Is it legal to hedge in another account?
- Thread starter clambill
- Start date
FredBloggs
Guest
fair point but whats wrong with a newbie having a long term view long, but a short term view short?
eg in the next 2 years i think jpy-usd is a good carry trade(????), but due to circumstances, in the next few weeks, i want to take advantage of a decline in jpy-usd.
some would simply trim the long position, but if you look at the cross ( any position) in terms of time frame - having different positions (in different accounts) then you become more objective. you dont get married to your position.
when you notice you want to go heavily long your short term position, you start to understand that maybe yo should think again about the long term short position. or should you? know the levels.
portfolio/asset class diversification is big in academia, but as dalton points out, and mamis (eludes), should we really be thinking of time frame diversification?
eg in the next 2 years i think jpy-usd is a good carry trade(????), but due to circumstances, in the next few weeks, i want to take advantage of a decline in jpy-usd.
some would simply trim the long position, but if you look at the cross ( any position) in terms of time frame - having different positions (in different accounts) then you become more objective. you dont get married to your position.
when you notice you want to go heavily long your short term position, you start to understand that maybe yo should think again about the long term short position. or should you? know the levels.
portfolio/asset class diversification is big in academia, but as dalton points out, and mamis (eludes), should we really be thinking of time frame diversification?
In the end your account balance nets everything out. I've found it is easier to manage strategies and maintain perspective using multiple accounts.
It is much easier to adjust for a bad fill or mis execution when the positions are segregated.
I don't understand why this is such a contested debate. Possibly because futures and forex got tangled and each have different rules.
NFA rules for Forex disallow net margining / hedging of accounts. You can go long and short in two seperate accounts provided they are individually margined. FSA rules allow net margining / hedging of forex accounts.
NFA/CFTC rules for currency futures allow for net margining / hedging of accounts.
Clearly there are strategies that can not be executed using just one account.
It is much easier to adjust for a bad fill or mis execution when the positions are segregated.
I don't understand why this is such a contested debate. Possibly because futures and forex got tangled and each have different rules.
NFA rules for Forex disallow net margining / hedging of accounts. You can go long and short in two seperate accounts provided they are individually margined. FSA rules allow net margining / hedging of forex accounts.
NFA/CFTC rules for currency futures allow for net margining / hedging of accounts.
Clearly there are strategies that can not be executed using just one account.
FredBloggs
Guest
yep.
we should never lose sight of that.
relative returns are a poor benchmark despite the salesmans patter in a trending market.
in my view, absolute return can never be beat/disputed no matter what the conditions are.
i do have problems in geneva/zurich convincing them of this though! surprising as i generally admire the swiss for independent thought.
Anybody who talks about hedging one currency pair against another is a total fucking halfwit. The only way to hedge in the CCY markets is to fix a price - TRANSFER THE RISK - e.g. fixing USDJPY in a 3m Dollar vs. 3m Yen rate position. If you are going to Mexico on your hols, you can HEDGE your USD$ spending money with a USD/MXN position you are TRANSFERRING YOUR CURRENCY EXPOSURE. Whenever people talk about hedging they are usually using the term misleadingly - for example, you might describe "hedging" a financial ETF with SPY, but what you are really doing is taking a relative value (Beta) position. Fact of the matter is that most people get it.
RE: multiple strategies - of course it is possible to be bullish long term but bearish short term - but having seperate portfolio's is retarded. Just job in and out of your long term position and leave yourslef with the same exposure end of day. Easy, huh? If you can't manage that in excel, then...
RE: multiple strategies - of course it is possible to be bullish long term but bearish short term - but having seperate portfolio's is retarded. Just job in and out of your long term position and leave yourslef with the same exposure end of day. Easy, huh? If you can't manage that in excel, then...
For the record, you can easily be Long and Short the same e-mini contract, in the same account, using different strategies.
No problem.
P.S. Hope too many people don't get upset by that little factoid, LOL.
In reality, at one point when testing various methods in two different demo accounts, I did have some strategies that conflicted with each other. One method was giving me a signal to go long and the other a signal to go short just a while later (or vice versa).
In the end, I finally figured out which methods I wanted to focus on the most and stopped doing opposing trades. Although I can still try out different methods in the other demo account I'm using.
After months of work, I finally came up with a method that can make money if I'm only right 40% of the time. I'm not ready to reveal it yet although I plan to start trading real money again very soon. But, as usual, with every method I've looked at, it works only in some situations. Although I've noticed that I can change some rules to trade a variation of the method in other situations. The trick though would be to use my intuition in some situations. I guess that's what struck me the most with all the work I did. I noticed if you could alternate between various strategies that would fit the situation, your trading results would be way better. It would be just a matter of developing that trading intuition.
In the end, I finally figured out which methods I wanted to focus on the most and stopped doing opposing trades. Although I can still try out different methods in the other demo account I'm using.
After months of work, I finally came up with a method that can make money if I'm only right 40% of the time. I'm not ready to reveal it yet although I plan to start trading real money again very soon. But, as usual, with every method I've looked at, it works only in some situations. Although I've noticed that I can change some rules to trade a variation of the method in other situations. The trick though would be to use my intuition in some situations. I guess that's what struck me the most with all the work I did. I noticed if you could alternate between various strategies that would fit the situation, your trading results would be way better. It would be just a matter of developing that trading intuition.
again, how is this mathematically different from just adjusting your position size? Seriously?
You can play with possibilities all day, but in the end, it is still smoke and mirrors.
It's an illusion, all you're doing is locking in loss, paying additional spread, and having valuable trading capital tied up for absolutely no benefit. Eventually you have to take a view on direction, close the 'hedge', and be exposed to risk.
This type of 'hedging' is for inexperienced novices who don't have a viable trading plan and can't accept being wrong, it serves no purpose.