A Hedging Strategy at Nobullshit Network Forum

TickerTapeTrader · 04-04-2007, 07:41 PM

EUR/USD - The Best Pair to Apply a Hedging Strategy This Week
Wednesday, 04 April 2007 15:50:01 GMT
(Original Article from DailyFX with link at bottom of Article)
*Note from Mod, Be nice and quote the website source you took this from

Written by Antonio Sousa, Currency Analyst

§ Entry Zone: Go both long and short at the market if the price is at any level within the 1.3300-1.3385 range

§ Protective Stop: Long stop some pips below 1.3245 and short Stop slightly above 1.3415

§ Profit Target: Long Target at 1.3385 and Short Target at 1.3300

§ Profit Potential: 85 pips (excluding transaction costs and slippage)

For Currency Pairs that are trading sideways, HEDGING is the best strategy to implement. This involves putting a buy and sell order in the same currency pair at the same time – in one account. Every day, we rank the major currency pairs by suitability for hedging.

Rules for Following the Hedging Radar

1) Entry Zone -> Go both long and short at the market if the currency is at any level within the Hedging Zone.

2) Profit Taking ->Target for the long order is the top of the entry zone, for the short order is the bottom of the entry zone.

3) Stop Levels are Key Support and Resistance Points -> Place the actual stops a few pips above the higher level and a few pips below the lower level. The break of these levels signals that the ranges have been broken and the hedging strategy should no longer be implemented.

4) The lower the Average True Range, the Less Risky the Currency is for Hedging.

EUR/USD - The Best Pair to Apply a Hedging Strategy This Week

TickerTapeTrader · 04-06-2007, 12:03 PM

When you follow well publicised analytics like the above, well, if everyone has stops around the areas suggested you'd be pretty well sure someone will try and trigger them which happened on the upside.

TickerTapeTrader · 04-10-2007, 06:46 PM

It takes a while to figure out how to trade a market regardless of direction and make profit. I engaged in a hedging stratedgy with EUR/USD since its locked in a daily range from 1.3300 to 1.3450. On the upside I locked in (can't recall exactly) over 120 pips. On the downside I also locked in some profits following NFP release (can't recall exactly) prior to today's Euro 2 year highs. I didn't exactly trade as recommended above by Antonio partly because it got so widely publicised it was prone to triggering stops. The trick is now to unwrap this hedge strategy and trade with a more directional bias. There are no hard and fast rules to trading everything is dynamic.

jazzz · 07-09-2008, 01:05 PM

Hi all....

I am providing my hedge strategy for options. I hope you would find it interesting.

The primary risk in both stock and futures positions is what is option traders call "delta" risk, the loss when the price of the stock or future moves in the wrong direction. Long positions have a positive delta, while short positions have a negative delta.

That risk can be hedged by taking an options position with the opposite delta. Deltas for options are

positive for long calls
negative for long puts
negative for short calls
positive for short puts

So, if you have a long stock (or futures) position you have a positive delta. To hedge that risk you can take an options position with a negative delta by buying puts and/or writing (shorting) calls.

Similarly, if you have a short stock (or futures) position you have a negative delta. To hedge that risk you can take an options position with a positive delta by buying calls and/or writing (shorting) puts.

Looking fwd for you comments.
Cheers

jazzz · 08-01-2008, 11:32 AM

No reply..... guys i am waiting for your response????

JoseLeon · 08-01-2008, 02:44 PM

I think there are few people trading futures here jazzz

jazzz · 08-08-2008, 06:05 AM

Yea right....

But futures are quite exciting and a very good source of high earnings with reduced risk.

I love it.