An Alternate To Hedging By Wayne Jackson
This is a strategy to replace hedging that Wayne Jackson created. We agree with his feelings about hedging in this post and feel that it provides valuable information. We wanted to share this theory because it presents insights into hedging and the options you have. However this is not a post to endorse his products because we have never had the opportunity to test and review his products and services. We hope you find this post as insightful as we did.
DO NOT LOSE SIGHT THAT the prime strategy is to trade medium/ long term and trade with the trend, with a trailing stop.
We have posted this in his words.
“Hedging ” to me is simply hiding a loss under another opposite trade…and sooner or later, when the hedge comes off, there is an ugly loss exposed…I don’t like that concept !!! (However, to those who use them, I say, different strokes for different folks…that is, its a personal choice).
Currently, this is what seems to happen to some Traders…
1. you put a trade on and you put a stop loss of around 40- 50 pips
2. the market goes against you (horrors….I was wwwwwrong !! )
3. let the market continue…it will probably go say another 30 – 100 pips past your stop…who knows ???
4. FINALLY, the market comes back around and starts to head in the opposite direction
5. by now you are totally hacked off with the market and you let it go
The solution that that I found is a pretty simple one but one that has to be executed without fail…
Scenario 2
That strategy is:
1. you put a trade on and you put a stop loss of around 40- 50 pips
2. the market goes against you (horrors….I was wwwwwrong !! )
3. let the market continue…it will probably go say another 30 – 100 pips past your stop…who knows ???
4. PUT AN ORDER IN AT THE EXACT SAME FIGURE AS YOUR STOP LOSS (if you were originally “short” then place a “short” order) This ensures that when the market comes back, as it invariably does, you have a DEFINATE order in place to put you back in the market where you were originally…and you are now in the same direction as the market is moving..
5. FINALLY, the market comes back around and starts to head in the opposite direction
6. The market picks you back up on its new direction
7. THE ADVANTAGES OF THIS (THEORETICAL) STRATEGY IS THAT
a. IT HAS AN EFFECTIVE AND DISCIPLINED COURSE OF ACTION
b. IT GIVES YOU A SPECIFIC “ENTRY” POINT
c. IT REDUCES LARGE DRAWDOWNS
d. IT PUTS YOU BACK IN THE MARKET EXACTLY WHERE YOU GOT OUT
I know that there are DISADVANTAGES with this strategy, buy I think that the overall effect of the advantages outweigh the disadvantages.
I also think that this strategy is more appealing to my business sense of minimizing risk than the original concept of “hedging” that initially set me off to discover an alternative strategy to hedging.
I have now been using this strategy for a couple of months and it is working brilliantly.
PLEASE NOTE: I am a medium to long term trend trader. The above method works best on those time frames. It works less well on short term time frames because of the volatile “noise” in the market.
When a stop loss has been triggered, I allow it to go past my SL by a minimum of 50 pips before I set the new order.
When the market has turned and is coming down in the “trend” direction, my order is then opened.
Try it…you will be surprised how good it is.
The key advantage is that you are not tempted to “hang on” to a losing trade….and therefore your drawdowns are minimized.
However this is a “default” trade. It is NOT the prime strategy to use.
DO NOT LOSE SIGHT THAT the prime strategy is to trade medium/ long term and trade with the trend, with a trailing stop.
A continuation of the Anti-Hedging strategy
I start with weekly, then move closer in using daily, 4 hour and 1 hour to help me make a decision. Less than 4 hours tends to be “noise” rather than a “trend”. They are the “sucker” rallies and declines.
PS Don’t be the sucker…
But I am also starting to notice that it doesn’t really matter anymore where I buy or sell.
The anti-hedging strategy is FAR, FAR, FAR more important.
The anti-hedging strategy ensures that,… if you make a trade in the wrong direction,…. you can get your losses back …AND you are in the direction of the trend.
Stick a trailing stop loss on it and you are guaranteed a profit.
