This is my present to all the forex traders. It’s a simple system that works and it’s based on a mechanical or mathematical system. Please make sure that you practice this system on a demo till you get the comfortable with it.
Happy New Year
Sure-Fire_Forex_Hedging_Strategy.pdf (68.3 KB)
Probably better to call this a Martingale strategy, for that is what it is 
Yes indeed it has a Martingale system incorporated, that why is very important to practice on a demo and avoid low volatility pairs and market consolidation. Do the trades just before the markets are opening or before important news releases or any probable brake-out and you’ll love this system. This is a tool that can be used when everybody is suggesting to stay away from the market.
So what are the signals generated by the trading model ?
I feel some flames but here goes:D
As long as some sort of loss limit is used a strat like this can be traded with good results. The trick is to trade when the price is moving just like the OP said. A martingale strat with no limits is good way to blow an account. Everyone always jumps on grid strats and martingale strats like they are the worst thing you could do. With a little common sense these tools can be used to make money and manage risk.
I think Bishnitz explained when this is a good strat and when its not and he suggested to demo for a while with it to learn how it works. Good advise for any trader playing a new strat.
I would agree. Especially if the probability of getting one of your first two take profits is high. And then limit how many double ups you use.
You have to balance number of wins times pips won vs. number of losses times pips lost. Get on the right side of that equation and you’re doing ok no matter how you get there.
In the PDF though there is mention of signals which makes me wonder if he is trying to sell something?
In the PDF though there is mention of signals which makes me wonder if he is trying to sell something?
I skimmed the PDF I missed that. Its still a pretty clear explanation as is and with a little practice and a financial news release calendar I think it would work.
I have not tested or tried this as its laid out. I have stayed away from this kind of hedging my self as the spread costs are doubled, that will take a bite out of profit in the long run. Not to mention I couldn’t hedge now if I wanted to.
Thanks Big Brother I knew I needed some one to protect me from myself:rolleyes:
its fairly easy to hedge with Oanda. You have to have two accounts but they make it quick and easy to switch back and forth between the two.
I may try it just for fun.
I forgot to mention that this strategy will not work with US brokers, as for signals, I use common indicators like Bollinger Bands, to determine a brake-out or volumes indicators to determine consolidation, nothing fancy, use the first trade in the direction of the trend and avoid low volatility, stagnant markets or brokers with high spreads. Also you can extend the TP if you feel that the direction is good and change the stop loss where the TP was for more pips.
But I will stress out again :the plane will crash because of a pilot error no matter how good the plane is. So in order to avoid a crash please practice on a demo and get comfortable with it till you master it, and then you’ll have the ATM card.
Any strategy that can be implemented in a “hedge” fashion can be done in a non-hedge one. This is a certainty because “hedging” is only a fashion of accounting, and nothing more.
I know you wouldn’t implement this strategy but if you did, how would you do it without hedging? I already know but would like to read your take on it.
For another example of hedging. I may take a long term position trade say short for example that will last several weeks but while that is going on I may take a few intraday counter trend longs so at times would be hedging and at times not. There would be no point in closing the short to go long. After all it’s still a good trade so leave it going. But don’t pass up those little opportunities along the way.
For another example of hedging. It’s possible to have a long and a short going at the same time and they can both end in profit… but that’s a whole strategy for another thread sometime…
My comment was made without having looked at the strategy because a) I’m not particularly interested in it, and b) it’s a pure statement of mathematical fact. For the sake of the discussion, though, I’ve now given it a look.
Following the progression laid out:
Buy 0.1 lot at 1.9830. Enter a sell limit order (take profit) for 0.1 lot at 1.9860. Enter a sell stop order for 0.3 lots at 1.9800.
Market goes down through 1.9800, so now 0.3 lots have been sold. That means you’re now short 0.2 lots and are sitting on a 30 pip loss from the 0.1 lot long that’s now closed. Remove the 0.1 lot 1.9830 sell limit. Enter a 0.2 lot buy limit at 1.9770 (take profit) and a 0.6 lot buy stop at 1.9830. If the take profit is hit, you book 30 pips of profit on 0.2 lots, so you’re now net in the green by 30 pips on 0.1 lot.
If the market doesn’t hit the short target, but instead goes up through 1.9830, your 0.2 short lot is exited for a 60 pip loss and you’re now long 0.4 lots and a total of 90 pips down (on a 0.1 lot basis). You enter a 1.9860 0.4 lot sell limit order as a take profit and a 1.9800 1.2 lot sell stop order. If the target at 1.9860 target is hit, you book 120 pips of profit for a net total gain of 30 pips on a 0.1 lot basis.
etc.
Of course, since in the real world there’s a spread, you’ve probably only made about 20 pips because of all the trades.
And of course if the market doesn’t break out of its range in a timely fashion you will eventually will be so leveraged that a margin call will become inevitable and you’ll lose half your account. This is a strategy which relies on the market making a directional move, as other strategies rely on markets to hold to narrow ranges. They can look very appealing from a win % point of view, but in both cases if the market doesn’t follow the script VERY big losses happen.
For another example of hedging. I may take a long term position trade say short for example that will last several weeks but while that is going on I may take a few intraday counter trend longs so at times would be hedging and at times not. There would be no point in closing the short to go long. After all it’s still a good trade so leave it going. But don’t pass up those little opportunities along the way.
Call it “hedging” or call it adding or reducing your base position. It’s the exact same thing. If you’re short EUR/USD from 1.35, put on a short-term “hedge” long at 1.34 to grab 50 pips of upside it’s identical to you closing your short at 1.34 and reopening it at 1.3450.
That’s very important to avoid.
I personally don’t go more than 7 trades and that keeps the losses in check(they are not that big anyways). It happened to me a few times when I first started using this strategy and that was because I was eager to trade no matter what, but now I am using a calendar, a watch, an indicator, a schedule, good pairs, a plan and I usually don’t have to use more than 2 trades. Also in order to avoid a margin call you must calculate your lots very carefully based on your balance for ex. if you are going to use 7 trades that means on a 0.01 starting lot you’ll need 19.00 lots. Make sure you have 19.00 lots to trade safely. For 3 trades you’ll need just 1 lot but also some practice, timing and momentum.
This strategy is based on these factors: market is unpredictable, money management, and skill.
ah good then we agree hedging and not hedging are mathematically equivalent. Commutative property and all that. So it doesn’t matter if you hedge or not, the results are the same. Except that in my example with the long position trade and the shorter term counter trades my way suits me better because I can just leave the long trade on and not give it any thought until it comes to the right time to close it and do other trades in the mean time.
I’ll keep doing my hedging then because wyliwyl (what you learn is what you like)
it’s kind of like ice cream, some like chocolate and some like vanilla.
This is the best system I have ever seen. I had also given up to the idea that the market trend can be predicted. I then developed a system which used just limit orders and take profit. It could double and sometimes tripple my investiment capital but on just one day I couls lose all the profits and start again. I then became confident that since I could make money consistently, alteast for a week and a half to two, then with proper money management I could make money consistently and rely on it completely. Now that I have seen this, I am 100% sure that I will make it. Bishnits thanks a lot. This is not one of those strategies that you can be afraid of letting other people know thinking that they would soon be overcrowded to limit your profitability. This is natural and you can tell anyone knowing that they will have little or no effect in your future endeavors. If you know how to cook, you will not be afraid to teach someone because you think that they will have a restaurant just like yours and put you out of business.