Optimization: Your trades are long term, so missing a few pips on the entry is less important than avoiding an entry on the wrong side in the first place. We can probably agree that a long term trend following system that employs simple indicators is best. If your “system” is currently profitable and back-tested profitable, then we can say that it is already “fitted” to the market. Problems I have encountered with optimizing are that too perfect a “fit” may cause a failure going forward if there is the slightest deviation in market dynamics in the future. Concisely stated: You don’t need to reinvent the wheel.
Something to consider: Why do I feel my system needs to perform better? Am I capturing a reasonable return for the amount invested relative to general move? Don’t worry about being in first or about getting the last dollar. Also, know that markets are not always tradable for speculators.
Hedging: I don’t think there is a true hedge in forex. It is not a good way to keep your account liquid if you are in a bad trade. Just take your lumps. You said it best: If you’re unsure of a position, get out.
Pyramiding: You mean using additional margin created by unrealized gains to open new positions in the same direction of your current profitable trade? This is a popular technique for “position traders” in futures. I used it in rare circumstances in grain trading. The dynamics of those markets are radically different, so I don’t think that experience applies here. As I see it, what you are doing is further leveraging an already over-leveraged instrument.
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