Rajvir.. I am watching your trades for same time... are you heading your positions..

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no i trade on cycles.... i have turn dates when markets should turn with respect to price... based on the works of W.D.Gann! I hope you have liked what you have seen :)

I really like.. I dont know nothing about this... I will contact you next week.. Maybe you can send me a link to understand... thanks

Sure there is no link to send you but drop me an in mail and I will give you some more info...

Aurel, perhaps this is a more informative question: What are the differences of perfectly hedging your exposure as compared to just closing the position?

The devil is in the small details in this case.

@Hardy

A position undertaken by an investor that would eliminate the risk of an existing position, or a position that eliminates all market risk from a portfolio. In order to be a perfect hedge, a position would need to have a 100% inverse correlation to the initial position. .. this is the perfect hedge .. definitions ..what if your success rate is 56% .. how much you need / want / must to hedge .. 100% --> 50% ..0r XX% .. devils is there where same one can manipulate the market .. :)

"...In order to be a perfect hedge, a position would need to have a 100% inverse correlation to the initial position." Yes but it doesn't need to be "from" the initial position meaning that I can buy 100 shares of XYZ stock at $103. I can buy a $100 strike put option on this stock as a hedge. Say I pay $2 for this put. The hedge doesn't kick in till the stock sells off to $100 but my $$ hedge doesn't kick in till the stock hits $98. Below $100, every dollar I lose on my stock is offset by every dollar I make on the option. Since I paid $2 for the option, the ride down from $100 to $98 is me recouping the cost of my hedge. Below $98, every dollar I lose is my stock is offset by every dollar I make in the option. So to answer your question. In my option hedge scenario, I kept my original long stock position but spent $2 as a hedge. If the stock rallies, I still retain all my original intended gains less $2. In yours, you miss out on the potential rally by closing out.

If you look at volatility of your product, you can evaluate what is the usual maximal correction and hedge only when a levels are broken. Then when it get overbought/sell, at extreme, you can release. Market always fade levels... and having a hard stop put you into the stop hunters games. If you have no long term plan hedging ain't for you.

@Matthieu= YES :) ..with this approach I full agree (only if market level are broken ) ..when it has to happen

Only metatrader 4 brokers (who don't care about their clients) promote this rather useless feature to the uninformed. Most exchange-traded products and professional trading platforms track the net positions of each product traded. So if you go long 1.5 Million EURUSD and then later go short 1.5 Million EURUSD, then you are 'flat' EURUSD (net 0, or no open positions for EURUSD).

Mt4 is the only major retail platform that would still show 2 separate positions of 1.5 Million EURUSD and short 1.5 Million EURUSD

Mathematically you are ALWAYS worse off this way. You will pay 2 commissions, 2 spreads, and 2 swaps if you hold it overnight. Plus you just took 100% of the risk. Normally your broker (clearing their books properly via a prime broker or exchange) hedges their net positions. Of course your retail broker is more than happy to do this.

@John :) ..we are in the money making business .. I don't care how . . . i am using MC and TS . . .because . . . i cannot use MT4 because of the strategy i am running .. in my life (56y) i have never find a broker /banker / exchange witch is worry. . . if i am losing or if i made a mistake .. i always fighting with the logs executions . . .brokers/exchanges as market manipulators . . .. if i can make money with a pencil and a pieces of paper (like Gann ) maybe i will be happy than I am today .. with the ECB ... i lost >>> and I recover + 5K . . :) thanks god

I hope I had a helping hand in your profit today

@Stefano http://dropshots.com/ispasaurel/date/2015-12-04/01:25:59 .. this is what you mean ?

You would not perfectly hedge unless it was more profitable to hedge. Sometimes the position that is hedged cannot be closed. An oil fracking company cannot close the future streams of oil revenues that it expects to get. It can only hedge against a future drop in prices.

Most positions- in the broadest sense are not hedged. A pension fund does not hedge its portfolio against poor performance over the next 10 years, A Global company does not really hedge 99% of its foreign currency exposure, A major oil company simply cannot hedge the tens of millions of barrels it produces.

You are forgetting the spread. A perfect hedge means your net position beats the spread or even double the spread. ie buying above the resale price, and selling below the purchase price.

This is not hard to do for Market makers, they win on market orders, and point of service strategies. But nobody comes to you for order fills, most orders are routed to market clearing staff.

So, knowing that, how can you as an individual outsider, avoid this markup ?

Easy as pie. Challenge: I will take 5 positions, in and out, involving at least 10 trades, and come up on top by at least 2 spreads for the day. How can this be done ?