Thread: Fully-Balanced Hedging

1) Two currencies
For to currencies YYY and XXX only in the event that you enter 1 lot BUY then input 1lot SELL. It'll be accurate balanced payoff since:
1) net pip value =0
two ) net margin=0

consistently it's a shedding system (reduction of spread) and there's absolutely not any way to profit from hedging. Mo way in any way.

Two ) Three currencies
When there are 3 currencies YYY, XXX and ZZZ
and Dominating currency is DDD

M1:,Margin for pair 1 termed YYYXXX
M2:,Margin for pair 2 termed YYYZZZ
M3:,Margin for pair 3 termed XXXZZZ

P1:,PipValue for pair 1 termed YYYXXX
P2:,PipValue for pair 2 termed YYYZZZ
P3:,PipValue for pair 3 termed XXXZZZ

To acquire accurate balancing: the net should amount to zero.

M1 M2 M3=0
P1 P2 P3=0

we understand FROM GENERAL RULES this:
P1=Lots1*XXXDDD ----- M1=C1*Lots1*YYYDDD
P2=Lots2*ZZZDDD ----- M2=C2*Lots2*YYYDDD
P3=Lots3*ZZZDDD ----- M3=C3*Lots3*XXXDDD

so e have 3 variables: Lots1, Lots2 and Lots3.

C1*Lots1*YYYDDD C2*Lots2*YYYDDD C3*Lots3*XXXDDD =0
Lots1*XXXDDD Lots2*ZZZDDD Lots3*ZZZDDD=0
gt;
gt;should C1=C2=C3 (ALL PAIRS WITH THE Exact Same LEVERAGE) then:

Lots1*YYYDDD Lots2*YYYDDD Lots3*XXXDDD =0
Lots1*XXXDDD Lots2*ZZZDDD Lots3*ZZZDDD=0
gt;

We have three variables but 2 criteria.
So we must assume one variable and solve for additional two.
Hence C is 100,000/Leverage

Any practical use?

PRACTICAL USE!!
We ant to establish that it is always lossing system is it was balanced.
But for mt4 broker minimal lot is 0,01, through this way you can design lots less than 0.01. Such as 0.003 lot. THIS IS THE ONLY ONE ADVATAGE.

Originally Posted by ;

Keep in mind that your hedge is fully balanced only at the time you are calculating it... due to the lively pip value.

It is a slight change! Insensible
EURUSD, AUDUSD, EURAUD
AUDUSD*EURAUD/EURUSD=|-1|
therefore:
if audusd=buy
afterward euraud=buy
eurusd=sell

eurusd audusd always pips value continuous, so there will be no effect
but euraud pip value will be the current price of audusd. And any alteration in price will probably be insensible if converted into USD.

Interesting
however do you practice?
Only an example...

Originally Posted by ;

Entertaining but how do you practice? Only an illuion...

WE PROVE HERE THAT HEDGING IS VERY STUPID AND HAS NO SINGLE ADVANTAGE, if fully-balanced.
But: if you need lots less than 0.01 lot (it is amount to one place ) make it slightly unbalanced.

There's not anything hedging that is balanced. It just a wrong trading egy that can decrease loss for instantly but it destroys valuable trading equity. I have dropped many time a great reduction by hedging. I believe that it is far better to shut order instead of hedging.

Originally Posted by ;

There is nothing fully balanced hedging. It just a wrong trading approach that can decrease loss for instantly but ultimately it destroys valuable trading equity. I've dropped many time a great loss by hedging. I think that it is far better to shut order rather than hedging.

NO BROTHER
there are threee facets: Please concentrate
1)
if you hedge in precisely the same time and it was fully balanced. It's alwyas lossing (spread commision)

two )
if it is not fully balanced, then it actually amount to one place on one pair, with only 1 advatage: the effect lots is less than 0.01

3) positive hedging STOP TAKEPROFIT = NON-DIRECT TAKE PROFIT
if not hedged at precisely the same time, you input BUY and wait two days you then see a profit of 200 pips. TheN if you do not shut DIRECT TAKE PROFIT but fully hedge open positions,
then wait patiently until hedged place win 59 pips, then shut and wait patiently to go again and so forth, you might profit 500 pips though your pair does not proceed more than 250 pips.

I mean you don't decrease sensitivity of the pair.

Suppose I ask you now to get participated in EURUSD with 0.004 lot??
How can you solve this mystery??

absolutely through unbalanced-hedging

Lots1*YYYDDD Lots2*YYYDDD Lots3*XXXDDD =0
Lots1*XXXDDD Lots2*ZZZDDD Lots3*ZZZDDD=0

through these equations you may design your lots to fulfill fully-balanced-hedging.

And we prove that fully-balanced-hedging is very stupid way. No way whatsoever to profit.
Always losing system.

3 variables and two equations??
So there is no unique solutions
according to math there are unlimited options

so in this case, we assume one variable to be known and solve for both variables.