How to hedge
- Thread starter Mdtbyk
- Start date
Undoubtedly - but that, too, isn't a reason not to use them.
If only for the sake of argument, don't consider yourself "hedged," with a stop loss.
I guess I'll get Back when I have 200k to trade
Yes, it can. Spread it with a broker that recognizes CME margin credits.
The only way to limit losses to 1% on a piker account like that is to buy options.
This will also limit gains. You will be old and gray by the time you double the account , unless you blow it all much younger which is 10000x more likely.
This will also limit gains. You will be old and gray by the time you double the account , unless you blow it all much younger which is 10000x more likely.
Agree with a firm GTC stop limit order for loss mitigation.
In terms of hedging - if you allow a flat price outright position to go against you, and only then you decide to "hedge" the underwater stinker, it only makes matters much much worse. If you're trading outrights, take a clean outright loss.
Dynamic hedging is a complex strategy used by big commercials. The firm is essentially hedging forward production or costs on-the-run, and complex basis models are required.
Having said all that, there are plenty of inter market speculative trading strategies that involve hedging - but they are designed from the start to capture convergence or divergence between highly correlated instruments. Examples might be: ES vs NQ, Dow vs Russell, Kospi vs Nikkei, FTSE vs CAC-40; and lots of arbitrage: for example, a basket of equity shares from a dark pool versus ES futures. These speculative hedged Spread positions are executed as simultaneous as possible - letting naked legs run wild is a major no-no and will get you blown out or fired in short order (as such irresponsibility defeats the strategy design and purpose).
Many high speed intraday automated trading designs are in fact based upon correlated lead-lag or inter market Spread strategies - the possible options available electronically worldwide surely number in the millions.
In terms of hedging - if you allow a flat price outright position to go against you, and only then you decide to "hedge" the underwater stinker, it only makes matters much much worse. If you're trading outrights, take a clean outright loss.
Dynamic hedging is a complex strategy used by big commercials. The firm is essentially hedging forward production or costs on-the-run, and complex basis models are required.
Having said all that, there are plenty of inter market speculative trading strategies that involve hedging - but they are designed from the start to capture convergence or divergence between highly correlated instruments. Examples might be: ES vs NQ, Dow vs Russell, Kospi vs Nikkei, FTSE vs CAC-40; and lots of arbitrage: for example, a basket of equity shares from a dark pool versus ES futures. These speculative hedged Spread positions are executed as simultaneous as possible - letting naked legs run wild is a major no-no and will get you blown out or fired in short order (as such irresponsibility defeats the strategy design and purpose).
Many high speed intraday automated trading designs are in fact based upon correlated lead-lag or inter market Spread strategies - the possible options available electronically worldwide surely number in the millions.
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