How to hedge leverage for long term trades


Question:

Does anyone know how to trade long term trends without getting wiped out on margin.

Yes? How do you do it? Be specific.

My experience is: long term trends are not tradeable, because large short term swings will wipe you out.

I don't think you can unless you have a very large account. you will get wiped out on margin.
If a short term swing is having an effect on your margin, then your account is simply too small for the trade you are putting on

Obviously you must calculate how much you are willing to let the trade go against you, so should it go there you do not violate the margin requirements of your broker.

But, here are some other solutions.......

use In the Money options, If you have sufficient funds to buy an ITM option you will not lose more than the amount you put up for that option, (you still need to check margin requirements) but at least your downside is quantified.

If you are unfamilliar with options, read up first, they can get very tricky whn it comes to time decay, so if you are looking at a long term swing as you mention, you need to buy an expiration date that is far enough out so that you do not get "theta'd ' to death, and give up price increse by offsetting with time decay.

And again you can offset the theta effect, with a calendar spread, by being short the near month (beneft from decay) and long the far month. Of course with the calendars you will need to kep an eye on the Gamma, (which of course is the change in delta), because as we all know how a volatility surprise can kill a good calendar.

Now of course depending on the length of the trend you can employ a strategy of buying the underlying, and selling OTM calls against it, when the calls expire use the proceeds to buy of the underlying, and then sell more OTM calls. You will need a much loger term trend for this, say 1 year time horizon.

I guess the point I am making is what exactly are you trying to do?
How big is your account?
define Long Term?
What goals have you set?
Are you trading every day, or just glancing at a position every now and then to adjust it

SO in your own words "BE SPECIFIC"