(SRHR) Support and Restance with Hedging and Recovery

Place your new trading idea here to see if someone can automate it.
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miller150
Posts: 2
Joined: Thu Apr 26, 2012 9:23 pm

(SRHR) Support and Restance with Hedging and Recovery

Post by miller150 »

I’ve been trading The Beast live for several weeks with good success (3% per week x 5 weeks) and like the no stop loss strategy/theory that Steve explains (price will come back eventually). With proper trade/money management it is not an unsafe way to trade. The ideas and programming within this group is simply outstanding and I wish I had found this years ago.

I also manually trade support and resistance zones/trend lines trying to catch small retraces against the trend, and moves with the trend after pull back using the recovery strategies in The Beast. This provides optimum entry and increased success for recovery, but the idea of making money on those trades you are waiting to recover from is the genesis for this idea.

As a U.S. trader, I would like to ask if Steve could use the elements already built into The Beast to design an EA that will trade long or short (but not both on the same account in order to hedge two accounts). I suppose non-U.S. traders could do it on the same chart or different charts in the same account.

The concept is simple: at each S/R level your “long” EA will buy and your “short” EA will sell. At the next S/R level the EA will “rinse and repeat” (close and open a trade at the same price) profitable trades and or begin recovery (using rules already established) for unprofitable trade. This system will not get you optimal entry into each trade but knowing that you are always making money with one of the trades is the advantage.

Recovery is the heart of the system and ideally could go at least 6 levels deep, maybe 10. The EA could be built with two options how to perform.

Option one could be for the trader to input the number of pips between each level of recovery (this may not target S/R levels however). We know that the further price moves the more likely a re-trace so you would want to be able to choose more pips between trades at the higher levels to reduce draw down. We also know that some pairs are more volitile and you want the ability to fine tune these distances for each currency pair you decide to trade.

Option two is to base it on S/R levels. This is my ideal method and could use Fib levels or the volatility calculations of The Beast to determine your entry/exits/recovery trades (I defer to the experts on how this would be done as I am not a programmer). The key is that the entry/exit prices are the same on your long and short trades. You could also manually enter your target prices into the EA. This would make it non-automatic, but give you tremendous control of your entries trying to find the most significant S/R levels to improve success of recovery. This could also be an option of the EA (i.e. manual S/R entry up to 6-7 levels each way or to let the EA calculate them for you).

Please, please feel free to critique this strategy and make any suggestions at all. I would even pay to have this programmed and posted it for all to use.

Thanks
miller150
Posts: 2
Joined: Thu Apr 26, 2012 9:23 pm

Re: (SRHR) Support and Restance with Hedging and Recovery

Post by miller150 »

It only took 24 hours to see a flaw in this idea. Primarily if you increase the distance in pips for your recovery trades, the chance that price will move all the way back to ealier levels is unlikely. With this is mind, the EA would calulate a BE point (as does The Beast). The trader would ideally be able to create a BE+X number of pips to at least make some money on the trade basket. This price would show up on the chart as does The Beast (blue line).

While this is happening, the EA trading in your oppisite direction is now loooking to begin recovery. An option to to set the price that recovery begins vs. letting it begin at the last S/R level would be ideal. Both trades may have moved 200 pips or more to wait for an optimal re-entry price for your losing basket. You want recovery to begin once at the same price your losing basket closed out (BE + X pips).

I envision this as more of a sophisticated, yet powerful trade management EA vs a fully automatic EA. I've traded this style manually on two opposite demo accounts and it can get very difficult to manage the order of your trades. If your broker's Empty4 platform doesn't stop you from closing trades in FIFO order (you accidentatly close a "last in" trade) you could be in trouble.

In order to be fully automatic, your levels would need to be fairly uniform and recovery lot sizes speicifcally designed to BE or possibley make money falling back to each level (i.e double at each level). This could be riskier than most traders would like. In this situation the losing basket is really only recovering to BE and you are only making money on the single winners on the opposite side.
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