Following Hedging part 1.
With a hedge, capital protection is prioritized over making money on it.
It's important to understand your trade type before opening your position.
Perfect entries are not necessary and laddering can be applied to open your position.
Follow your plan, adjust your mindset accordingly and remember, protecting your portfolio should always be your priority.
This tutorial will provide you with an in-depth walkthrough of Daniel's reasoning behind opening his hedges, including his famous 69k hedge.
Time Stamps
5:30 – HEDGING WHEN TRADING
- It is important for Daniel to note that hedging for him is significantly different than a normal trade.
- He does not care about the exact entry point when hedging while with scalping he does get the sniper entries. He even ladders into the hedge.
- He is focused more on protecting the capital than making money on the hedge so if the hedge goes ‘under water’ he does not lose any money.
8:40 – DOT EXAMPLE
- If Daniel is under the perspective that the trend will change he enters a short.
- Using leverage is advantageous if you know how to use it.
- You have to trade emotionless and know where your invalidation is.
- Daniel is not after a perfect entry but just wants to protect his capital.
20:36 – HEDGING WHEN TRADING
- Daniel is not afraid of a loss on a hedge trade as he would only enter a hedge at a significant level of resistance. If broken it shows him a sign of strength, where he would simply close the trade.
- He keeps the hedge open until major support is reached or a SOS.
- When in hedge you are gaining money with funding – so even a stopped-out trade at the breakeven price would be very profitable.
- Once he has a winning hedged short he is also more comfortable taking longs off significant support levels (gives much more confidence).
- The same goes for him for all the assets
- In general, Daniel prefers to maintain his capital / increase it slowly than to make the most % gains. He takes a conservative and long-term approach. Trading is a business.
43:54 – EXAMPLES: FIL, SLP
54:07 – Q&A
- The majority of the time longs pay shorts so Daniel is not concerned about that.
- Also, if Daniel expects a big drop on an asset he does not mind paying funding.
1:14:19 - SUMMARY