So…
1. If your trade is a winner, you stick a trailing stop loss on it and let it run.
2. If your trade is a loser, employ the anti-hedging strategy, and at some time, you can get your losses back …AND you are in the direction of the trend. Stick a trailing stop loss on it and let it run.
K.I.S.S. (keep it short and simple)
Tags: hedging, long trading, medium trading, trend trading
Comments
32 Responses to “An Alternate To Hedging By Wayne Jackson”
Leave a Reply
-
Social Links
I do use hedging – successfully. This is what you do. EUR/USD and USD/CHF are inversely correlated. Use the following example: You go long the EUR/USD pair, and (horrors) it immediately goes against you. You place an order to go long (yes, long) the USD/CHF pair at the point where you might have put a stop loss for the EUR/USD trade. Because these pairs trade inversely, one goes up when the other goes down. Because of the nature of the market, (i.e. it perpetually goes up/down/up/down) one of these will be profitable while the other will not. Sell the winner, hold the loser if the loss is greater than the win. Sell otherwise. If you held on to the loser you can now hedge the loser until it’s a winner if you want to. I’ve done this successfully, and it works. It also helps me sleep at night.
I agree with Cindy above.I do the same and it always works.
Hello Cindy and Ahmed, is it possible to get more info on hedging?,i am about to try it
fxcm UK.Twice i lost biggggggggg money when i a trade went against me.
Hello,
Mr Wayne went broke from the trading, I saw him in Singapore and he looked in very bad way…. not like in the past.
Now he very poor, on forex factory they start a fund to help him back on his feet.
Not good strategy, not for Jacko.
Mr Chan
Hello my friends,
I dont agree with Jackp strategy, that is why i never paid him 700sd to get his information. i think people wo is real trader, dont sell tips on internet.I see you talking about hedging, i would like to learn more abot it. I discovered some interesting blog they provide free signals. The best thing the figures they post may put you on right side of the road, that is very iportant inforex.
todaymarketsignalsdotblogspotdotcom
I agree real traders don’t have time to post anything on blogs and forums they concentrate in the market and the open position not selling tips to the world otherwise millions of people even beginers will be driving expensive cars around vegas spending tons of cash made from the market
PS lol..
after apply for banruptcy because of huge losses in forex, conclusion is: thereis no profitable system sold on internet, the only one having success are the brokers and banks and scammers. i am very disappointed with forex, after buying systema+systems=bankruptcy. this is a devil business.
Yes , you all right,no profitable system sold on internet, the only one having success are the brokers and banks and scammers.
Using a Hedging for forex trading will end up broke.
cholo, Mauricio, Facefish – how wrong you all are. There are GOOD systems on the net PROFITABLE systems on the net. All 3 of you lack the most important in trading: Good, sound money management, good sound risk management and good sound trading psychology. If you do not have this – no trading system on the forex market will get you anywhere
Joe you say that, because you hava quick rich schem and it is easy for you to think the rest of people suffering in this financial jungle, as Cholo said, if there is profitable systems on internet why to many begginers driving expensive cars by Las vegas? Honestly if i had a profitable system i would not sell it on internet. most of this systems sellers are 1:scammers or 2:people with profitable systems, but the just sell false information to rip off inocent people, to get more money to put on their real accounts to make profits for themselves
Joe you say that, because you hava quick rich schem and it is easy for you to think the rest of people suffering in this financial jungle are stupid with no brain, as Cholo said, if there is profitable systems on internet why not many begginers driving expensive cars by Las vegas? Honestly if i had a profitable system i would not sell it on internet. most of this systems sellers are 1:scammers or 2:people with profitable systems, but the just sell false information to rip off inocent people, to get more money to put on their real accounts to make profits for themselves
Hi, I have to agree with Joe, he is right on the money. I learned from a professional trader that all systems work, its the mentality we need to develop with in us to make any of these systems work for us.
for example, lets say you have a trader who likes to trade fast, he is not concerned so much with losing his money, he is concerned enough though to have good money management, the best system for him would be a trading system which lets him get in and get out of the market quickly, he feels best in this type of situation, anything longer than the 5min to 15 or 30 min is much too long.
than you have another trader who only feels comfortable with long trades and being able to think long and hard about the market before he gets in. his style would be more on the 1 hour 4 hour and daily times. anything lower than the 1 hour is uncomfortable for him.
both of these traders are very successful in how they trade because they picked a system that makes them feel at ease while they are trading.
