[ img ].... BTW, how to add pictures directly?! Img here does not automatically load external pics.

milanese » Thu Aug 14, 2014 10:58 am wrote:

[ img ].... BTW, how to add pictures directly?! Img here does not automatically load external pics.

For all ,who do not know how to add pictures to their post read please this: http://www.stevehopwoodforex.com/phpBB3/kb.php?a=2

Cheers

Tommaso

Fibotrend » Wed Aug 13, 2014 12:16 pm wrote:

kotsh » Sat Jul 12, 2014 8:42 am wrote:Hi Fibotrend,

this idea also crossed my mind, but if you try to implement it with an EA it is not practical.

Lets say your first hedge trade is 50 pips away from entry. It opens and price goes 10 pips into it then reverses back in original direction, so you close the hedge when (the hedge) is at BE. Now lets say on the way back in your original position favour, it oscillates at the -50 pips level dome time, It goes for example from -48 to -52 pips 10 times, this means you would every time open and close the hedge trade, paying spread and commissions, plus it is very painful to watch

You idea would much better be implemented manually, for example if the hedge goes to BE, you can put a pending order 10-15 pips BELOW the first hedge and increase hedge position size, so in case it reverses again you still catch it with the hedge, but you are at the same time giving it room to move in the ALR zone.

I've been playing around with numbers and thanks to Kotsh advice I've developed a trailing ALR version. What I'm trying to achieve is killing the trade ASAP after the hedge position kicks in. Therefore I thought we should have a recovery zone for the hedge, the same way we have it on the original trade.



The ratio 1:3 works well, as those levels correspond to fibo's likely to be hit. In our example we open the 2nd hedge 15pips above the -50 level, then we put a sell order 30pips below for the short hedge. As this trade has a long bias we keep trailing our orders in this way, long hedges 15pips above, short hedges 30pips below.

Since we are opening each position closer to each other, lot sizes are much smaller when compared to the original ALR version:

1 = 0.1
2 = 0.134
3 = 0.065
4 = 0.08
5 = 0.085
6 = 0.106
7 = 0.113
8 = 0.145
9 = 0.155
10 = 0.206
11=0.218

The smaller the lot size the smaller the margin, risk and exposure. Unfortunately I don't have any formulas or spreadsheet for the model. I've worked out the size for each hedge manually, any help from the math gurus in the forum would be very appreciated.

Another huge plus is that the orders are shifting away from the ALR zone. Basically if the price keeps bouncing in the range it will trigger 5 orders only.

Any feedback is welcome. Cheers

I think the better solution is instead of using static SL and TP is to actually Trail SL in steps once it's X pips in profit, and to do so for both the original position (which will reduce the SL and risk), as well as for the hedged positions (which initially will be opened with the same SL and TP as the last known SL and TP for the previous position, but once also the hedged positions is X pips in profit it will modify the SL). As a result, it will require less number of opened positions, the lot sizes will not increase as much as before, and overall reducing the total risk and margin use.

Fibotrend » Fri Aug 15, 2014 1:06 am wrote:

I think the better solution is instead of using static SL and TP is to actually Trail SL in steps once it's X pips in profit, and to do so for both the original position (which will reduce the SL and risk), as well as for the hedged positions (which initially will be opened with the same SL and TP as the last known SL and TP for the previous position, but once also the hedged positions is X pips in profit it will modify the SL). As a result, it will require less number of opened positions, the lot sizes will not increase as much as before, and overall reducing the total risk and margin use.

The idea sounds great, however I'm not sure how reliable MT would be in managing such a complex EA

I would be happy to have a semi-automated EA that takes care of the trailing hedges after the first hedge kicks in. I'm quite confident that the number of turns would reduce drastically comparing to the static ALR.

Another problem with the current EA system is that it takes over the entire trade regardless of market conditions. Ideally the EA should give you the option to set the trailing distance for short and long hedges after the first hedge opens, so it can be optimized according to market conditions.

Cheers

For anyone wondering still which is better, please look at this post where I did a back test using the same EA strategy comparing ALR I versus ALR II: Dewey McG @ Trend Trading EA with Automated Loss Recovery

blazecrown » Tue Aug 19, 2014 8:44 am wrote: hi Dewey, thanks for all these great work you've been doing along with Spider and the rest... i believe many are following this ALR topic but are either not posting comments or making replies (for whatever reason)... so for clarification, with all these ALRs posted and revised, may i know which particular ALR are you referring to as ALR I and ALR II respectively... thanks...