NFA Hedging restrictions, May 15th

[Nancy Cheah]

What about opening 2 positions at the same time?

Many brokers don't allow this and I feel that only brokers win all the time while retail traders lose all the time.

Sad, isn't it?

 

[flashrob]

how to BEAT the NEW HEDGE RULE...in the same account...

two things guys: try this, AND SPREAD IT ALL OVER THE PLACE...

how to BEAT THE NEW HEDGE RULE!!!

now, I like being a spoiler, especially when it comes to the BIG GUYS implementing stuff to put the squeeze on the little guy, namely me, so I'm gonna THROW A WRENCH IN THEIR PLANS!!!

Ok, now I know you can open two accounts, but margin loss on the opposite position WILL STILL WIPE YOU OUT...so I'm gonna show you HOW TO BEAT THE NEW RULE with JUST A SLIGHT MODIFICATION...then will see if the SMARTIES at the top can NULLIFY THIS.

Now, I'm some what of an "intuitive" was that great in math, but great in "instant intuitive solutions to problems..." the reason I'm telling you this is I didn't do the math...just intuited the answer to BEATING THE NEW HEDGE RULE...SO HERE GOES:

1. an exact example...I tried it...it seems to work...some math wiz can back up the logic...etc.

the solution to HEDGE in the SAME ACCOUNT...despite the NEW HEDGE RULE:

now you can use ANY THREE CURRENCIES...(you used to use just two before they started monkeying with the rules...

example: by position

BUY the YEN and SHORT the DOLLAR,
BUY the DOLLAR and SHORT the EURO,
BUY the EURO and SHORT the YEN.

now notice what's different:

there are now THREE CURRENCIES involved instead of TWO.
there are now THREE POSITIONS OPEN instead of TWO.
THIS IS A LOOP...so you have an effective hedge IN THE SAME ACCOUNT...I tried this for an hour in my practice account, and except for the initial pip spread give to the broker, it MAINTAINED AN EFFECTIVE HEDGE (should as long as you keep the three positions open...used to be TWO OFF-SETTING).

essentially you are using a mathematical loop with THREE POSITIONS (3 currencies) in a loop, whereas before you could just do TWO OPPOSITE POSITIONS.

try it out, and let me know if you run into any problems...IF IT'S GOOD TO GO...

SPREAD THE IDEA ALL OVER THE PLACE... AND WE'LL PUT THE SCREWS TO the NFA AND FRIENDS!!!

again, YOU ONLY USE THREE CURRENCIES and YOU GO: long/short...long/short...long/short forming a loop as in the example above.

YOU CAN DO THIS WITH AND COMBO OF THREE CURRENCIES...

EFFECTIVELY CIRCUMVENTING THE "new hedge" rule...IN THE SAME ACCOUNT!

flashrob

Ps. for example after the three trades are running for a while...when one is winning big, and depending on the "short-time chart pattern" ...I might sell the winner and wait for the
cyclical back move on the NOW UNHEDGED POSITION!

tell me what you think???

THERE ARE THREE

 

[Nancy Cheah]

I'll let everyone into this too.

I've been trying this for quite a bit and it worked also.

Assuming the EUR/USD price right now is 1.4.

I opened 2 positions simultaneously; which is a long and a short at the same volume, say 100k.

I then set a take profit of 10 pips.

Let's say the price hits 1.389, I'll have one of my positions closed.

Hence, all I need to do is to wait for the price to hit 1.401 and my second position shall also be closed.

Hope this helps.

 

[Pharaoh]

Under NFA rules, you can't open a long and a short at the same time. You either need a broker that's found a "work around", 2 accounts, or a non-NFA broker to do this.

The drawback to your system is that price might not come back enough to let you close the 2nd half of your hedge without losing more than you made on the first half.

 

[Nancy Cheah]

Yes, I do agree with you but sometimes, it really does work.

The only thing you need is to study the market extremely carefully and not be greedy at all times.