Learn How & When To Close A Hedge

Okay, so there's your hedge. Okay. Grouping.

Fine.

Right. So estony hedge terror count over here. We've only hedged these trades. Yeah. Which is 19 trades. And the lot size of these 19 trades adds up to 29 lot sizes.

So.

So these trades are for a sell and the hedge is for a bar. Okay, so the question that estony has, she doesn't understand when must she remove the hedge. So this is what I'm saying. So let's enlarge that.

And let's see if we can't go any more left.

So.

Let'S draw that out. Okay.

Right.

Okay.

Let'S draw some candles.

Green candles.

Green candle, green candle, green candle, red line.

Support. Okay.

If it breaks through.

Terrific. Breaks through support, carries on going. New support line. Great.

Let's draw the 8 exponential moving average so that we can see where it's going and what it's doing. Yes. We know that the 8 exponential moving average doesn't behave like that in a straight line. So we'll just make it all funny for you so that it's nice. Okay, there's your 8 exponential moving average. Groovy. Let's move it a little bit to the left.

So that it sort of like follows.

Follows the line. Great.

Right, enlarge. Okay, let's now tell you what's happening. This is your hedge. These are your sell trades. This is your hedge bar trade. Okay, now the. It hits support. The process hits support. And we have a red candle.

So.

Red candle goes up.

So it goes green and then goes red and comes down. Okay, now your 8 exponential moving average is there. Okay.

Candle. So let's just do the candle. So the first candle.

Opened above the 8 exponential moving average. Do you see that open then went south. Actually, it opened there where the other candle. So let's just increase the so so that you can get a better. A better view of it. Right. So there's where the eight. That's where the trade opened and it went north a bit. So we'll just. Must I draw a wick for you so that it's easier for you?

That's fine.

So it goes down and then we get the first candle that opens below the 8 exponential moving average. And this is the second candle. This candle is the 8 exponential moving average. When this candle opens here, just maybe it's at the support line. Whatever. Okay. When the second candle opens, you're going to close this trade.

In profit.

Yeah, I understand that. Right, that's clear.

Great. So now let's say. Let's say it does something Else, let's say tonight it has a freak out and does this.

Okay.

Yeah.

That's your question? That's your question?

Yeah.

Okay.

Yeah.

What do you do? Nothing. Yeah. Because the candle opened above the 8 exponential moving average.

Okay. So now on Monday morning a new candle opens. Yes. So now. So now.

The 8 exponential moving average is like there, about there. Okay. First candles open above 8 exponential moving average. Second candle. Oh, jeez. Second candle. So this is the first candle that opens below the 8 exponential moving average. That's the first candle, right?

Yeah.

With me, 8 exponential down here is your second. Goodness gracious, man. Here is your second candle that opens below the 8 exponent inch moving average. What are you going to do?

Nothing.

You're going to do nothing. You're going to look at it and smile and say, oh, thank God I'm hedged, I don't have to worry. And then we're going to. And then the currency goes down. We know that this is the support life. Yes. So there is the support line. We know from experience because it reversed. Right?

Yeah.

Okay, cool. So let's just make that a yellow dotted line for support. So the currency bounces off here. By that stage, your 8 exponential moving average is about there. Right. It's following closely. So it comes down and then it bounces.

It bounces.

Yep.

It bounces. And we have a green candle.

Green candle. Green candle. Green candle. Can you close your hedge? No, because it's not in blue.

Yeah.

So you have to wait. So what are we waiting for? Let's tell you what we're waiting for. This is black here, right?

Black. Okay. Prices here. Prices. Right. So what we're waiting for is. We're actually waiting for.

Can I do a selection? Yeah.

Selection.

Selection does not, doesn't do that. Okay. So I'll have to do it manually.

Does that answer your question? So you're saying. Okay, so let's say it breaks support. Let's do it the other way. Let's say it breaks support.

Okay.

Black. Let's say it breaks support. The price carries on going south. Let's get a good candle.

So, so obviously I can close obviously I can close those other trades.

And it goes south. And it goes south.

Yeah.

Now your 8 exponential moving average has followed closely, right?

Yeah.

Then we have what we call green candle. Okay. So now we have a green candle. Green candle has opened below the 8 exponential moving average. What's my rule?

The second candle above.

