Thoughts on money management.

[5yrtrader]

Quote from SpellingPolice:

Ok, I see. Thanks for your response. I am aware that the 10yr and 30 yrs minimum fluctuations are different. I was looking at an intraday chart for a couple of weeks and the two charts seemed to be identical. I wasn't aware that they diverge sometimes.

I didn't really know what a spread trade is actually.

Is there such a thing as a perfect hedge though? I'm just wondering if all hedging is imperfect anyway, but helpful nonetheless?

So it wouldn't help to maybe take 2 10yr for every 30 yr ? Especially since they can diverge anyway? I wonder how often or how badly they do diverge.

Thanks again for your help. I think I will read up on spread trading today.

SP

A perfect hedge would be to close out your position, sell your 1 10yr. The point of hedging is to take away risk, a perfect hedge would take away all your risk.

The point of trading is to take on risk in order to make profits, a traded doesn't want to be hedged he wants to be on the right side of moves. You want to control your risk, so you will not lose (THIS IS THE WAY TO SPELL IT NOT LOOSE) too much and still have an opportunity for gains.

Someone that hedges usually has to pay to do so, a trader is the entity that allows the hedge to take place and should be the one getting money for it, especially in the futures market.

5yr

 

[dac8555]

Quote from canyonman00:

I think the best understanding, and acceptance, that you can have here is that you can't avoid accepting a loss. The best defense sometimes is to yield. You're in the beginning of your plan and already you're doubling costs. You're planning that ultimate hedge of the hedge of the hedge that will somehow negate the loss. That's already been done. It's called the next good trade!

i agree with this statement. I would concentrate more on simplicity, compunding the winners and cutting the losers short.

It sounds like mentaly you dont want to accept a loss. COme up with a simple formula(with equities i double the position every 10% gain with a techncal or trailing stop loss)...i can program it and walk away.

but you are thinking and looking for input to spot your errors...so that is great.

Good luck.