Fully-Balanced Hedging

[Oxikelfangelo]

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

[juliocasla]

Any practical use?

[Oxikelfangelo]

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.

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.

[lolavixxegas]

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

[Oxikelfangelo]

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.

[Pkmmes25]

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.

[Oxikelfangelo]

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.

[Oxikelfangelo]

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

absolutely through unbalanced-hedging

[Oxikelfangelo]

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.

[Oxikelfangelo]

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.

[Oxikelfangelo]

Assume lots1 is known:

Lots1 *YYYDDD Lots2 *YYYDDD Lots3 *XXXDDD =0---------------1
Lots1 *XXXDDD Lots2 *ZZZDDD Lots3 *ZZZDDD =0 --------------two
-
Lots2 *YYYDDD Lots3 *XXXDDD = -Lots1 *YYYDDD ---------------1
Lots2 *ZZZDDD Lots3 *ZZZDDD = -Lots1 *XXXDDD ---------------two
-
Lots2 *ZZZDDD = - Lots1 *XXXDDD - Lots3 *ZZZDDD ---------------two
-
Lots2 *ZZZDDD = - (Lots1 *XXXDDD Lots3 *ZZZDDD) ---------------two
-
Lots2 = - (Lots1 *XXXDDD Lots3 *ZZZDDD)/ZZZDDD ---------------two
-
- (Lots1 *XXXDDD Lots3 *ZZZDDD)/ZZZDDD*YYYDDD Lots3 *XXXDDD = -Lots1 *YYYDDD ---------------1
-
(Lots1 *XXXDDD Lots3 *ZZZDDD)/ZZZDDD*YYYDDD-Lots3 *XXXDDD = Lots1 *YYYDDD ---------------1
-
Lots1 *XXXDDD/ZZZDDD*YYYDDD Lots3 *ZZZDDD/ZZZDDD*YYYDDD-Lots3 *XXXDDD = Lots1 *YYYDDD ---------------1
-
Lots3 *ZZZDDD/ZZZDDD*YYYDDD-Lots3 *XXXDDD = Lots1 *YYYDDD - Lots1 *XXXDDD/ZZZDDD*YYYDDD---------------1
-
Lots3 (ZZZDDD/ZZZDDD*YYYDDD-XXXDDD) = Lots1 (YYYDDD - XXXDDD/ZZZDDD*YYYDDD)---------------1
-

Lots3 = Lots1 (YYYDDD - XXXDDD/ZZZDDD*YYYDDD)/(ZZZDDD/ZZZDDD*YYYDDD-XXXDDD)

to simplify:
XXXDDD/ZZZDDD=XXXZZZ ------ SECOND PAIR.
ZZZDDD/ZZZDDD = 1
Lots3 = Lots1 (YYYDDD - XXXZZZ*YYYDDD)/(YYYDDD-XXXDDD)

DIVIDE ALL BY YYYDDD

Lots3 = Lots1 (YYYDDD/YYYDDD - XXXZZZ*YYYDDD/YYYDDD)/(YYYDDD/YYYDDD-XXXDDD/YYYDDD)
-
Lots3 = Lots1 (1 - XXXZZZ)/(1-XXXDDD/YYYDDD)

we know: XXXDDD/YYYDDD=XXXDDD

so:
Lots3 = Lots1 (1 - XXXZZZ)/(1-XXXYYY) -- Final Solution

[Oxikelfangelo]

So lot of pair#3 termed XXXZZZ is Lots1 of pair#1 (pair YYYXXX)
MULTIPLIED BY:
1 minus price of pair# XXZZZ
DIVIDED BY:
1 minus mutual of price of pair#1 YYYXXX

XXXYYY is the reciprocal of YYYXXX

[Oxikelfangelo]

we Know EUR.USD = 1/USD. EUR

if initial currency YYY=EUR
if SECOND currency XXX=USD
if THIRD currency ZZZ=CHF

THEN:
YYYXXX = EURUSD
YYYZZZ = EURCHF
XXXZZZ= USDCHF

[Oxikelfangelo]

AND FOLLOWING THE Very Same PROCEDURES E CAN SOLVE FOR VARIABLE Lots2

[Oxikelfangelo]

