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the players made the quick drop during start of European session for the long holders to liquidate the buy positions with fear.They are expected to rise from 10:00 GMT,first a recovery move followed by short covering rise.Month end moves are like that.
Hence hedging trading is recommended to keep hedging order instead of stop and keep stop at entry in the sell position which is taken against the buy position.trail down till the hedging is closed with profit.Then keep another hedging order 30 pips below market and trail up as they rise the market till you are able to keep stop at entry in the buy position.
Once they stop cutting the new low for more than 30 min the rise will be seen till week end.
Regards
Dr.Sivaraman
Dr Sivaraman,
Thank you very much for your guidance. Yes I will take care to plan hedging in advance and not get into panic position and so want to understand the whole process with your help.
In your latest comment you say “trail down till the hedging is closed with profit.” Does it mean we need to use trailing stops in hedged position or it means something else?
So how do I manage hedged positions. How many times should I try this?
If I release the Sell hedge position first time (after 30 pips) and after waiting for 10-30 minutes and still not able to go near the original Buy position, I am entering 30 pips later on stop (now my loss becomes 60 pips). Should I lock the position and wait for a few hours or days to see when reversal takes place?
On the other hand, if the hedged Sell position shows profit and is way off from the Buy position (which shows 60 pips higher loss than the profit shown in the sell position), how many days or hours I need to hold the position?
How many times (maximum) I should do this hedging and up to how many pips?
Do I need to watch certain hours where gaps or false or big movements normally happen to cut the Sell position ?
Should I put my Buy position of 1.2748 as a stop loss in the hedged Sell position? And once it happens how do I cover my loss of 60 pips from Sell position?
And if the reversal doesn’t happen, and the Sell position shows profit the whole process is reversed and still the nett loss will be 60 pips. Here also I need to wait for the reversal to happen before cutting the Sell position and be ready to enter into another hedge SEll entry if the releasing of the earlier position doesn’t help me.
Please guide me. Thanks again.
dear poonam
if the hedging is making profit then keep 15-25 pips trailing stop in the hedging position till it is closed with profit and then keep 30 pips below market another hedging order to limit the risk.This sort of hedging you can use till the original position is closed.So either with the hedging (sell position) or with the original position ( buy position)you continue to book profit.Only during monthly and yearly trend reversal times it will take about a week or so to close all the positions with profit.But with in the month you should be able to close all the positions with in 3-4 days.
When you use trailing stop in the profit making sell position frequent hedging will not happen.The money you block in yiour buy position is compensated with the profit earned by the sell position.so at any given time the loss excess blocked money will be 30 pips.Once the sell position continue to make profit - you can cut the buy position with loss and then try to maximize the profit in the sell position.that situation will come only during extended moves they make during trend reversal times.You can follow the blog and understand before hand about the trend reversals.
Regards
Dr.Sivaraman
Hi Dr
Thank you for your comments and daily postings.
One question for you though.
You have been caling for the rise in the majors for a while.
However, we have yet to see any reversals and today it appears that the USD is trying to break out of its recent range higher ?
Can I hear your opinion on this ?
Do you still hold the view that there will be a reversal in the majors today and next week ?
Appreciate if you can comment.
cheers
jason
dear jason
a move normally before data is false move.they are making the drop to induce risk aversion sentiments and normally the players create market sentiments and act against the traders.the GDP data may be more than expected and not that much negative and then the risk appetite will start.For week ends they make this sort over spikes and volatile moves to induce higher level long holders to liquidate at lower level and then the lower level short sellers to cover at higher level.The players drop and buy and rise to sell their buy positions.
I am expecting the rise.
Regards
Dr.Sivaraman