Elite Trader's Gambler's Anonymous ETGA

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So if I went short the EUR/CHF could I balance out? How many units would I use? 14,875?

Another question: Should I always endeavor to get exposures as close to zero as possible through a combination of pairs?

Michael B.


Quote from futures_shark:

That looks like you are long both EUR/USD & USD/CHF.

Being long both pairs is the same as being long EUR/CHF
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Fridays closes

1.2872 (EUR/USD) * 1.1951 (USD/CHF) = 1.5384 (EUR/CHF)

Right now it seems your are long EUR/USD & USD/CHF. That is the only way to get the balances you show.

Short CHF 22,043.92
Long EUR 14,875
Short USD 1,342.78

if you sell 14875 EUR/CHF @ 1.5384 you would then have:

LONG CHF 839.78
EUR 0
Short USD 1,342.78

You could trade (buy) USD/CHF to zero out the CHF position but then you would have realized the current (unrealized) loss in the account .
 
The three pairs there represent a "perfect" hedge but in so doing they also rule out any possibility of profit. Because in being perfectly hedged the gains in one part exactly offset losses in the others.

So your left losing the bid-ask spread on both the trades & the interest rates.
 
Futures Shark,

Thank you for the info....

A perfect hedge is needed, as this system profits a different way. I do not believe you have read all of this thread and the opening post of this thread.

System#1 profits from retraces and chops within the pool.

What needs to be done, is when I can get to positive parity it is to go flat, and then to only enter long and short in the same pair. I will call one account "hedge long" and another account "hedge short" (which I have already set up waiting for this change-over)

This one month of forward testing has proven to be quite fruitful..as system #1 is so hard to visualize.

Michael B.
 
Quote from ElectricSavant:

If a price falls in a straight line such as the EUR/USD and you have it hedged with the USD/CHF then how long could you last before a margin call if you sized your trade to withstand a 10Y historical range? For you Forex traders as you know when the EUR/USD goes up the USD/CHF goes down. Say you were long in both pairs at the same time, and when one side went up the other side went down. Now you would take profit in equal increments and/or add to in equal increments on each side. You simply replace the trades that took profit. You line up your limit orders to buy on each side of the teeter-totter. When one side is going up and taking its profits the other side is going down and accumulating entries.

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I skimmed through the previous post and voted in the poll. Then after reading the above post from you I skimmed through the rest of this post to make sure no one else had pointed out the error to you before I made any comments.

I believe I see what your trying to do and I think there are some flaws in your thinking.

If you trade the same contract long in one account and short in the other, why would you ever think that you may end up with profits? the profits in one account will just equal the losses in the other. It doesn't matter if a loss is realized or unrealized, it's still a loss and your account value is down.

All the gambling vs. trading talk sounds as though you're looking for a no-risk trading plan. You can minimize risk but you can NEVER remove it. Without risk there is no reward.

If I'm missing your point then I apologize in advance. I'm not trying to bust your balls, I just wanted to point out an error that I noticed.
 
you are missing the point

the system never closes losing positions

the idea is that on every retrace the system then closes with profits

basically the idea is that the currency pairs tend to go nowhere more than trend, so eventually they retrace and then you take profits no matter which direction its going
 
futures shark,

example:

Price series: 1, 2, 1, 3, 5, 1, 2

Day one
Day two +1
Day three -1
Day four +2
Day five +2
Day six -4
Day seven +1


from the beginnning of the series to the end +1

The flow in between +11

Flow> capacity 11:1


Look at it like this...The price can go up and the price can go down. If you can capture that and just realize it, then the beginning and the end is just unrealized. As the pool grows the ability to make all the profit from flow strengthens and you are gambling less and less and less

I want you to see this futures shark. I await your questions. This is important and I believe it can change the way you look at the market.

Thank you for the open discussion in the understanding of some of the mechanics of Forex Pairs. I hope it was helpful to ALL. Folks, please hold your PM's, lets discuss this openly. There are some traders who grasp some things and at the same time still have questions. We need to help one another and the most effective way is on this Journal.

Michael B.
 
futures-shark is right in one respect if the currency pair just keeps on going in the one direction. But the act of going in the same direction (long only) in this case on usd/chf and eur/usd gives you the anti-correlated pair that will swing between two extremes (at least for a while) and enable the skimming that makes this work IMO. As electricsavant calls it the flow (and on his recent figures of 11:1) this seems feasible. Again the long moves are everyone's bugbear and I see a need for a hedge. One thought, I feel somewhat akin to what sympatico said (or more correctly hinted at) in a previous post, is to mark your boundaries and set positions between the top and bottom (long term pivots??) but to put on a trade in the direction of the current movement taking profits at x pips until the reversal, when your opposite trend trades in the grid will start to profit and you are left one trade in the last direction, but this is then marking naturally the boundary of the grid for that period. Just a thought and something I'll trial next week.
 
adowland,

Great! your thinking outside of the box. Will you please share, as you test? You are saving at least a month of forward testing in this project by doing it concurrently...

I have noticed that pivots capture the "Natural Flow" of the market, which is on the surface difficult to understand. But averaging the H/L/C of each bar "sizes" the increment.

Can you imagine the power of diluting each pairs trade ticket and trading 15 pairs! At first this seemed to me to be overtrading and wasting the spread...but if you can capture velocitity and increase it each 24 hour period, wow!

Michael B.


Quote from adowland:

futures-shark is right in one respect if the currency pair just keeps on going in the one direction. But the act of going in the same direction (long only) in this case on usd/chf and eur/usd gives you the anti-correlated pair that will swing between two extremes (at least for a while) and enable the skimming that makes this work IMO. As electricsavant calls it the flow (and on his recent figures of 11:1) this seems feasible. Again the long moves are everyone's bugbear and I see a need for a hedge. One thought, I feel somewhat akin to what sympatico said (or more correctly hinted at) in a previous post, is to mark your boundaries and set positions between the top and bottom (long term pivots??) but to put on a trade in the direction of the current movement taking profits at x pips until the reversal, when your opposite trend trades in the grid will start to profit and you are left one trade in the last direction, but this is then marking naturally the boundary of the grid for that period. Just a thought and something I'll trial next week.
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