Hello:
i have 1 system in FOREX but I NEED buy and sell eurusd for example at same time ,is possible?
thanks
Uh… I may be misunderstanding your question, but why would you want do that? Just do nothing and you’ll get the same result, except without spreads or commissions.
no my friend, my FOREX system win making Hedging of positions.(because open a lot of positions, some times hedging too)
do you trading options?
some kind of options called Straddle or Strangle make money with volatility when you dont know exactly go the price (up or down) but you bet on volatility and win if the price have a great movement to up or down.
The short answer is no.
The long answer can be found in a thread the last time time this was discussed back in April, there is a thread called, "Matthew, is hedging possible on C2?" or something like that and the conversation lasted 4 days. The conclusion was the same. No.
Good luck.
i read the thread, but i still thinking in the possibility of chamge that and allow hedging,thx
Respectfully, maybe you need to re-read the thread. Some of the posts were from Matthew Klein the owner of C2 and I think he was fairly conclusive in his final posts.
What don’t you get about this idea that would make you want to do it? This is equivalent to being flat or holding no position. If your system gives you that signal, you need to re-write it, as this is equivalent to being perfectly offsetting, and it’s already been said you’ll save on commissions by doing it this way.
if you are long the USD you are long the USD
if you are short the USD you are short the USD
if you are long AND short the USD, you are flat. Whether you have 3 or 30 or 300 units both long and short. You are NOT “hedged.” You don’t “need to be hedged.” You are flat. if you disagree, then you need to study the concepts of flat, long and short, and ask yourself why you don’t understand them…
If you own two DIFFERENT but similar instruments, THEN you might be hedged,
For example, someone owns 9 or 10 different stocks for the longterm. They might short the S&P futures for a while to hedge against perceived downside risks. But if they short all their exact stocks, then they really own nothing and might as well just sell them.
Southwest hedges their future fuel purchases, by locking in the price using the futures market. But they are just ensuring they know what the cost of fuel will be. THIS is hedging.
If you own two DIFFERENT but similar instruments, THEN you might be hedged,
For example, someone owns 9 or 10 different stocks for the longterm. They might short the S&P futures for a while to hedge against perceived downside risks. But if they short all their exact stocks, then they really own nothing and might as well just sell them.
Southwest hedges their future fuel purchases, by locking in the price using the futures market. But they are just ensuring they know what the cost of fuel will be. THIS is hedging.
look index, i can give 1 idea ,maybe you dont know this concept , is very simple but who know…
1 market trending up for example
you can go long EURUSD at 1,45 and 1 month later you can go short EURUSD at 1,55 and move stoploss (long position) to 1,50 .
This trading is very usuful is you dont be sure of short position and you take this position without risk (without stoploss), because you are hedge with the other long position.
you can tellme , why you dont close the long position and go short only…
the reason is because you want be short with the minimum risk and take the money with the lower risk with long position open , because you think the long trendy go on.
sorry by my poor english
you understand this concept?
"you can go long EURUSD at 1,45 and 1 month later you can go short EURUSD at 1,55"
Once you do that, you are FLAT.
I guess you can think of yourself as “hedged,” because EURUSD can go to infinity or it can go to zero, and you won’t make a dollar, because you are FLAT.
"do you trading options?
some kind of options called Straddle or Strangle make money with volatility when you dont know exactly go the price (up or down) but you bet on volatility and win if the price have a great movement to up or down. "
Do you trade options?
Advanced option strategies such as straddles, strangles, etc make use of different strike prices and/or different expiration months. Which has no parallel in the FX world.
As you were previously told, going long and short the SAME forex pair is equivalent to be flat.
Wanting to be long and short the same pair sounds like some sort of psychological crutch (e.g. not wanting to close out a long-term position while you trade in the opposite direction).
Definitions:
Flat = Same Investment instrument with opposing positions
Flat Example: Buy EUR/USD and Sell EUR/USD
Hedged = Different Investment instruments with opposing correlation
Hedge Example: Buy EUR/USD and Buy USD/CHF (typically their price action opposes each other)
Each of these "Definitions" can be used in strategies depending on what you are trying to do.
I believe what is being said is as long as you are closing these "FLAT" positions at different times, it would be possible to pick up pips but it would make more sense to just pick a particular position and either go long or short. The point is when you are two different directions in the same instrument you must pay swap and spread on each trade when in a single position this would be less costly and you could still hold the same basic strategy.
I think I understand what the BraveHeart FX guy is trying to tell us in his bad English.
To re-state his example, he wants to go long at 1.45. Then once the price reaches 1.55, he wants to raise a stop-loss on the long to 1.50 and go short at 1.55 (on which he doesn’t want to set a stop-loss).
He wants to be able to be simultaneously long and short because it will allow him to maintain a short position which pays a profit of precisely 0.10 for all prices from 1.50 to infinity as well as profit on all prices from 1.50 down to 0 (the lower the price the higher the profit).
What he is trying to do is similar to replication of being long a put.
The ultimate reason why he needs both positions to be active is because if he closed the long and then kept only the short, he would not only have to set a stop-loss on the short but in order for his position to maintain the payoff described above at all times, he’d have to watch the market and re-enter the short each time the price stops his short out at 1.50. And each time he gets stopped and then re-establishes the short to stay in the market, he’d have to incur the spread.
However, he’s forgetting that equally, each time price hits 1.50, if he uses his “hedging” technique, his long position (in place to serve as “protection” of the short’s losses) gets stopped out (at the raised 1.50 stop-loss). Even though at profit, from then on, the “protection” is gone. So all he has achieved is shifting the position management labor away from the short to the long. Because now instead of having to re-establish the short, he has to re-establish the long (and incur the spread each time).
This so-called “hedging” (wrong name) is nothing more but an attempt of retail FX brokers to make the customer gain a sense of elitism and feel better about themselves, thinking they are more sophisticated and doing some way more complicated things than everybody else.
The bottom line is, if you wanted to replicate the payoff of an option, you do NOT need simultaneous long and short positions. You can still do it by simple spot trading but you’re better off trading the actual options because otherwise you’ll end up paying loads of commissions to your broker on the spot fx bid/ask spread.
Brokers like Oanda have already brought fx option trading to the retail market via their BoxOption product, which I think is part of every customer account by default.
Trendy Bendy
Good analysis Trendy, I would be interested to see the effect of interest carry cost in a typical ‘flat hedged’ scenario.
The retail brokers tout the “hedging” feature as useful but as I pointed out, it’s not. You bring up a very good point, which is how I would like to conclude my contributions on this topic.
The broker is interested in customers opening simultaneous positions long and short because it brings them more spread revenue. Additionally, it allows them to collect even more carry interest (they double up on the revenue from the carry interest rate spread)!
Example carry interest rates from Oanda:
AUD: you receive 6.9500% on longs, you pay 7.3250% for shorts
JPY: you receive 0.2500% on longs, you pay 0.8000% for shorts
If I went long AUD/JPY (receive interest on long AUD, pay interest on short JPY) and short AUD/JPY (receive interest on long JPY, pay interest on short AUD), I would receive a net of 6.95%-0.8%=6.15% for the long and would pay a net of 0.25%-7.325%=-7.075% for the short, which nets out to a cost of 0.925% per year for just being flat…
Assuming you can perform your strategy without incurring additional execution risk or increased bid/ask spread cost, but without using “hedging”, would you be willing to give up 1% of your return to the broker just on carry interest alone? I wouldn’t!
