Forex hedging journal

[TrueStory]

Quote from oraclewizard77:

The main reason to hedge a trade is that you want some protection if you are wrong assuming you don't already use a stop.

For example, lets say you want to go long GBP/USD but if the trade goes against you, it will activate your EUR/USD short position.

This way instead of having a hard stop, lets assume the $ strengthens in a sharp move that you were unprepared for, you lose less money than if you just went long GBP/USD.

However, the problem that I have seen is that the GBP moves a greater distance than the EUR/USD, so shorting the EUR/USD did not provide much if any benefit vs having a hard or mental stop.

1) It is not hedging.
2) If you want some protection, take a smaller position rather than paying extra commission.
3) There are 2 currencies as part of every pair. There are days when GBP/USD is up 1% and EUR/USD is down.

 

[TrueStory]

Not trying to be a prick or rain on anyone's parade, but this thread is a waste of time. Because there are 2 currencies in every pair, there is no such thing as hedging using different pairs.

Hedge, at least partly:

Short YM
Long ES

Not a hedge:

Short EUR/USD
Long GBP/USD

I know we've been through it over and over, but any differences in results of this "hedge" vs. EUR/GBP are strictly position size. There is no other way. These currencies HAVE TO MOVE together in that regard. Otherwise an arbitrage opportunity would exist and you surely know that can't happen at the retail level.