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"The only way to trade with Fibonaccis" journal
- Thread starter 1a2b3cppp
- Start date
are you using futures to hedge?
Quote from kenwx23:
1) are entry/exits arbitrary or is there a structured plan dictating every move?
Both kinda. Like I start out with a structured exit plan but depending on what happens I may adjust it as I go.
2) why bother with hedges at all when this strategy is clearly bullish (at least to my understanding)...strikes me that best hedge is already in place by holding cash and waiting for lower prices to average down
Hedging allows holding more SPY which pays more dividends (if the position is still open when dividends are paid).
I mean yeah technically instead of buying x amount of shares of SH I could just sell an equivalent amount of SPY and the current net position at that particular time would be the same, but I prefer to do it this way because psychologically it's easier for me to keep track of everything treating it as two separate positions. And this potentially reduces some wash sales.
Quote from cgstewart92:
I guess I am confused then. If you are going long spy and short it's inverse with the same position sizes, wouldn't the returns on trade always be zero? I understand how hedging works, just not in this case
Only if you opened and closed equivalent positions at the same time.