Right. So there's the first candle comes down. Let's say it's not such A groovy green candle. Okay. Second candle opens up. Okay. And now I need to just get some points here.

Okay. I need to get a new line.

Okay. So there it is. Okay. Yeah. So now your second candle is opened. Okay. Above the eight exponential moving averages, what trades are in positive here?

Well, all my cell trades, all your cell trusts. So all these trades. Yeah, we'll close them out. Bang. Goodbye.

Yeah, yeah, let me close.

Now you've got open 49.

Yes.

A 29 lot size. So what happens to your drawdown? So two things happen.

Increases.

Equity increases.

Yes.

And your drawdown increases.

Yes.

Okay. Because you're not hedged anymore. So obviously your drawdown has to increase because you removed that hedge. Right?

Yeah.

Okay. So you're unhedged. But we now know that we're in a north direction. So let's say you closed out.

My goodness gracious me 10. So let's say you made.

$1,000 from this, from these trades profit. Okay. That you closed out.

Okay.

But your hedge is sitting at minus $3,000. Okay.

Yeah.

You're going to use 50% of the thousand dollars. $500. And you're going to close a percentage of this 29 lot size. Call it six lots. Six lots gone. Okay.

Okay.

We're going north. So it's getting less and less and less.

Right.

So yeah, sure, let's draw something.

Unless it goes south, unless it goes out.

Then we'll re hedge. But you won't be hedging 29 lots. Now you'll be hedging 23 lots.

Yeah.

Okay.

So you hedge your hedge and then, huh, you, what you're saying is you will then hedge your hedge.

You'll hedge your hedge because you don't have.

You don't have.

You don't have these trades anymore. They're gone. So now you need to hedge against your hedge. So your hedge becomes your trade. Now you're going to hedge against that trade. Okay. So now it goes south.

Okay.

Okay.

First candle, second candle. As the second candle opens, you open.

What do you open?

How many lots?

If we close six, then we do 23.

Thank you very much. 23 lots. And we now hedged.

Okay, great. So now we've got.

So what was that? This is a bar trade. Right? Right. So we got. Now we hedge 23 lots. Call. So carry on.

Amen candles. Do you get it? Do you understand?

Yeah.

Down goes down. So now it's going to go sideways. So now we're going sideways. You can see we're in a sideways V. Okay, make this Black. Okay. And where is the 8 exponential moving average?

Okay, now I understand hedging the hedge because that was. That was my problem. It's like, what do I do with that 29?

Now you're not.

If this thing goes the opposite direction.

No, you're not.

So hedging the hedge makes makes sense.

Right. So now you hedge the hedge, but less. Yeah. Okay. So now you've paid $500. Your hedges.

Yeah.

Okay. And you're getting out of. You're getting out of poo.

Okay.

Do you get it?

I do. I've got one question left.

So, I mean, the thing that keeps coming up in my mind is, okay, so this thing is coming back to the hedge. Why don't we close it? That's the question that keeps popping up.

You can do that. I don't. Yeah, I don't like to do that. You can do that. It's a good strategy. It's. Look. Yeah, it's a good strategy. There's nothing wrong with it. Okay, so you want to remove the hedge. So you're saying, okay, let's remove the 29 hedge because we're going back. But my point is to you estony what direction?

Yeah. We still got two candles above the 18 minutes. Yeah.

That's how I trade. Other people trade differently.

Okay.

Other people trade differently. I don't trade that way.

Yeah. Because what you get with the second candle above or below is a confirmation of a trend.

My confirmation of the trend.

Yeah. So if you have your confirmation, people do.

Everybody's got different strategies. They're different. Billions of strategies. I follow my strategy because I'm comfortable with it and it works for me. Other people have got other strategies, and that's cool.

You see, what I. What I like about your strategy is it's almost like you have confirmation. Anything else is a guess.

Exactly. It's confirmed for me that those are my confirmations. There's other confirmations, but I don't really rely on them because they are western technology. And I don't like the western technology. I don't like it at all.

Okay.

Doesn't make sense. It's just graphics on the page.

Yeah. So basically working with the confirmation point.

You can. Then it's confirmed the trend, but then obviously it can turn around within that trend to go into a new trend.

But here is your confirmation. Here is your book. Bullish Arami.

Yeah, but the. The point what I'm trying to make is you can manage it with the hedging the hedge.

