any thoughts would be much appreciated.z
From my calculations your friend hedged at around a nett loss of some 1400pts ($35K!!!) Can I ask why it took soo long to take action? Anyway, that's besides the point.
Your friend has basically locked a $35K loss in. Whatever he does, that's the amount that he's going to loose. If he was to close any of the long or shorts, and the market moves against him, he's going dig a deeper hole. The one thing he can do is to MINIMISE that loss - with the best case scenerio of him getting 100% of it back.
What I'd do is to look for when the market is extremely Oversold or Overbought (or any other strong technical indicators) that a change in direction is going to happen and take a
risk and close one of the hedge contracts off. Then pray that once the hedge is closed, the market will move in his favour. If the market doesn't move in his favour, this is where you'll need to implement stop losses and try to preseve as much of that remaining $3K capital as possible.
Once the market looks like it's about to change direction, you can always re-hedge to lock in the new losses... hopefully some figure less than $35K.
Basically, what he's attempting to do is to use what's left of that $3K and turn that in $35K....
I also bet that daily interest is killing him? Perhaps close the contracts off (yes... realising his losses) and re-opening them when your CFD broker has finished calculating open positions for interest calculations. Just remember that $35K is your target to get back...
Other than that... especially to new traders... never get yourself into such situation... always use stop loss and have a trading plan on when things go bad... you have an escape route!