Peterma said:
Hmmm... so this is democracy in action. We elect a government to protect us - from ourselves, then we rejoice in being saved.
Then we look to our neighbour, he too is following our lead, he too is being protected from himself, this is democracy.
Ah! now I understand, this is the reasoning behind blank cigarette packaging in Australia, soon to spread to the rest of democracy - protect us from ...oh yeah, ourselves.
So you guy cannot hedge? - very wise, you have to be protected, from ...
What's this thing called again, oh, yeah, they have a name on it, you get to vote on it.
I'm glad I live in the last vestige of democracy ...... for now
I wasn't praising the restrictions in place, I was just commenting that Canada already has it worse but we seem to be doing ok.
That said (and this is not directed at you, but just ranting in general):
Hedging in FX on the same pair (or
Nedging, Noobie-Hedging) is
bullshit and only helps the broker rank in more revenue. If you view your trades in terms of "net exposure" instead of individual tickets/trades, you'll end up with the same result (P/L) as a non-hedging account over a series of exposure changes, only you will always come out a little ahead thanks to not paying the extra round trip spread and/or commissions involved.
The only reason retail FX traders have it shoved down their throats is because MT4 itself is a ticket based order system (meaning two tickets/orders are treated independently on the accounting side of things and not grouped into 'net positions',) which allows for opposing positions to be held at the same time, and brokers then exploit this "feature" with unsophisticated traders to help generate more activity.
And further, it's not even a traditional 'hedge' anyway.. at no point would you ever see a professional trader (on any other market) talk about hedging risk by opening up an opposing trade they'll manage independently of their core position on the exact same security. If they reduce their next exposure in a given security, they call it pairing off risk, and do so by closing part of their position. A real hedge is done in a related, but different, security.. it can be related by being a derivative, or in the same industry, or in the same asset class, or affected by the same market forces.. but it isn't the same security.
Like... no one buys a metric shit tonne of FB (Facebook) stock and then go "crap, I need to hedge this out, I better short FB on the same account." That wouldn't make sense. They might buy a put option on FB, they might pair off risk by selling some of the FB they have, they might even short some LKND as a weaker peer... but all of these are on different 'securities' than the common FB stock itself.
So when we talk about blocking the act of hedging on the same pair in FX as a consumer protection, it actually is a consumer protection.. it prevents the broker from marketing an action that has ZERO upside for the user and can only prove to increases the revenue the broker generates.
As I said in the first part of this rant: If you break everything down to a "net exposure" basis between an account that hedges and an account that doesn't, and then treat it all from an accounting point of view (resulting P/L from the same actions taken to adjust net exposure,) the non-hedging account will always win out since it will have at least one less round turn of spread or commissions to be paid for the same changes in exposure over a series of trades.
(I have another rant about how FIFO is also just an accounting thing and has little material impact on traders.)