Yes. So it doesn't matter if You've made a mistake. And that's. What's Keith about using FBS is that we can hedge. There's a lot of forex companies out there that you can't hit a lot of hedge. You have to use other currencies to hedge. We're lucky where we can hedge and we don't pay swap fees, which is like. Oh my God. Yeah, it's like a wet dream.

Okay. That's what this is like. You can't get better, like trading conditions like, like ever.

Okay, so you just need to. I get it now.

Okay. Right. So there's other people. So does anybody want to ask a question?

And if you haven't watched my, my, my hedge videos, then I don't think you should ask a question. I think you should go and watch my videos. I'm going to add this to my hedge scenario to my hedge video sequence because maybe this part was missing.

And that's why Estony was confused. So I'm going to add this to the hedge sequence as clarity.

So that you know when to remove the hedge and how to get out of the hedge. So it's all very well placed in the hedge. But the challenge is how do you get out of the hedge?

Okay, so there's another strategy. Do you want to know the other strategy?

Yes, please.

Okay, so this is. It's a very dangerous strategy.

You can't do it if your drawdown is high.

Okay, so you've placed your. You've got trades over there.

So yeah, you've got trades.

And here's your hedge.

But your hedge.

Let's say your trade. Please, please mute your microphone. Lawrence. Your. Your. Let's say your trade.

Is equals to three lots.

Your hedge needs to be three lots plus 50%.

So that is 1.5 equals to 4.5 lots. That's your hedge. Okay, so so these are cells and went in the wrong direction. And then you had to place a bar trade. Okay, so this bar trade would be in your case, 29 plus half of 29, which is 14 and a half. So it's 30.

How much is it?

33 and a half.

Thank you. So this trade would be three. 33 and a half. Okay. So that when it gets to a point over here. Not. It's not that long.

Sorry. 43 and a half.

43 and a half. So it's not that long. So when it comes up to about here in profit, you'll be able to close the trades. But here's the challenge.

It didn't get there. It got to Here, it needs to be here. Now it's reversing. So you've got a long wick. And now it's reversing and you are 50% more lot size than these trades. So let's say it reverses. What do you do?

So let's say it reverses. So now you've got this trade over here, which is 43 trades. 43 lots. 43 lots. Okay? So now it comes down and you're in trouble. Okay, so what do you need to do? You need to place another sell trade for 43 plus half, which is 21. What is it? 21 and a half.

And hope that it passes. This line over here needs to come down to about here, and then you can close out all three trades. And if it doesn't and it retraces.

Then you need to play place a 43/21 +30, which is 90 lots, and then hope that it gets to about here. So it'll get to about here. And the challenge with that is, is that you need equity to do it. So you can't do it when your equity is.

Like, your drawdown is like 40% or 30%. You'll run out of. You run out of money. And you need to be a skillful trader to be able to do that. So. So I don't teach that strategy, but it's auto recovery hedging strategy. So that's how professional traders do.

Feels very dangerous.

It's very dangerous. You need to know what you're doing, and you need to constantly watch your chart. You need to watch your chart so that if it does reverse, you catch it in time to place.

To place that trade plus 50%.

Can I say something here as well?

I think this actually works quite well, but you just, as you mentioned, you need equity. You need to make sure that you have the margin available, because this way your margin is running quite out because the lot sizes are getting that much bigger, you know, so you need to check on that and rather do it earlier than later because then at least you're getting more chances before the sizes are getting that big.

Correct.

So it's a very dangerous strategy. That's why I don't teach it. But it is another strategy so that you know that it exists. Okay. But I would prefer you to use this strategy. Do you understand this strategy, Esteine?

Yes.

Okay. So are you comfortable until Monday?

Yeah, I'm comfortable till Monday.

That's perfect. Okay, so.

That'S the strategy, and you'll just follow it now, you know, when Monday comes, we'll talk again on Monday and we'll have another discussion and then we'll decide what to do on Monday. Nothing to do right now. Okay, perfect.

Thank you.

I told you what was going to happen today and it happened. I told you that you are miles away from the 8 exponential moving average. This thing is going to retrace back to the eight.

Okay. And I said paused on the 100 on the H1 and it's going to stop. And that is where the banks are trading on the 100 moving. And it did exactly what I told you it was going to do. It's. It's exactly what I said.

Yeah, it is.