Assume lots1 is Famous:

Lots1 *YYYDDD Lots2 *YYYDDD Lots3 *XXXDDD =0---------------1
Lots1 *XXXDDD Lots2 *ZZZDDD Lots3 *ZZZDDD =0 --------------2
-
Lots2 *YYYDDD Lots3 *XXXDDD = -Lots1 *YYYDDD ---------------1
Lots2 *ZZZDDD Lots3 *ZZZDDD = -Lots1 *XXXDDD ---------------2
-
Lots2 *ZZZDDD/ZZZDDD Lots3 *ZZZDDD/ZZZDDD = -Lots1 *XXXDDD/ZZZDDD ---------------2
-
Lots2 Lots3 = -Lots1 *XXXZZZ ---------------2
-
Lots2 = -Lots1 *XXXZZZ- Lots3 ---------------2
-
Lots2 = -Lots1 *XXXZZZ- Lots1 (1 - XXXZZZ)/(1-XXXYYY)---------------2
-
Lots2 = -Lots1 (XXXZZZ (1 - XXXZZZ)/(1-XXXYYY)) ---------- Two
-
Lots2 = -Lots1 ((XXXZZZ (1-XXXYYY) 1 - XXXZZZ)/(1-XXXYYY)) ---------- Two

Lots2 = -Lots1 (XXXZZZ -XXXYYY*XXXZZZ 1 - XXXZZZ)/(1-XXXYYY) ---------- Two
Lots2 = -Lots1 (1 -XXXYYY*XXXZZZ)/(1-XXXYYY) ---------- Two

Lots2 = -Lots1 (YYYXXX -XXXZZZ)/(YYYXXX-1) ---------- 2

[alpisleam]

quote NO BROTHER there are threee facets: please concentrate 1) should you hedge at the same time and it was completely balanced. It's alwyas lossing (disperse commision) 2) if it isn't fully balanced, then it really amount to a single position on a single 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 the same time, you enter BUY and wait two days you then find a profit of 200 pips. TheN in the event that you don't shut DIRECT TAKE PROFIT but completely hedge open positions, then wait... Very good answer with precise description. Thank you very much for the fine post. Got some brand new in order that not understood.

[Oxikelfangelo]

Lots3 = Lots1 (1 - XXXZZZ)/(1-XXXYYY) -- Closing Solution
Lots2 = -Lots1 (YYYXXX-XXXZZZ)/(YYYXXX-1) -- Closing Solution

[Oxikelfangelo]

Double Scan:

Lots1 *YYYDDD Lots2 *YYYDDD Lots3 *XXXDDD =0---------------1
Lots1 *XXXDDD Lots2 *ZZZDDD Lots3 *ZZZDDD =0 --------------2
--
Lots2 *YYYDDD Lots3 *XXXDDD = - Lots1 *YYYDDD ---------------1
Lots2 *ZZZDDD Lots3 *ZZZDDD = - Lots1 *XXXDDD ---------------2
-
Lots2 *YYYDDD Lots3 *XXXDDD = - Lots1 *YYYDDD ---------------1
Lots3 = (- Lots1 *XXXDDD - Lots2 *ZZZDDD)/ZZZDDD ---------------2
-
Lots2 *YYYDDD Lots3 *XXXDDD = - Lots1 *YYYDDD ---------------1
Lots3 = - Lots1 *XXXDDD/ZZZDDD - Lots2 ---------------2
-
Lots2 *YYYDDD Lots3 *XXXDDD = - Lots1 *YYYDDD ---------------1
Lots3 = - Lots1 *XXXZZZ - Lots2 ---------------2
--
--
--
Lots2 *YYYDDD Lots3 *XXXDDD = - Lots1 *YYYDDD ---------------1
Lots2 *YYYDDD ( - Lots1 *XXXZZZ - Lots2 ) *XXXDDD = - Lots1 *YYYDDD ---------------1

Lots2 *YYYDDD - Lots1 *XXXZZZ*XXXDDD - Lots2 *XXXDDD = - Lots1 *YYYDDD ---------------1

Lots2 *YYYDDD - Lots2 *XXXDDD = Lots1 *XXXZZZ*XXXDDD - Lots1 *YYYDDD ---------------1


