Hedging currencies pairs with Expert Advisors

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Interesting subject ??

I guess so...

Hedging multiple pairs to protect your account from big losses with positions entry techniques using technical indicators

for example : if we Buy x lots EURUSD  and SELL x lots GBPUSD and to protect the positions we have to  Sell x lots  EURGBP

with taking the trend indicator MA for entry of new positions  

 
yehia78:
Share your experience.
 

this does not work as a perfect hedge.

let EUR = A, GBP = B, USD = C, then EURUSD = AC, EURGBP = AB, GBPUSD = BC

for the lot sizes to end up creating a perfect (almost perfect) triangular hedge, you need X LOT for AC and AB, but have to modify the lot for BC by a factor of the price of AB. so BC's lot size is X*(bid or ask of AB) then round that number to the nearest minimal lot step.  

make sense?  if the absolute value of the non-margined lot volumes for EURUSD subtracted from the synthetic pair (EURGBP/GBPUSD) is smaller than your account balance, say you are invested 100,000 USD in one and 105,000 from the synthetic with an account balance over 5000 then no matter what happens you can never blow your account until negative swap rates finally eat away at the balance ;)

if you don't modify the BC lotsize as I mentioned earlier than the difference between the EURUSD and synthetic pair in the hedge could be as bad as having a quarter to half lot (or more) of exposure still at risk!

 
yehia78:

Interesting subject ??

I guess so...

Hedging multiple pairs to protect your account from big losses with positions entry techniques using technical indicators

for example : if we Buy x lots EURUSD  and SELL x lots GBPUSD and to protect the positions we have to  Sell x lots  EURGBP

with taking the trend indicator MA for entry of new positions  

Thanks for sharing, not a new subject, anyway, as Fleder stated before, what about share your experience using it?
 
positive swap rates is important in this strategy
 
Jeremy Scott:

this does not work as a perfect hedge.

let EUR = A, GBP = B, USD = C, then EURUSD = AC, EURGBP = AB, GBPUSD = BC

for the lot sizes to end up creating a perfect (almost perfect) triangular hedge, you need X LOT for AC and AB, but have to modify the lot for BC by a factor of the price of AB. so BC's lot size is X*(bid or ask of AB) then round that number to the nearest minimal lot step.  

make sense?  if the absolute value of the non-margined lot volumes for EURUSD subtracted from the synthetic pair (EURGBP/GBPUSD) is smaller than your account balance, say you are invested 100,000 USD in one and 105,000 from the synthetic with an account balance over 5000 then no matter what happens you can never blow your account until negative swap rates finally eat away at the balance ;)

if you don't modify the BC lotsize as I mentioned earlier than the difference between the EURUSD and synthetic pair in the hedge could be as bad as having a quarter to half lot (or more) of exposure still at risk!

For the equilibrium, first, you have to try to sell, only after, you have to buy... You don't need to make a 100% of equilibrium... 100% of equilibrium is against the oportunities... :)
Good topic... is not a simply matter... You only have to make the currency hedging if you have a pair where the currency direction that you needs is market valued. Many times, the same currency are depreciated in relation of all the other currencies... 2014... Seems that this topic does not make difference for all... They are sleeping... Hedging is the game of the operators and the money suppliers... This is the game beyond the retail traders.

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