Hedging

What does it  indicate if your portfolio is increasing in value and you hedge is making money too?

Then you need to see how much the hedge makes when your positions decreases in value, i.e. how good is the hedge when the value of your positions going down.  

To hedge is to deal with unknowns like at this time no one knows how the market will react to the Fed words/actions.  I'm long index futures and I must have them hedged today..................

Edited by redfoliage2, 29 July 2020 - 10:52 AM.

Thanks red

What does it  indicate if your portfolio is increasing in value and you hedge is making money too?

then it is not a hedge.

when i run correlation about -30 for portfolio and hedge, very uncorrelated 

short term results maybe a quirk which will change

Only good reason I see to use hedge is to avoid short term capital gain.

A real Hedge reduces your profits and it is like betting against your own thinking.

Hedging smooths out your volatility.

I also have done the income tax idea, you mention, for long term capital gains. That is different

The VX Aug contract possibly fits your scenario, and historically implies we may see a dip in equities towards the close and or Thursday.  Market internals seem really strong for the gap and go today, but I am moving to the sidelines with no skin in the game.  Since we went back to break even for the week last night on the ES around 3204 it seems like we might just hit the week's high at 3246 and pull back again.

On a side note about GLD/SLV, I remember an old end of month trading system that would only be long the strongest relative strength issues based on those end of month closing prices.  Not sure if the system was long GLD/SLV based on the relative strength based on the closing prices for Jan 31, 2012, but both had a great run into Feb 28, 2012, and then got slaughtered on Feb 29th giving up most of the gains.

The VX Aug contract possibly fits your scenario, and historically implies we may see a dip in equities towards the close and or Thursday.  

Thanks Darris , I am using qqq micro Sept.

Either better?