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I am writing here about forex because I am still learning, and though I am intent on developing in forex, it is not time for me to become officially a wanna be forex commentator yet, although I have felt drawn to this as I sense my knowledge growing so quickly that I sense it could be come part of my business here.
I don’t apologize for diversifying. I have a brand, and my brand represents good work I do, and I not only do good work in auckland cd reproduction and dvd duplication and auckland posters, but also forex, and children’s entertainment and event and talent management so that’s where I will be focused.
Doing good work in the place that I have the most talent and skills to offer. It doesn’t have to carry strong connections to other work under the kurb banner.
However producing media and making money and being involved with talented performers and events and entertainment has a strong lifestyle component that will attract people to the brand without having to clearly understand what we do.
It’s media. Some of that media relates to forex as a strong way to provide funding for more exciting lifestyle components.
I am constantly making tweaks to my forex system. Now in the latest round of adaptions I am trying a new hedging strategy, that is, if I get out on a wing side of any range, instead of buying bigger positions as we go back – which got me into this mess really – we start buying bigger positions as we go forward, and then only selling when we go backward.
At this stage I will open no more short positions so every time the hedge shrinks, the short rises, thus relieving my equity. everytime the short drops back further, I add more to the hedge, so that if goes any higher, not only am I profiting from larger positions as they rise, but I have a larger hedging position rising to counterset any rises.
Now that we understand the trends better, we can keep this strategy up until we get the signal things have turned around, then we get to begin selling of all those juicy positions as we get more confident with confirmation. On the short side, We are finally able to start placing decent positions knowing that as long as we’re going up we will catch the tail of the big positions eventually.
Wherever we go, a market that is going down, and trending down will only get tiny marker positions offered, that way, always their debt positions are shrinking, because its on the low side coming up that the big positions get placed.
In the end we can always never buy a sinking position, and always hedge against the worst effects. It may plod along, but we will stay alive. We have to consider hedging as an emergency procedure to stop an account frying.
My advantage in my system is that I deal with such tiny lots, that the losses are controllable but we still need to put the breaks on a situation that could threaten to get out of control.
In the end it is better to have a hedge position that fades as you recover so even as you move into recovery, the position loses 5% on $10k, you’re wearing $500, however, your emergency positions have come down over $5k at least by that point,
You’ve got to remember if you’ve got an extra $10k always on each end huge shifts in the market will shift your equity but never knock it out so youre out of the game, and you must be able to keep playing.
In my position right now, I carry a lot more than $10k on the far side where I first began, and I have to carry that. It seems now I have made my pilgrimage to the other side of the market, I must there pay my penance and establish hedges. It will be a very long time until a return to the far shore, and the hedging I commit to now, will never become as significant as the problems caused which create the reasons I am taking this measure.
The trend is for it to continue to go down. Our hedges will be profitable as well as buying us insurance. Every hedge against the euro is worthwhile because when the euro rises, I get relief right across many problem areas and losing $100 on a $5k position would be nothing, If that exteds to 3 x $5k positions you are hoping you can get out in time should it pull back. Grab your profits, and go on.
In tweaking my system I refine it to make it more foolproof and be aware of the parameters. I am hoping in 6 months time, we would have made enough profit that these holes we’ve created will begin to look insignificant. In maybe that we just simply continue to push a bias against whichever side we want to shrink. If we want less debt on that side, by less as it goes down, and more on the other side as it goes up.
Eventually it begins moving to a 2nd phase where the system itself will tell you when it’s time to prune profits. and the relative stability of GBPAUD helps me to do that.
If it’s green and advancing, buy bigger positions
If it’s green and falling, take profits and replace with smaller positions
If it’s red and rising, buy positions rising from a standard lot
If it’s red and dropping, let it go, lay long markers and wait for it to come back.
The idea is that while a currency is rising, we are putting more money down, and that money is going up, and while a currency is falling, we are selling out profitable positions, if we have no profitable positions, then we are having to hedge until the hedge is rising faster than the original investment is falling though this is an extreme of an extreme.
At this point, the turning point must be reached. Bailing out of the hedge at the right time becomes crucial. The bias causes a switch, we begin to buy small positions on the other side to see if they rise.
But there is a technique. A $10k hedge goes deeper, and then again, and then again. Now you have a $30k+ hedge almost 50% of your original investment you’re hedging against. moves in either direction begin to effect equity less and less.
It moves up again, it’s time to take a profit, probably $100 and then looking at replacing the position at the top. You’ve still got a $30k hedge. You’ve take $1000 profit. on the other side, it’s dropped $2k, so you’re still $1k further back. If you can take the $1k difference, youre in a position to keep the other $1k should it start falling. What of riding it all the way, so you just keep on throwing down $10ks until the equity doesnt really move. the higher it goes, the more likely it will snap back. You may have to take the risk of taking some profit before bed. It rises you lose a little but youre still in the game, while if it goes down, you dont lose as much, you stay in the game, and your equity begins to rise.
In the end when everything stabilizes through hedging, getting your equity to rise becomes the aim of the game. Having a lot of equitey gives you more cushioning against moves in the market that we are forced to hedge against. The more equity we have the less aggressively we need to hedge, and can possibly look at buy back the most toxic debts, afterall equity would stay the same. its only risk/exposure and profit that decline
This would be a good tactic when a swingback has begun to fade on trend and the far heights seem unattainable. This is where we begin to see with more clarity. We want our money on the winning side. It doesn’t matter if the position is in loss or profit. What matters is that it is going up.
This is how a technical system like my own can benefit from fundamental analysis.
The bottom line is, even if I have to lean $50k into a hedge, well, that will cost me a $100 margin so these new investments shouldn’t cost me more than $200. Why wouldn’t I spend $200 to stop me losing $40k??? By the time a huge lump on one side becomes a problem on the other, months will have passed. My account will have doubled. My knowledge of hedging means I never really will run any major risks while we can watch and see what is happening.