So all the systems work, and work well, you just have to know which one works best for you and how to have the correct mindset for it.
plus good money management is key as well in any kind of trading.
Hi cindy,
I think this strategy you do could be very dangerous. You say to sell the winner while keeping the looser. How about if this looser is increasing day by day after 2 or three days you will be a big looser
I think the best strategy I have found ( being regular looser) after a decision to trade is to trade opposite to your decision.
Surprising how often it works.
Then you are trading against the crowd.
Some of the posters here would be better off stopping forex.
Money management, sound planning and a sound price action system will make money.
There are no get rich quicks and systems – these are all bull shit.
In a LONG term trend the system of a trailing stop loss can help. Ideally if the trend is long term you could have a bank big enough to take the draw down. You are not concerned as the trend will always be up or down. It will always come to rescue you.
The tricky thing is the placing of the stop loss.
You will only get caught if you get stopped out and then the trend comes back straight away. I have seen 50 pips indicated.
Currencies move in cycles, most things do. Some things have long long terms trends – Gold is an example. This is a good market to apply this type of system on.
All of you are right in your comment because in forex trading you learn difference lessons. This is the 9th month of the 4th years of my trading. The first 3years of my trading are losses by i kept on researching until i discover the truth about forex trading. These are
1). Take trading as if you establish a company or building a system that will not return profit in short term.
2). Use a good money management system that can accomodate losses up till 3000 pips.
3).see every position opened as a profit if not now but in future.
With the above, you are a professional trader. For the past 9 months that i have been using this trategy i have not loss a penny to the market again.
If you want to trade always and along the fundamental or technical indicators, you will remain a vitim in the market.
So when ever i need to spend money i just withdraw from my account and keep the market rolling, infact i dont need to know if their is a big move any day. mine is to make profit everyday (trend up or down)
Olajide
This is a message for Mr Chan who posted on September 13th, 2009 2:16 pm. Would you be able to contact my self? Please let me know I can can give my email.
Many Thanks
I paid Jacko $700 and followed his blog. His entry strategy is flawed. Even the hedging is bad. I didn’t take all the trades he recommended because half of them were against fundamental trending strategies. I was right. I would have lost more than I did. I did not make any money with Wayne Jackson. When I questioned him, he didn’t answer. In fact, he ignored me. I asked for a refund because the $700 was to pay for the signals he sends by texting for a full year. I didn’t get texts for more than 3 months. Now, after 6 months, he blocked me from the blog.
All because I asked for a refund. His attitude towards me has forced me to right this. Others need to know before they send him money.
Rob, I’m afraid many others have suffered, hundreds paid for the blog service.
He also set up a fund and took probably close to £1m+ USD from many people around the world. He promised to return the money to all investors but has disappeared.
We need help to find him. Mr Chan please let us now if you can help.
Mauricio said on March 20th “I think this strategy you do could be very dangerous. You say to sell the winner while keeping the looser. How about if this looser is increasing day by day after 2 or three days you will be a big looser”.
This “anti-hedging” strategy would be good so long as the trend is intact. And the assumption that the end of trend is known is its weakness. If you look at the concept clearly you would either think that anybody can be a Buffet or Soros, or you may think it is a foolish idea. I thought it was funny when I first heard about it in the forum. I mean it is not like eurousd IS going to run like that forever?
Using a sold system will not make you money, but if you develop your own strategies and always stick to them you will be profitable over time, or at least more likely to be.
Hedging is awesome if you do it right. There is a free (yup, free) hedging strategy on forex-central.net that works (try it out on a demo account first, when you get the hang of it, switch to real money). It’s in the Strategy section (easy to find).
