Is risk diversification even possible in the forex market? - page 4
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Listen, zanulator, I've come up with a brand new way for you to "zanulate" and build a "market-neutral portfolio" (well, fuck, in your mind)!
I give it to you!
Sliuhay here - here you have 100 quid and you buy EURUSD and USDJPY and sell EURJPY. Obviously losing money on spreads!
Instead, you don't buy or sell at all! And you got 100 quid and you still got 100 quid! And you don't lose on spreads! It's a "market-neutral portfolio" (well, in your mind) !!!!!
So, what do you think, nullah?
Vladimir Suschenko:
I'm afraid to bring up a subject for possible endless discussions, although it doesn't concern me, what is the purpose of trading several instruments at the same time in your case? If you trade several different instruments with the same trading algorithm, it does not lead to diversification of risks.It's simple.
Suppose I trade by the chart and want to hold up to ten symbols simultaneously instead of the 1st one.
In other words, I want profit (theoretically potential) to be 10 times larger within the same unit time.
Is it possible to do this in forex?
Or, are there some mechanisms of understanding correlations (very reliable) between currencies that allow one not to put all eggs into 1 basket?
Yes. Trade on the same entry and exit criteria.
It's simple.
Let us assume I trade by chart and I want to hold up to ten instruments simultaneously instead of one.
In other words, I want my profit (theoretically potential) to be 10 times larger within the same unit time.
Is it possible to do this in forex?
Or, are there some mechanisms of understanding correlations (very reliable) between currencies that allow one not to put all eggs into 1 basket?
Correlation between currencies is there and strong, but it is constantly changing.
Risk diversification is possible if only derivatives - options - are available. Real options, not what they sell in retail forex companies.
Classically, the term market-neutral strata is used by hedge funds to describe the fact that the performance of their strategy does not correlate with an index. Typically, such strategies are implemented through buying one stock in a sector and selling another stock in the sector (L/S portfolio). In forex, the market-neutral strat can be realised through combinations with other instruments: sell oil, buy dollar-ruble, buy OFZ.
Correlation between currencies is there and strong, but it is constantly changing.
Risk diversification is possible if only derivatives - options - are available. Real options, not what they sell in retail forex offices
(in a nutshell).
+ there's a high entry threshold to the market, isn't there?
(in terms of starting deposits)?
P.S. I understand (by hearsay) that people (and not novices) still trade with several instruments simultaneously in forex.
(Even if you look at the results of tournaments).
What can they rely on in this case in terms of diversification?
(I'm just curious.)
Does anyone have any ideas in this regard? )
Risk diversification is possible. And it is in forex. And forex itself is set up in such a way that diversified strategies can only bring profits in the long run.
Another thing is that I have never encountered a trading platform, which would allow competently testing such strategies without some crazy tricks. Still, it is possible.
For example, I mentioned in one of the threads that the dollar has been strengthening against all major currencies for at least 5 years (I haven't looked deeper) (the average dollar point value for all pairs is steadily declining). Smoothly, without jumps. Already this fact can be used for risk-free (relatively risk-free) trading.
And how do options help to diversify?
(Briefly)
+ there is a high entry threshold, isn't there?
(in terms of starting deposits)
http://www.forex.ua/knigi/torgovye-sistemy/metod-graficheskogo-analiza-krestiki-noliki-tomas-dzhons-dorsi/9-torgovlya-optsionami-s-ispolzovaniem-grafikov-krestiki-noliki/optsiony-put-kak-strakhovye-polisy.html
This is not forex, this is intermarket trading
There is no market-neutral strategy in forex, because there is no single index (like the SP500) against which market-neutrality is tested (low correlation).
What about the dollar index?