(Resent) The issue that hedged trades might be the strongest
Is the strongest method actually the hedged position in FX?
Hello, I’m Sato, a full-time trader.
I am a pure discretionary trader (up until recently...).
Now, in addition to discretion, I have found a method that profits whether you predict both buys and sells or not,
and I’m deeply into that.
It was the ultimate “hedged trading.”
At first I wasn’t interested in hedged trading,
but one day I tried it and realized its enormous potential.
Hedged trading means you place buy orders and sell orders at the same time.
Since you’re betting on both directions,
whether it goes up or down, one of the positions will be profitable.
With every trade you can reliably take profit, and as the number accumulates,
there’s a sense of fulfillment in doing it (laughs).
After all, when you trade you want to end with profit.
Because hedged trading bets on both directions,
you can always close in the plus.
So there’s a mysterious sense of reassurance.
Of course, among the two positions,
the other side will become negative,
but depending on the method you can erase this negative.
You can erase about 50%–80%.
Then, to my surprise,
the profit portion remains.
In reality, it’s just that the difference between positive profit and negative loss gradually grows every time.
I know this might sound meaningless at first.
You might wonder, can you really profit with both buy and sell orders?
So in this article,
I’d like to explain this hedged trading that actually yields profits.
■ Encounter with Hedging
I have always focused on
discretionary trading centered on “market structure” and “price action.”
If you understand market structure and price action,
most price movements in FX can be explained.
Tools that give signals or flashy methods are fine, but
without understanding the mechanism of how the market moves, you won’t achieve results.
At first, I relied on sold tools and popular教材 (teaching materials)
and didn’t study the fundamental market mechanisms (market structure and price action).
That was why I couldn’t win.
After realizing this,
FX became surprisingly winnable.
In the end, the key was market structure and price action.
So, based on overcoming the reasons I couldn’t win,
I teach students the fundamental mechanism of market movement (market structure and price action) from the ground up.
Indeed, students who learned the market movement mechanisms from me
are also starting to win in FX in the same way.
If you compare it to arithmetic,
you won’t be able to do multiplication or division if you can’t even add or subtract.
FX is the same in my view.
Since you trade on charts, understanding the movement mechanism is one of the first things you should learn.
Skipping that and buying signal tools, automated trading, or some method won’t make you profitable—this is my claim.
So,
the basics are to learn “market structure + price action,”
and I still believe that understanding the mechanism of market movement is the royal road to FX mastery.
However, with hedged trading there is an exceptional case,
there are some “slightly special circumstances.”
Even without knowing the mechanism of market movement,
it’s relatively easier for beginners to win.
In FX, the category of “hedging” stands apart from others,
as an isolated island.
Because the fundamental approach to charts is different,
even looking at the same chart leads to a completely different interpretation.
Will the price move up or down? That is
irrelevant.
What matters is how much you add to your buys and sells in terms of position sizing.
Only adjust your position sizes like that.
Unlike discretionary trading where you guess the direction and profit if you’re right, hedging is fundamentally different.
For hedgers, the ups and downs of the chart are just symbols.
Like east or west direction.
There is no meaning there.
You simply take the positions that align with the chart.
It’s a highly mechanical process.
But because the tasks are fixed,
anyone can achieve similar results.
Although it isn’t based on market principles like “market structure + price action,”
hedged trading has its own appeal as a way to make money in some sense.
Since you can expect some profit each time,
(depending on how much you can reduce losses on the opposite position)
it might be a good method for those who want to steadily grow money little by little every day.
Learning the mechanism of market movement (market structure + price action) is the core of FX basics,
but for those who still can’t understand it or aren’t succeeding with current methods,
hedged trading is one option to consider.
Even those not earning now might find it easier to make money this way.
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