Whats the point of hedging?
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Thread: Whats the point of hedging?

  1. #1
    I've been reading numerous posts and article on this topic recently attempting to understand the true benefits of hedging, but I still do not get it and watch it as a useless exercise.

    Here what I have gathered and known so far:

    1) Hedging reduces risk.
    Average illuion given: You think EUR/USD will go up, so you long 50 Lots, Short 30 Lots to hedge position and if your wrong you will have lost less.

    ****My comprehension - Why not go Long 20 Lots because the internet position is 20, yes you shed less, but you gain significantly less if it goes up, why not take a smaller position to begin with?

    2) Hedging with two inversly correlated pairs
    Example: Long EUR/USD Long USD/CHF

    ****But isn't this similar to simply trading EUR/CHF?

    3) Additional examples I have heard are

    Let us say you have a very long trade that is up 50 pips. . .the weekend is coming and you're going to be out of town but you'd rather not give up the position. That means that you may take a brief position equal to your long position and conserve the 50 pips.

    Let us say when you come back the market has resumed the uptrend and you think that your long position is nevertheless valid. . .so you shed the brief position and keep the long position. This might be useful because normally when you take a hedge, you do not need to supply the additional margin. . .meaning you do not really risk anything but the spread to preserve a position.

    ***Isn't this exactly the same as just shutting the position? Why not come back and restart the trend with a new commerce? Its not like your making any cash in the meantime Your hedging

    My Comprehension of hedging is opening and closing transactions such that you reduce risk because in reality your just reducing your position, hence also limiting profit

  2. #2
    Quote Originally Posted by ;
    if ANYTHING is your gravity in this joint it's the stuff states. He is not an almighty deity to be worshipped and followed without consideration... but so much the trend is that something like 9 days out of 10 what states is on the money and factual.

    Then why the hell do you bother trying to refute what he's said?
    The characteristic of a great idea is that after you do your best to disagree with this, you reluctantly find that you actually agree. My advice is to do your best to disagree with everything that David says. The end result is that you are likely to get a lot of ideas that are great. That is certainly what I do.

    And welcome to the Hanover fan club.

  3. #3
    Quote Originally Posted by ;
    The characteristic of a good thought is that after you do your very best to disagree with this, you find that you actually agree. My advice is to do your very best to disagree with everything that David says. The final result is that you will end up with a lot of good ideas. That is what I do.

    And Welcome to the Hanover fan club.
    why disagree with reality? If I needed to disagree with reality I would join a church.... Any church.

    And just how can you deduce that I'm at the fan club? As much as I'm worried he's just a nice variant of me, and I'm my own biggest fan

  4. #4
    Quote Originally Posted by ;
    why disagree with reality? If I needed to disagree with reality I'd combine a church.... Any church.

    And how do you deduce that I am at the fan club? As much as I am concerned he is only a nice version of me, and I am my own biggest fan
    Ideas are never reality. And if I were you I would begin using caps and exclamation marks. This is perhaps the most elementary mistake any thinker can make.

  5. #5
    Quote Originally Posted by ;
    Ideas are not reality. And if I were you I would start using exclamation marks and caps. This is maybe.
    Long ago I decided I did not care enough to bother with specific punctuation online. It merely serves to impede my typing. Notice how I still used the' in did not? That's because firefox underlines it as a typo if I don't (lt;-- another example) properly punctuate the regeneration.

    And if you're going to get philosophical afterward we are going to end-up back where we began where it becomes personal standpoint that dictates what is and what isn't, and so an individual may stake claim to any fact they enjoy despite it conflicting with every single other person in existence.

  6. #6
    Seriously nubs, my proposal to try to disagree with David (and everyone else) is a very sensible suggestion. This is not philosophy but recommended course of action. Furthermore, it's one which you've taken to heart.

    But maybe you are thrown off by my usage of the word disagree? So that it reads disagree 11, Maybe I should add an adverb?

  7. #7
    Quote Originally Posted by ;
    Seriously nubs, my proposal to try and disagree with David (and everybody else) is a really practical suggestion. This is not doctrine but recommended course of action. What is more, it is one that you have taken to heart.

    But perhaps you are thrown away by my use of this word disagree? So that it reads disagree 11, Maybe I need to put in an adverb?
    But disagree about what exactly? You give me? Should I disagree with him whether he says that 1 1 = 2? Should disagree with him if he says that water is wet? What do you propose that I disagree with him around?

    What you are suggesting to me, or asking me personally, would be to make-up something to be disagreeable with about. There is no debate to be needed.

    We have whined about distinct windows OS's previously (since david was incorrect.... YES YOU WERE HANOVER SO SHHH!) . But now at that point in time what fact or truth do you want me to disagree with?

    What you are saying not only doesn't make sense it is actually missing the point of just about everything that has been said at one point or another. There are subjective matters, and objective things. Objective things are correct or erroneous. So what reality should I now CHOOSE to disagree with, and what exactly is the advantage to me or anyone else for disagreeing with everything is factual?

    Your next article may suggest something along the lines of a debate furthering new ideas and whatever.... no! You supply the new ideas if you have them, but do not expect me to disagree with somebody for the sake of it without a stake on some new thought or perspective.

    Generally all bases have been covered on certain topics, so introduce something new to contemplate and discuss and argue over, or do not.

    if you continue to reduce complexity to a core idea or concept that you start to reveal elegance. It'll withstand scrutiny through it is purity of truth.

  8. #8
    Quote Originally Posted by ;
    but disagree about what exactly? You provide me an example of something I should disagree with david about? Should I disagree with him whether he states that 1 1 = 2? Should disagree with him if he states that water is wet? What should you propose that I disagree with him around?

    What you are suggesting to me, or asking me personally, would be to make-up some thing to be unpleasant with about. Yet, there's absolutely no disagreement to be needed.

    We have whined about distinct windows OS's previously (since david was wrong.... YES YOU WERE HANOVER SO SHHH!) . But...
    Cheers Nubs,

    My advice is on the market, I get it done , it works nicely for me and my bet is I want to create money on FX. There's so much sound out there the only solution would be to treat everything sceptically. A vital mindset has worked wonders at figuring things out and when I get specific things right I get paid for it.


    But further back and forth on this issue...

    To quote a particular Don't expect me to disagree with someone for the sake of it without a bet.

  9. #9
    Quote Originally Posted by ;
    Cheers Nubs,

    My information is out there, I get it done , it works nicely for me and my own stake is I wish to create money on Foreign Exchange. There is so much noise out there the only solution is to treat everything sceptically. A critical mindset has worked wonders at figuring out things and once I get certain things right I get paid for it.


    But further back and forth on this problem...

    To quote a certain Don't expect me to disagree with someone for the sake of it with no stake.
    Yeah but at any point you need to come to your own decisions and reduce unknowns into knowns along with your critical thinking. Unless something occurs to cause reconsideration then what you know is what you know.

    Some would come here and assert that hedging is this and hedging is that.... Hoping to revolutionize our puny brains with spectacular new ideas. But we are years and years ahead of the and understand that the end of the story prior to the newb gets there. At the meantime that the newb sings and es and makes a stooge of himself while we await the inevitable. Hell, even the OP was compared to some of those people. There is nothing new to consider here, therefore it's the exact same old story. We know how it ends, while others continue to be ching-up. Some never will get there.

    We've utilized our critical thinking and have distilled the cream from the crap and have view that sees each of the angles discovered up to now.

    Don't quote. That man is a dumbshit. Just ask about!

  10. #10
    Quote Originally Posted by ;
    The characteristic of a good idea is that after you do your very best to disagree with it, you find that you in fact agree.
    Full circle

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