Okay, so we, that's where we are to hit the support level, the resistance level. Banks are trading there. There's nothing you can do. The banks will make their move on Monday and I'm telling you it's going north on Monday. Okay, Monday we are going north. As far as this right now, this scenario, what's going to happen? Okay, I'll tell you what's going to happen. Tokyo is going to wake up on Monday. Australia is going to wake up on Monday and they're going to say it's north. Dumb money. Let's go north. And they all place their north trades. It's going to go and it's going to peak above here. It's going to go north. Australia is going to wake up at 1 okay. Or 2. They're going to see that it's gone north and they're going to place their north trades. So let's just minimize this. And it's going to get to the 200 and everybody's going to have a heart attack.

That's what's going to happen.

Okay. As long as it stays under the 200, I'm happy.

So theoretically.

The other way of doing this is to close this 29 when you hit 200.

Yeah.

Because you know what's going to happen. We know. We've seen it. We see it every day. It almost hit the 200 and people had a heart attack. Why? Because it's Friday. They don't want to be in the trade. They don't want to hold the trade over the weekend because they're going to pay swap fees for three days. Friday, Saturday, Sunday.

They don't want to do that. So they'd rather take their profits. It's going to play around here. Then the 200 will come down, the 100 will move up, 50 will move up to 34 will move up and. And we'll see what happens. Yeah. So if it gets there, you have an option, okay, of closing out this trade. It depends on the profit. If it's $100, leave it.

Because your drawdown is going to get big as a percentage. So rather lost it. It's not going to be like a big trade that you're going to close out. You're going to make lots of money.

Okay, so that's what's going to happen. Monday it's going north. Tuesday it's going north.

Sorry. Australia, Tokyo, they're going to hold their trade over there and the bank will decide on Monday or Tuesday.

What'S happening. Let's see what's going north. Okay. There's a reason it's going north because the banks are factoring in the price for an event. So let's see what's happening on my Facebook. Is it cpr?

Is it? What is it? So next week, let's see next week, Friday.

Bank of Japan, I think.

There you go.

There you go. Bank of Japan. Bank of Japan press conference. Bank of Japan interest rate decision. Now do you understand what's going north?

So I don't think anything's going to happen there. But they factoring it in in case.

But there has to be a move.

CNY GDP in China. It affects Japan.

And GDP previous 18.3% and GDP consensus 8.1%. That's going to affect the price of the Japanese yen. Very close.

The pound also had some news today. The bank of England had a meeting and the pound also just went north. And just now it had a big retracement of about 40 pips the pound USD. So I think it seems like the pound yen did almost exactly the same.

Yeah, but I hate following the news. I hate the fundamentals. Can't stand it because it's speculation and it's. There's just so much opinion and just don't dig it. I like my candlesticks. I understand it. I can read it. It gives me clarity. It's like science. It's numbers. I understand it.

There's lots of info in these candles. Like it's like a little mini. You know the little mini discs that we used to get? The 1.4 megabyte discs came out after the floppy disk. Do you remember them? They were blue, half the size of stuffy. Stuffy? Yeah, stuffy drop.

Yeah, stuffy.

That's what this is. Each candle is a stuffy, okay? Got info in it. Learn what the info is. Then you've got. Then you'll know. Okay.

Cool, thanks. Thanks, Alan. Much appreciated.

Great questions that you asked and I'm happy that you asked them and that you got clarity on it and I'm hope. I hope that every this helps other people on the call.

You can ask me questions. If you've watched my hedge videos. If you. You haven't watched my hedge videos, then it's pointless asking me questions because I'm not going to explain to you what is a hedge like the basic questions of a hedge. You need to go through my hedge videos. If you've gone through my hedge videos and you've got a question, I will take your questions.

Okay, cool. Wonderful Friday to you all. The. The sea was a bit cold. I had a nice swim. It's a wonderful life down in Plet. That's all I can say. You people should come and join me. So have a wonderful. Can we say, don't tell us from the north.

Come and join us here in the south. Yeah.

Have a lacquer. Have a lacker weekend. Did you guys make profit this week? Yeah.

Yes, most definitely.

Are you guys. I'm getting there slowly. Yeah. Are you guys happy with the, with what's going on? Yeah. Okay, cool. Okay, guys, have a good weekend. We'll see you Monday.

Thank you, Sam. Same to you, Alan.

Bye. Bye.