I don't think it is allow since it is such a powerful technique, some pair I am thinking off june/sept sp500/n(emini) n(emini)/top 5 of sp500 etc..
I am afraid this technique is madness unless you have guaranteed stops. When the likes of FXCM offered guaranteed stops then it was a very profitbale risk free strategy if adopted just before major figures when you expected markets to gap one or two big figures. They realised that it was madness to offer the guaranteed stops last Summer and I am not aware of anyone offering it anymore. This was the only time that such a 'straddle' or 'hedging' strategy could have been adopted - I repeat to do it without guaranteed stops is madness. Hope this helps.
Well, I remember someone mentioning opening separate accounts trading the same future/equity/option. One account going long, the other short. They stated that you could put equal weight stops on either account and simply let the trade run on the winning side. I thought the idea was stupid for a bunch of reasons: If you wanted to play that strategy, why not keep your execution costs down by establishing a beginning price and place your entry as buy stops and sell stops equal distance away from that beginning point? Do all of this in one account. Either way, it doesn't work. You would get whipsawed out 50% of the time.
I'll admit I do not understand what you are doing and it doesn't make sense to me. With options you can vary the strike price and expiration date to create unique straddle positions but I don't see how that can be applied to Forex trading. Can you give a concrete example of an actual hedging trade you placed and what prices you closed out both positions to illustrate how this works?
Helpful and offered insightful input, I greatly appreciate it. I may have to think about Currency options soon.
You guys... look at it this way... The forex market is SO DEEP and VAST in liquidity that the different structures, systems, tactics and trading techniques are huge and varied. Taking a long and short position(s) out on the same pair or a related pair to hedge, there's probably a variety of ways to play it to make profit and cut losses: And methods of trading none of us have even heard or thought of yet. Doesn't mean anyone's right or wrong. To each his own as long has he/she can make money. We're all pretty much trying to do the same thing: Buy/Sell or Sell/Buy a currency/pair, hold the position until goes into our favor then close the trade and take profit. Only one thing is for sure: There will always be winners and losers. Peace out, sKaLpZ
An entry order at the stop level of both positions will result in EXACTLY the same thing. You don't need hedging.