people, attribute to them. 

Of course, but it all depends about your audience, to which people your are talking. As I said, try to discuss about "hedging" with a Stock or a Futures trader. It happened I had to explain a customer why so much people was complaining about MT5 netting system, he was simply not understanding the problem. So the people you are reffering to, and it's the most people here of course, is "Forex people". 

So you will probably see in future posts I will use the word "hedging" when actually meaning "locking", or even "using several strategies on same symbol", as it's what people understand. And you don't always want to big off-topic explanations. But "we" know the truth.

And now we have a good reference thread ;-) 

 

So what is the topic of the thread we are going to derail tomorrow?

Should you trade more than one instrument from the same EA?

Does NormalizeDouble() work?

Is OOP superior to procedural coding?

 

 
honest_knave:

So what is the topic of the thread we are going to derail tomorrow?

Should you trade more than one instrument from the same EA?

Could be very interesting. 

Does NormalizeDouble() work?

I am thinking about this one since a while, but I need solid arguments 

Is OOP superior to procedural coding?

Already existing

PS: And we need one about pending orders, specially for Fernando

 
Alain Verleyen: PS: And we need one about pending orders, specially for Fernando

Nope! Not falling for that one again!

I don't need to convince anyone of it. They can continue to do as they please, while I (and WHRoeder) continue to benefit from its advantages all on our own.

 
Fernando Carreiro:

Nope! Not falling for that one again!

I don't need to convince anyone of it. They can continue to do as they please, while I (and WHRoeder) continue to benefit from its advantages all on our own.

No problem, just don't read it when it will take place ;-)
 
Alain Verleyen:
No problem, just don't read it when it will take place ;-)
Thanks for the "heads up" so I can take that day off!
 
honest_knave:
Well, outside of the "locking" scenario, there are also several methods that hedge Forex in the more traditional sense i.e. opening concurrent trades on correlated pairs. Is that what you mean?

Trading correlated pairs doesn't seem to be so popular nowadays as it used to be. At one time there were so many that believed it to be a "can't lose" strategy and of course they were wrong.

I used to see many posts advocating strategies like this.....

EURUSD and GBPUSD are correllated as they tended to move in tandem (just an example, not a statement or an opinion)

so

Buy EURUSD

and

Sell GBPUSD

What they weren't able to grasp is that all they are doing is Buying EURGBP in a roundabout way, but doubling their trading costs. If EURGBP rose, they'd gain, if it dropped, they'd lose.


Then there was the triple correlated pairs which was considered "perfect" by so many.

Another fallacy as in reality there was no chance of recovering the spread and commissions on trading 3 pairs.

Sometimes some people did win, but not because of the strategy, but because of weighting. They often would not calculate lot sizes to balance out the different tick/pip values for the 3 pairs, so if the pair with the largest tick/pip value gained, they may make a small net profit.

 
Alain Verleyen:

From what I know, the US law (NFA) is exactly what I am saying, it rejects "false" hedging and allow actual hedging.

They even sometimes use quotation marks when talking about "hedging" :

It's NOT only semantic.

As true hedging requires trading at least 2 different instruments, then I would think that it would be impossible to detect it, let alone ban it.

 
Alain Verleyen:

Does NormalizeDouble() work?

I am thinking about this one since a while, but I need solid arguments

Do NOT use NormalizeDouble, EVER. For ANY Reason. It's a kludge, don't use it. It's use is always wrong
 
whroeder1:
Do NOT use NormalizeDouble, EVER. For ANY Reason. It's a kludge, don't use it. It's use is always wrong
That's why I need solid arguments