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Thread: Hedge trades instead ...

  1. #1

    Default Hedge trades instead ...

    Hi.
    This is a basic question, sorry if not help, but I wonder whynot make an ea that hedge trades instead of a stop loss?
    Whatever strategy we can use, it would be wonderfull have an ea that could hedge as perfect as manual trading, when specific conditions are happen, and that replaces the SL .

    Is it possible?

  2. #2
    Administrator funyoo's Avatar
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    Quote Originally Posted by civfan View Post
    Hi.
    This is a basic question, sorry if not help, but I wonder whynot make an ea that hedge trades instead of a stop loss?
    Whatever strategy we can use, it would be wonderfull have an ea that could hedge as perfect as manual trading, when specific conditions are happen, and that replaces the SL .

    Is it possible?
    Hi civfan,

    What would be the logic for the exit ?

  3. #3

    Cool

    >>exit logic

    Why not when the overall position was in profit (or out of loss) by a specified number of pips?

    When I manually hedge to get out of a losing trade, this is what I do:

    1) Calculate a lot size greater than the trades I am opposing. For example, if 5 micros are losing, I would hedge 1 mini.

    2) Pick a TP level for the hedge where the whole position is in profit.

    3) Close the losing trades as soon as the hedge hits its target.

    The extra credit feature would be for the hedging feature to set a "hedgebrakevengain" and "hedgebreakeven" amount. Rather than a TP on the hedge, the SL of the hedge would be set according to hedgebreakeven. Maybe it would actually be better to have the hedgebreakeven set automatically... the important thing is being in profit on the whole pair. Anyway, the losing trades would be closed when hedgebreakeven is set. At that point, you are in the money and the hedge can keep going into profit if it will.

    Sound doable?

    MM

  4. #4
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    Well, that´s a martingale expert with a hedge option active.

    Just add a take profit in pips including short and long positions.

    Also, it could be active all time

    Should work quite well

  5. #5

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    yes sounds intersting. Maybe used with asiatic scalpers facing a big wipsaw like it often happen on EG.

  6. #6

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    Thinking about what happens if the market turns against the hedge before the target is hit, probably the best thing to do would be to close the hedge based on a hedgestoploss setting. Another risk reduction strategy might be to place the hedge as a stop order. That way, the market has to confirm its direction by moving to execute the hedge, so if it does not, you are not left with the hedge cost.

    MM

  7. #7

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    A set that determine when start hedging: start hedge at x loss pips

    Set to determine hedge increment: y pips to increment hedge.

    Hedge exit rule: % to exit hedge... like: 5% profit, or 2% profit... or -2% profit...

  8. #8

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    If this could be done effectively, then every martingale system would become tradeable from a risk standpoint.

    If loss > x% start hedge

    X represents an open equity loss at a measurement of standard deviations of returns.

    The real trick would be in unwinding the hedge and how to quantify it ! If we aren't careful here we may end up losing more on the hedge than we would have in the original system.

    Take a look at any Martingale equity curve. They are easily defined by thier short negative spikes followed with consistant gains............then the "BLOW OUT"........

    But if we could measure those typical spikes and then hedge below them and carefully unwind that hedge as the martingale returns back to a positive, possibly we'd have the Holy Grail !

    D
    Attached Images Attached Images Hedge trades instead ...-testergraph-gif 
    Last edited by Dutchess; 01-12-2010 at 01:59.

  9. #9
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    Just a few thoughts (sorry for my english):
    1) Maybe we could use an opposite martingala system
    I mean, everytime the price moves in our favor, we increase the possition.

    As so, we open a short and long positions in the EURUSD at 1.4500, and we double our positions every 30 pips.

    The EURUSD moves up and we open 2 new long contracts at 1.4530, the price keeps going up and we close all positions when we get XXX pips.

    What do you think?
    Last edited by jose7674; 01-12-2010 at 09:53.

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