Been there, done that.
I have an EA that does this and other variations of something similar. Sometimes it works well, but a ranging market can wipe you out. Fortunately I never hit a wipeout in live trading, but I did find that backtesting does not accurately reflect forward testing because you don’t get real ticks
If both long and short positions are opened at the same price, and new positions are opened when SL or TP are triggered, where does the profit come from?
that is the question.
Even if you don’t hit a wipeout as @chesterjohn pointed out, your margin will continue to decrease due to spreads, Commissions/Fees, swaps etc.
when buy position is closed as profit it will open new one. it means you still have sell position, and if its possible sell position will close in profit too or loss but less then the profit. (when sell is close it will open new one)
@dbs1 Read through the thread… The Whole Thread linked Above… I demonstrated this technique back in 2019 LIVE in this forum… Most here don’t have a clue how Hedging and it’s various strategies are actually applied…
The linked thread was generated 4 years ago… An era when most of us were using 1:400 leveraged accounts… It took $2-4 margin to open a 0.01 lot position…
Unfortunately… This is no longer really achievable as margin requirements (1:30) have ensured the concept is prohibitive to most retail traders… Including me…
@tommor Profit is derived from the whipsawing of a ranging Market… A trending Market will generate a long (Not Big!!) drawdown which maybe impossible to cover…
@chesterjohn The type of hedging strategy that @dbs1 has put forward… Will only work in a ranging market… If your EA isn’t profitable with sideways price action… The Logic is seriously flawed…
I don’t think this is the answer. If you permanently hold equal-sized opposing positions your net profit from them at any point will always be zero. The system will only appear to be operating profitably if you ignore the unrealised losses from open positions and just total up the closed trades.
Opposing positions have the benefit for the trader of hedging. So, is there a better way to make money from oppposing positions?
Why not use entry orders instead of immediate live entries? This could be a type of bracket trade, using buy and sell orders set respectively above and below current price. No stop-losses are used. Let’s assume there is no time limit on the orders or positions once opened.
On this basis, there are four possible consequences -
the buy is triggered but not the sell
the buy is triggered but price falls and the sell is also triggered
the sell is triggered but not the buy
the sell is triggered but price then rises and the buy is also triggered
The worst possible outcome is that both orders are triggered but the trade closes the positions while there is an aggregate unrealised loss. But if the most volatile markets are selected and the trader is willing to hold for an unlimited period, profit is highly probable.
Umm actually that is my account on pocket option. My mentor did it for me and now I’m looking that EA. BUT NOW I understand that EA does work in real life. I feel it’s a fraud too
