Creation of constructive and profitable hedging strategy

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Creation of constructive and profitable hedging strategy

Postby clickfine » Mon Feb 06, 2012 5:30 am

I have been trading other strategies on forex, and rarely used hedging but one thing as we all must have noticed that you can increase your profits at a speedy pace if hedging, but the problem is the remaining trade/s which are rolling in negative balance :)
I am looking for a method and i request all of you to please leave your constructive ideas to make some strategy on hedging.

I guess if we know that overall trend of the day or week is bullish for sure, than we can buy that currency and on every retracment we can sell, because we are sure that the currency will go bullish in the end, so we can quickly sell and book profit on retracements while the overall trade will go bullish.

It's just an idea, what i want to know is it possible by this way we can create some hedging system, which will not wipe out our account.
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Re: Creation of constructive and profitable hedging strategy

Postby danialshazly » Tue May 07, 2013 1:10 pm

Hi All,

I used hedging as a last resort especially when i am trading on support and resistance on the daily chart. I have used it on an hourly chart before but i need to be glued to the screen until i can see a better opportunity to turn one trade in profit and waiting for the losing trade to reduce further by taking on another trade that is the same as the losing trade. At times, i get -20 pips lost on the first loss trade (Sell) and then with a 3rd trade on Sell after closing the 2nd trade (Buy), in essence the trend went bearish with 2 sells trades. With first sell trade at -20 pips and the 3rd trade sell now at +20 pips, i have broke even and also enjoy the profit of 40 pips on a buy trade. On this setup, it took me about 6 hours to see this, litrally pinning me to the screen to find a strategic opportunity to reduce that lost

If the trade did'nt go my way, then i needed to reopen a new buy trade but this time doubling the buy lots from 1 lot to 2 lots. This may occur if resistance has been borken. So i would do a potential calculation to see the next resistance. For me to see when i go in, i would use the 5 min chart to enter a trade. But i would use 1 hour as a key for my trades. Trading in the middle between support and resistance is tricky. You will need to start hedging straight away on that. Now i am on the daily trades and it just makes it easier and more profitable to trade. I normally trade the EUR/USD, EUR/JPY and ANZ/NZD pairs on daily chart
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