You can open up two accounts and have them up on two different screens. You buy a currency pair on one of your accounts and sell the same currency pair on your other account, and you set the stops about 50 pips away and the tgt 100+ pips away. So if the currency pair goes down 100 pips you gain 100 pips on one acct and only lose 50 pips on the other and vice versa. So if it goes up or down you gain more than you lose all the time. Would this work?
Unless the market took out both your stops without hitting either target. But I understand that currency markets trend more than stocks, so mayhaps this is an unlikely scenario.
If trading was that simple... It can work sometimes. But the question is - will it be profitable over time.. I think the answer is NO. This is not first time this idea comes up. I think the answer is - no, it wont work, but you can demo it and tell us how it works. Good Luck.
Here's latest discussion about it : http://www.moneytec.com/forums/_showthread/_s-/_threadid-4085 It started with discussing charts, but transformed to discussing hedging aproach. There are couple interesting ideas about this issue. Make search there - I'm sure you find more posts about it. GL.
Why not just place a buy order on a stop 50 pips up and a sell order on a stop 100 pips up to close it out if it gets filled, and a sell order on a stop 50 pips down and a buy stop order 100 pips down doing the same thing on the downside, and you will have the same net-50 results in either direction with a 100 pt. move, without dealing with the market chop or expense of two accounts. Jessie
I dont practice hedging, but in the thread I linked to earlier I read people posting CMS platform allows to do it.
jessie's answer is correct. What difference does it make if it a currency pair or the spoos in a channel. While you are long and short you are flat. When a stop gets trigger you have a postion. What does it matter if you have two accounts and are long in one and short in the other or if you have only one account and you are flat. Same net to you Now if you were hillary clinton the person giving you the bribe would just absorb the loss in the losing account (or so the thougts of her accusers say) Or do I not see something obvious. Do currency pairs gap 100 pips yet you are assured to get your 50 pip stop loss under all circumstances. I read some of the posts. Dr. Forex is on drugs. If you want to be in a position stop into instead of stoping out of your hedge. Save pips. If you want to be "sophisticated" by being weighed more heavily to the short term momentum side- scale in small stop entry orders. His reasoning is mildly amusing. Ask him to show you how his account statements making it pip foolish and pound wise. Finally marginal this equals marginal that and no free lunch in one example.
This is the same as placing a buy stop order 50 pip above mkt and sell stop order 50 pip below it. When you are filled on either one you place your target limit order. Now if mkt goes straight in one direction you have only 2 commissions/slippages instead of 4.