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ForEx (pg. 2)
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| Sushipunk |
I don't know if I can say for sure. It's been such a long time since I've had either of them. Easily a decade.
Edit: Not a Guinness fan at all :o |
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| Taipan |
| Easy - Buy Chinese RMB. Sell Brazilian Real. |
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| r5a |
babypips.com
get it in son
eventually down the line maybe ill get into forex on a serious note. could make some bank |
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| Comrade Stalin |
The perfect FOREX hedge. Each trade should have equal buying power reductions.
BUY USD/JPY
SELL EUR/JPY
BUY EUR/USD
The first one buys dollars and sells yen. The second buy yen and sells euros. The third one buys euros and sells dollars. So every currency bought is offset by another position in which that currency is sold. Strangely, the only way I haven't lost trading FOREX. It's very hard to do and because of the leverage, very risky. I am leveraged 100x meaning for every $1,000 I put down on a trade, I control $100,000 of currency. I double my money on just a 1% move. But I am completely wiped out by a -1% move. Very risky stuff. The perfect hedge keeps you basically at break even the whole time. Better than losing! :p |
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| Taipan |
| quote: | Originally posted by Comrade Stalin
The perfect FOREX hedge. Each trade should have equal buying power reductions.
BUY USD/JPY
SELL EUR/JPY
BUY EUR/USD
The first one buys dollars and sells yen. The second buy yen and sells euros. The third one buys euros and sells dollars. So every currency bought is offset by another position in which that currency is sold. Strangely, the only way I haven't lost trading FOREX. It's very hard to do and because of the leverage, very risky. I am leveraged 100x meaning for every $1,000 I put down on a trade, I control $100,000 of currency. I double my money on just a 1% move. But I am completely wiped out by a -1% move. Very risky stuff. The perfect hedge keeps you basically at break even the whole time. Better than losing! :p |
That's insane! How long have you managed to keep this up? |
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| Lews |
| I play forex with Bitcoins. |
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| Comrade Stalin |
| quote: | Originally posted by Taipan
That's insane! How long have you managed to keep this up? |
I just leave it alone. Let it run by itself. It's theoretically perfectly hedged. Try it out. Make sure the buying power that each trade takes away from you is as equal as you can possibly make it. That way, each position offsets the other as much as possible. It's stuff like this that gives "hedge" funds their name. Like buying McDonalds and betting against Burger King. If McDonalds declines then your bet against Burger King should help offset this loss because these two companies are very closely correlated so if one is declining, they probably both are. Basically, you take both sides of the trade, so you limit risk.
I use the thinkorswim platform to practice FOREX. Best free desktop platform around. Nothing beats it. Try it out. |
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| Nrg2Nfinit |
nothing beats practicing and not using real money. you can't lose and have infinite mulligans :p
i personally think thats a silly hedge strategy.
why don't you just buy mcdonalds and keep on selling covered calls on it.
if mcdonalds goes down, buy back the calls to close; rinse and repeat.
No need to waste money (margin) shorting bk. Or you could simply set up a collar strategy and risk less money on mcdonalds. |
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| fbgdavidson |
| quote: | Originally posted by Comrade Stalin
The perfect FOREX hedge. Each trade should have equal buying power reductions.
BUY USD/JPY
SELL EUR/JPY
BUY EUR/USD
The first one buys dollars and sells yen. The second buy yen and sells euros. The third one buys euros and sells dollars. So every currency bought is offset by another position in which that currency is sold. Strangely, the only way I haven't lost trading FOREX. It's very hard to do and because of the leverage, very risky. I am leveraged 100x meaning for every $1,000 I put down on a trade, I control $100,000 of currency. I double my money on just a 1% move. But I am completely wiped out by a -1% move. Very risky stuff. The perfect hedge keeps you basically at break even the whole time. Better than losing! :p |
Leveraged 100x. Christ...and I thought I was being a little risque with my 3x leveraged ETFs :wtf: |
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| Comrade Stalin |
| quote: | Originally posted by fbgdavidson
Leveraged 100x. Christ...and I thought I was being a little risque with my 3x leveraged ETFs :wtf: |
In certain markets, high leverage is the norm. High leverage is necessary in the FOREX because currencies usually make very small movements. We're talking about a change in the exchange rate of say $0.0125 for the day. Who can make money on a one penny move with 1x leverage? |
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| FuzzQi |
| quote: | Originally posted by Sushipunk
I'm serious, we have a beer brewed here in Brisbane called XXXX (pronounced FourEx). Nasty, nasty . I think I prefer Bud over it :wtf: |
amen to this
and to think they almost got destroyed in the floods :whip: |
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| Taipan |
| quote: | Originally posted by Comrade Stalin
I just leave it alone. Let it run by itself. It's theoretically perfectly hedged. Try it out. Make sure the buying power that each trade takes away from you is as equal as you can possibly make it. That way, each position offsets the other as much as possible. It's stuff like this that gives "hedge" funds their name. Like buying McDonalds and betting against Burger King. If McDonalds declines then your bet against Burger King should help offset this loss because these two companies are very closely correlated so if one is declining, they probably both are. Basically, you take both sides of the trade, so you limit risk.
I use the thinkorswim platform to practice FOREX. Best free desktop platform around. Nothing beats it. Try it out. |
1) How do you know it's perfectly hedged? Not trying to challenge you, I was just wondering if you rely on your own judgement to come to this conclusion or is it common knowledge? I can't imagine anything as volatile as currencies can be perfect and when you are dealing with 100x leverage, the slightest surprise can be disastrous.
2) Sure if you buy McDonalds and sell Burger King it could go as you said, but what if Burger King reinvents themselves and steals market share from McDonalds, then you are ed.
3) If your bet is perfectly hedged, then you make or lose money on marginal deviations. But since your aim was a perfect hedge, then whatever way the deviations occurs are purely luck and not intentional. Do you think you have more than a 50% chance of being successful?
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