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Hedge trading
https://www.stevehopwoodforex.com/phpBB3/viewtopic.php?t=2712		 Page 4 of 5
Author:  kwanann [ Wed Jul 17, 2013 6:57 pm ]
Post subject:  Re: Hedge trading
Hmm yeah you are effectively unhedged, but I guess that's why he mentioned what goes up must come down as the condition. That said the mt4i trade sim seems interesting, will see if that fits my needs.

It's been quiet because I.ve been trying to write my own trade sim which fits my needs and that is taking a while
Author:  tex [ Wed Jul 17, 2013 7:05 pm ]
Post subject:  Re: Hedge trading
Jeuro wrote:OK.. then when price hit one of them, the system is no longer hedged ..because you would be "net" long or short whichever hits first... right?

I would say if it is this way, the profit or loss would come from when un-hedged.
Is my thinking correct?

J
correct
Author:  lnorbi [ Thu Jul 18, 2013 10:59 am ]
Post subject:  Re: Hedge trading
I believe you can indeed make money from this system, assuming the market keeps expanding in a wave-like manner (up-down-up-down-up-down, bigger and bigger waves, so always higher highs and lower lows). Otherwise, you will end up with too many positions in the areas that seem unreachable for the price, and the end of this strategy is when you cannot open new posititons.
Author:  hakuna [ Thu Jul 18, 2013 3:00 pm ]
Post subject:  Re: Hedge trading
Perhaps this thread in FF would enlighten some of you here -> http://www.forexfactory.com/showthread.php?t=279648
Author:  Jeuro [ Thu Jul 18, 2013 6:32 pm ]
Post subject:  Re: Hedge trading
That FF thread ended up in nothing, not worth reading.
The concept was wrong from the beginning.

Hedging 3 pairs with the same lot is trading a small amount un-hedged in 1 pair.
That tiny un-hedge amount produce profit or loss, same as trading that tiny amount in that 1 pair.

If you make a perfect 3 pairs hedge ( the correct amount of units for each pair) then there is no profit or loss ever . You loss the spreads and swaps.

J
Author:  SteveHopwood [ Thu Jul 18, 2013 10:48 pm ]
Post subject:  Re: Hedge trading
hakuna wrote:Perhaps this thread in FF would enlighten some of you here ->
Would be a first if it did. :lol:

kwanann, I am thinking about a bit of automation to ensure we get trades sent at appropriate intervals. Here is what I am thinking. An ea that only leaps into life when there are already open trades - say the first hedged trades. From there:
  • keeps a record of the highest and lowest priced trades.
  • sends a hedged trade at x pips above the highest and below the lowest, up to a maximum of x trades:
    • will include trading hours so we can avoid major news releases.
    • will include my standard spread filter to avoid trading just when the market is going bonkers and the spread is silly.
I am going to code this for myself and will offer it up here anyhow, but is there anything else that you would find helpful?

:D
Author:  kwanann [ Thu Jul 18, 2013 11:06 pm ]
Post subject:  Re: Hedge trading
Hi Steve,

Thanks for the offer, in fact i already coded such an EA, which failed miserably during backtests :P

Attaching just for the fun of it if you guys wanna play around, the only thing would be to add in a news filter so that it doesnt go and screw up when price is moving like crazy, spread is already taken care of inside the EA.

Steve, u can rip out the file to take the parts you want. If you can, what i'm looking for is a trade inbalance, ie each hedged position should always end up in profit

e.g i send in a hedged trade today @ 0100 HRs, another at 0200, another at 0300

Rules for closure
1. Always close a buy and sell together
2. Buy and sell MUST be from different trade pairs
3. If you can dump in slipshod s/r lib, if price is at a S/r location, DO not add in a hedge position, otherwise add in a hedged position
4. Whereever possible, each hedged pair must be in profit. ie the trade at 0100 hours must be profitable, 0200 must be profitable etc
5. if DD hits say 50%, close out the most expensive losing buy and sell trade

Basically what happens is i'm paying it forward. Each original trade ends up in profit. Of course my current nett position will always be negative.

Thanks for the offer!

I'm currently coding out a trade sim to figure out for me the best places to enter and exit trades
Author:  landsat [ Thu Aug 01, 2013 4:48 pm ]
Post subject:  Re: Hedge trading
kwanann wrote:Hi Steve,

Thanks for the offer, in fact i already coded such an EA, which failed miserably during backtests :P

Attaching just for the fun of it if you guys wanna play around, the only thing would be to add in a news filter so that it doesnt go and screw up when price is moving like crazy, spread is already taken care of inside the EA.

Steve, u can rip out the file to take the parts you want. If you can, what i'm looking for is a trade inbalance, ie each hedged position should always end up in profit

e.g i send in a hedged trade today @ 0100 HRs, another at 0200, another at 0300

Rules for closure
1. Always close a buy and sell together
2. Buy and sell MUST be from different trade pairs
3. If you can dump in slipshod s/r lib, if price is at a S/r location, DO not add in a hedge position, otherwise add in a hedged position
4. Whereever possible, each hedged pair must be in profit. ie the trade at 0100 hours must be profitable, 0200 must be profitable etc
5. if DD hits say 50%, close out the most expensive losing buy and sell trade

Basically what happens is i'm paying it forward. Each original trade ends up in profit. Of course my current nett position will always be negative.

Thanks for the offer!

I'm currently coding out a trade sim to figure out for me the best places to enter and exit trades
Kwanann

still playing with your hedging strategy ??
Author:  kwanann [ Sun Aug 11, 2013 2:59 pm ]
Post subject:  Re: Hedge trading
Yup nothing to report yet though, still simmering :)
Author:  Haggadah [ Wed Aug 21, 2013 5:10 pm ]
Post subject:  Re: Hedge trading
kwanann wrote:Yup nothing to report yet though, still simmering :)
Kwanann,

Try doing it on low leverage, say .01 lot. I have a demo account on the same hedging across 20 pairs way back in January with $1000 initial capital and now it stands a balance of $2350/equity $2186 and a dd of $170 . The last 2 or 3 months though, the market is flat and did not make any trades except to let my dd run for the entire period.

Initially, with the above pairs you will be having a dd of at least $150 which corresponds to the spreads. I have also set daily target of about .055% profit, which actually captures the positive differential fluctuations between correlation/hedge pairs taking your total spreads as your bench guide. I also set $250 dd as my limit until it goes down again to level of $150 and do my daily profit all over again.

If I have to close my account now I stand to double my account for a period of 8 months. What I am not sure though if the profit indicated as my equity is actually what I get considering swap and spread charges.

I hope this help.

Haggadah
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