Martingale VS Hedging & Straddle

We were talking about #Forex Straddle. Not stock options straddle, yah?

Thank you RobotFX for some videographic explanation. Subscribe him on Youtube, if you'd like. He's an inspiration. He can be harsh but yeah no BS. Forexpresso will probably have some videos in the future too! (Do we get a "YES PLEASE"?).


Okaaaay now.

You're probably asking, what's up with this topic as I've been asking around the internet what the definitions are (in google, babypips, investopedia, and instagram as well).


Here's what's up:


When I shared the Straddle Technique 2.0 article in Philippine Association of Forex Traders Inc. (PAFTI) Facebook group, some of 'em long-time forex traders with stocks background commented that I must RESPONSIBLY choose my words so as to not confuse you dear readers.


'Cause they said, I tried very well rebranding the infamous Martingale with Straddle.

Sarcasm. Big words. Shots fired. what have you. I'm fine if you're wondering (hurt, but fine).


And I responded RESPONSIBLY. Asking what the legit definitions are. And to share with me specific sources so I could read up and learn something.


But, it's been weeks (?) the only sources I was told were Google and Babypips. Which is pretty much what I'm also consuming. What am I missing here?!


My inquiry is probably buried, trampled by them in high horse (I'm such a drama queen, sorry). SO I had to rely on what I found:


Source #1: Babypips


The first time I heard Straddle from my coaches, I didn't quite get it. So, I searched it. Lo and behold, Straddle has been used for Forex news trading.


Read some Babypips will ya: How to Trade the News Using the Straddle


"You are looking to play both sides of the trades wherein Breakout points will be your entry level."

Babypips went on discussing Straddle as a non-directional bias way of trading. It also explained scenarios and IF done well, you're a win in anyway.


In case it fails sometimes since trading strats don't work ALL THE TIME or maybe it's just done incorrectly (like how I prepare orders way early), you still end up with something.


This is because Straddle is some form of Hedging. You'll see why...


Source #2: Investopedia


Keyword phrase for HEDGING is having both BUY and SELL. Read, read, read.


Similarly, STRADDLE has both BUY and SELL but in PENDING Stop Orders (and Stop-losses). Please read between the lines--Risk Management.


And if you actually had the time to read and understand, you'll mostly encounter the word "protect". Hedging is utilized as a protective technique for financial portfolio as it seeks to minimize if not neutralize losses.


Off topic: If you look up Options Straddle, you'll see Long and Short Straddle. Which btw are executed/ ordered differently than Forex Straddle. For one, Long and Short Straddle have immediate costs. While Forex Straddle uses pending orders.


And even if those traders actually meant Options Straddle ( ...on a Forex discussion), I still don't get why it's referred to as Martingale.


Because...

Keyword phrase for MARTINGALE is DOUBLING the BET. Read, I beg you.

Having two bets are too different than doubling each bet. Just thought that maybe that's how they see Straddle.


Martingale is infamous because it proposes to increase your risk on your next trades. Of course, noobs burn doing this.


The confusion probably lies when Martingale is fused with Hedging (watch RobotFX video for the example).


Must call it Hedged Martingale instead. Which btw is also a thing. It's searchable. Almost similar as to how my M15 coach does her trades. Which I will try to write about once I understood it. Yes scalpers, I hear you too.


Source #3: RobotFX Youtube

(watch video above)

  • He's annoyed in the first minutes due to some losers ..err, traders who cannot differentiate the words. Then, he discusses what Martingale is 😊

  • Around 7:30 is Hedging.

  • 10:42 is an example of Martingale X Hedging FUSION.


SO THERE.

Hopefully I'm being responsible by providing here what I learned. Mind you, I've just been nearly approaching my 2nd year as a Forex Trader. Even if I do reach decades of experience, I won't claim to be knowing 100%.


Heck, that's why I didn't even know Straddle is a rebranded Martingale.

Or is it really? hmmm.


Happy trading everyone!

Sincerely,

@marilesaca || Trading Kitten :3


For comments, suggestions, discussions, and feelings: please Sign-in. It's FREE!

COnnect with us!
  • Facebook
  • Instagram
  • YouTube
  • Twitter

DISCLAIMER: As with any financial matters, PLEASE EXERCISE UTMOST CAUTION AND DISCRETION. Trading and Investing in the Forex market has risks that may not be suitable for everyone. An investor must always consider one's risk appetite and give due diligence in every financial opportunity encountered. The information shared and presented in this site are the strategies and tools that worked for the authors over several experimentation. It may OR may not work for you. Any loss experienced is solely accountable to the investor, as he/she is the account owner. Thus, risk only what you can afford. We encourage you to find your own style instead of blindly following trades. We only seek to guide while entertaining you in your Forex journey.

THE FOREXPRESSO

© 2023 by The New Frontier. Proudly created with Wix.com

This site was designed with the
.com
website builder. Create your website today.
Start Now