Lots2 (YYYDDD - XXXDDD) = Lots1 (XXXZZZ*XXXDDD - YYYDDD) ---------------1

Lots2 = Lots1 (XXXZZZ*XXXDDD - YYYDDD)/(YYYDDD - XXXDDD) ---------------1




Lots2 = Lots1 (XXXZZZ - YYYXXX)/(YYYXXX - 1) ---------------1

= -Lots1 (YYYXXX-XXXZZZ)/(YYYXXX-1) -- Closing Solution


SO it is correct,

[Oxikelfangelo]

Again
YYYXXX is a price
YYYZZZ is a price
XXXZZZ is a price
------------
Assume three currencied are: EUR, AUD, USD
SO:
Lot1=1.00 lot (supposed )
so:
Lots2 = Lots1 (XXXZZZ - YYYXXX)/(YYYXXX - 1)
Lots3 = Lots1 (1 - XXXZZZ)/(1-XXXYYY)

=

Lots2 = 1.00* (AUDUSD- EURAUD)/(EURAUD- 1)
Lots3 = 1.00* (1 - AUDUSD)/(1-AUDEUR ) = 1.00* (1 - AUDUSD)/(1-1/EURAUD )

AUDEUR=1/EURAUD

it cab be calculated or programmed using pen and paper!

[Oxikelfangelo]

What if leverage Continuous are distinct for some pairs.
C1 ! =C2 ! =C3
?
?
Follow procedures previously

[LipoGumo]

Interesting aproach, but I not reallt see the benefit. . Sure that the sizing is there but you need to buy the s in full anyway. . So it may be nice on the equity side, however, the margin negative will see that otherwise. .

Well perhaps I miss somethings

I do hedge a dfferent way (replace hedges with stop-loss-orders). . But theres a completly diferent aproach

[Oxikelfangelo]

YES SIR
Objective here: to demone that payoff is very stupid idea. Therefore it should be removed from heads.

[LipoGumo]

Haha okay. . Got it

nicely my hedging differs anyway. . Its for damage control, not to make any cash...
completely different aprach

[Emvig]

quote NO BROTHER there are threee facets: Please concentrate 1) if you hedge in the same time and it had been completely balanced. It is alwyas lossing (disperse commision) 2) if it isn't fully balanced, then it really sum to a single place on a single pair, with just 1 advatage: the result lots is less than 0.01 3) positive hedging STOP TAKEPROFIT = NON-DIRECT TAKE PROFIT if not hedged at the same time, you enter BUY and wait for two times you then find a profit of 200 pips. TheN if you do not close DIRECT TAKE PROFIT but completely hedge open positions, then wait...
#3 is also known as freezing your floating profits by simply following the price. It works with the combination of transferring SL to BE. When trade moves in your favor by some pips, you move SL to BE and being 100% in the market irrespective of which way the market moves. Quite Powerful in trending and high volatile pairs.

[Oxikelfangelo]

haha okay. . Made it nicely my hedging differs anyway. . Its for damage control, to not make any money... completely different aprach u might consider this the forth approach, and virtually all individuals are following!! Direct SL is much more preferable.

If at all possible, can you discuss ur idea her.

[Oxikelfangelo]

Try to Create ALL AREA of the circle Blue = Totally Balanced
https://www.nigeriaforextrading.com/attachments/1519516453.jpg

[LipoGumo]

quote u may think this the forth egy, and virtually all individuals are following!! Direct SL is more preferable. Can you discuss ur idea her if possible. ”Almost all peopes” additionally loose money trading, paying those which don't follow the crowd.

The aproach is very straightforward, rather than place a stop-loss order (that is in reality a STOP Order by order form ) I put Buy/Sell stop in the oposite direction
as this are 100% the identical orser types they are going to have exactly the exact same effect on slip and cost.

The only difference is that the posiotion isn't realized to the balance.

Once the pending order is filled, the trade is over, the assignment then changes from”making money” to”damage control”
each pip less in resolvong the Dollar is less reduction realised.

Very straightforward things.

[poliyeipkm]

Remember that your hedge is totally balanced only at the time you are calculating it... due to the dynamic pip value.