recently im interested in the hedging system how it is possible to generate some $ from it. BUT it has to be well managed + and possible of tight range market will kill ya
i came across this method while driving back home from work and i straight away jot down whatever point i had in mind that time on a paper
u triple the lot when the current open position reach the -20 pips level and each position has a 20 pips TP.
1st SELL order initiated and the price goes -20 pips against the post and another BUY position will triggered. if the price goes against the BUY position with the respect of -20 pips another SELL position will be triggered. Each position opened will be triple the lottage of the previously open position. and all position will be closed once the last position opened hit TP,… see figure for rough graphical explanation
calculation(on a mini account with micro lot):
we take the 7th position open managed to hit TP.
first we list down the lottage sequence until the 8th level…
1st 0.01 2nd 0.03 3rd 0.09 4th 0.27 5th 0.81 6th 2.43 7th 7.29 8th 21.87
WHy i list down until 8th level? because for min IBFX mini account u can only trade max 50 lots per click.
so the rough calculation of profit will be like this. REMEMBER the winning post will have 20 pips and the losing post will be 40 pips due the the gap.
for instance the 7th SELL position open managed to hit TP means that all the SELL opened will eventually hit TP. by default (ignore the slippage and opening price honored) all the SELL position will actually open at the same price same goes to the BUY position.
so by using this assumption. when the 7th position hit TP means that the 5th 3rd and 1st positions will also hit TP. with a 20 pips profit each and all the BUY positions will closed at -40 pips lost.
7th post (7.29 lot x 20 pips) + 5th (0.81 lot x 20 pips) + 3rd (0.09 lot x 20 pips) + 1st ( 0.01 lot x 20 pips) => 145.90 + 16.20 + 1.80 + 0.20 =164.00
6th (2.43lot x 40 pips) + 4th ( 0.27 lot x 40 pips) + 2nd ( 0.03 lot x 40 pips) =>-97.20 - 10.80 - 1.20 = -109.20
so a rough estimated profit is 164.00 - 109.20 = 54.80 profit (excluded the price of spread and slippage …)
the idea came out last week and i managed to test it last friday and today will a small profit due to both testing period got stopped at 3rd level/position.
as for manual trading using this method, it need constant observation on the price and positions which will be troublesome for most of us (including me)… i need to test more this method but it takes time since i have to be constantly sitting duck infront of the computer.