Good luck to all and have a great $ummer!
That “free” hedging strategy is nothing more than a Martingale setup…certain to blow your account in a ranging market! Avoid it or lose big time!
I don’t know what to believe any more…
I don’t know what to believe any more…
Let me help you out then.
1) Jacko was a fraud. Jackoff would’ve been the more appropriate nick. Guy couldn’t trade any better than my granny.
2) There’s no such thing as “hedging” in one market. Think about it: you buy one lot and you sell one lot, what’s your net position? Right. Nut up, take your losses and enjoy your wins. There’s really nothing more to it, and it’s not hard at all.
Best,
Nork
hi dears,
would you please show the strategy by picture? i cant understand it exactly!!!
Cindy, the long EUR/USD vs long USD/CHF hedge is an old idea and not always in opposition. There are times when they trend together and leave you sitting there biting your nails. I suggest that before taking a trade in EUR/USD you should first analyse the dollar index chart. When you find a signal, trade the opposite in the Euro. USD/CHF may have a close correlation with the Euro, but the dollar index is even closer, almost a mirror image, because the Euro comprises more than 50% of the dollar index. Good luck.
Hi All,
To my opinion Hedging Strategy is the only strategy which makes the Forex Trading Profitable provided you use it the way BANKERS used it for making billions…..
The market moves only in two directions up or down may be sideways but not for long time it has to move up or down so what if we are ready for both the scenario, be ready for it. I hate the idea of hedging two different pairs, it is not a good Idea, infact hedge on the same currency pair.
buy 0.01 @ 1.3000 Sl 1.2940 (60 pips) TP 1.3030 (30 pips)
Sell 0.03 @ 1.2970 (30 pips distance) Sl 1.3030 (60 pips) TP 1.2940 (30 pips)
if it doesnt work buy 0.06 @ 1.3000 with same Sl and TP if this doesn’t work
Sell 0.09 @ 1.2970 with same Sl and TP….if this does’t work, take all the losses gracefully. But, if you put a trade a a key levels proper support of resistance. Trend lines , ranges, then I guess only 2 or 3 orders are more than enough to take 30 pips profit at every trade you make….
I have 100% result for 1 year.
people those who follow strict money managemnet rules and don’t get greedy at a time don’t have anything to complaint about FOREX Market, it works, only if you learn the skills without paying a single penny to anyone, people putting across any thing even with 1$ cost , would be a scam, forget about paying 100$ ……tyr it work…beacuse the big boys play this game the Hedging WAY.
Great! This blog has gone for a long while and still people with new comments.
I agree with upendra, hedging is the most probably ways, as it involves 2 entries at the same time or different time for the same currency pair. Slowly earn it and slowly loss it.
However, it does not guarantee 100% profit.
Slowly earning it means consistent earning the money.
Looking the other way, non-hedging method,
it would be 100% loss per trade, or 100% win per trade. However the effect from this, is that you would earn fast money, and losing fast money.
Not forgetting money management, calculations of wins covers the loss, and indicators that combine this skills.
Erm…it is a lot of work, guess what, to be a professional, it is not about short term, it is about long term. Short term = Luck. Long Term = Professional.
Ever wonder how gambling works = the more you play the more you loss equals to “short term”.
Hi..
For me Hedging is the best strategy to earn money in longterm period. I personally use hedging for my Gold (XAUUSD) trading. And still have to calculate your Lot and Money management for long-lasting account.
First month, it took 20% of my equity to start placing long and short position in minus. But at the second month, my capital was back in place, and i still have 15+ open couple positions that ready to collect profit when the market move.
Of course, i have to pay the swap fee, but from my experience 1 time profit, could cover 5 swap positions for 30days each.
And the most exciting part, when the market is shaking high jump or deep bearish, i still can sleep well, since no emotion involved, since my EA will open new long/short and collect the matured position that hit TP automatically.
Hopefully, it’s useful
hi Upendra ,
Can you pls contact me on my email. I need us to discuss something pls. Tnx
ralozoms@gmail.com