How to limit losses in the context of recurrent hedging ?

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Hello,

 

In my quest of findind a trading strategy that makes consistent profits (everlasting goal … ;-)), I’m often face of the same situation that needs some care.


Here is the situation :

Suppose I determine that the market must be traded with a long position.

And that I find a precise level that gives the end of this long position.

In that case, if the price falls below this level, I close the long position (or I open a short position for the hedging).

But, in some circumstancies, it may be interesting to follow the trend if the price rises above this level - and the reopen the position or cancel the hedge.

And in the worst case, the price can play around this level a lot of times, and that back and forth movement can cause some important losses (spread, slippage, …)

I would like to know if you have this similar problem and reflection, and if you find some tricks to optimize these losses due to the spread when opening and closing the hedging position that you can share with me ?

Many thanks in advance for your reply,

 

Regards,

 
hedging transactions in the same instrument have no interest. Refrain
 
stanislass:
hedging transactions in the same instrument have no interest. Refrain

It has sense in some cases.

  • if you run multiple strategies on the same symbol.
  • or you can do a trick in case you need to override a weak leverage (like 1:50) - you may open an order against your signal to enable a double position in favour of your signal, then close the counter position.
  • or  you may place multiple partial stops/profits instead of a single stop/target line.

 But there is little use for a simple full position hedge.

 
Hedging transaction in same symbol----->its simply closing the position 
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