garyfritz wrote:

squared wrote:if I follow what you said, then i will have only one kind of trades, let say sell trades.

If the market only goes up, yes. That's the net result of your hedging strategy. Obviously it gets more complicated if the market goes up and down, but we're just talking about "market moving up" in this example.

assume that between each two sell trades, there was a buy position that was closed on a 10 points profit. So, if price goes up for 300 points then down for 30 points. yes you will close your sell basket same as previous scenario, but, in addition, there were 30 buy positions closed on 10 points profit each.

You're confusing yourself with the complexity of all your trades. You're getting all wrapped up in 1+1+1+1+1+1 and forgetting it's just 6. Simplify them and it will be clear.

Do you agree that "buy at 0, close it at 10, buy at 10, close it at 20, buy it at 20, close it at 30" produces 30 pips of profit?

If so, then how is that any different from "buy at 0, close at 30" except for your trading costs?

Similarly, if the price goes up 300 and you buy/close every 10 pips, that is the SAME as buying at 0 and selling at 300 -- it produces 300 pips of profit. So instead of buying/selling every 10 pips, just buy at 0 and sell at 300 and it's the same result.

You also short at +0, +10, +20, etc. At +300 you have the net open loss of all those shorts.

So now you're buying at +0, HOLDING that long until price hits +300, and shorting at +0, +10, etc. Do you agree that produces the same result as your strategy?

NOW don't do anything at +0. You never enter a long position on this market run-up, AND you also don't enter the short at +0.

You no longer have the 300 pips of profit from your longs. BUT you also don't have 300 pips of loss from the short at +0. They cancel out. "Do nothing at +0, and add 1 short at +10, +20, etc" is the SAME as your "buy 1 / short 1 at +0, close 1 long and buy 1 / short 1 at +10, etc."

Maybe I don't understand the details of your strategy, so my example might not match your idea exactly right. But the basic concept I'm illustrating here still holds: any hedged position is FLAT. You can remove it without changing the results at all.

squared wrote:hedging will do nothing. just ignore hedging part. open ea in two different criminals, on buys and the other one sells. it is the same. the idea is gaining pips up and down.

Similarly, if the price goes up 300 and you buy/close every 10 pips, that is the SAME as buying at 0 and selling at 300 -- it produces 300 pips of profit.

you are absolutely right. but tell me, how would you know that price will go up 300 points?

garyfritz wrote:

squared wrote:hedging will do nothing. just ignore hedging part. open ea in two different criminals, on buys and the other one sells. it is the same. the idea is gaining pips up and down.

If you buy in one crim and sell in the other, the net is the same as if you buy in one and sell in the same one, which is the same if you don't buy and sell at all. It's flat. No profit or loss, so why bother?

Similarly, if the price goes up 300 and you buy/close every 10 pips, that is the SAME as buying at 0 and selling at 300 -- it produces 300 pips of profit.

you are absolutely right. but tell me, how would you know that price will go up 300 points?

Ah, very good question! And it's very possible I don't understand how you plan to work this, so I may be oversimplifying it.

If you do the "buy/sell every 10" on the way up, and then "buy/sell every 10" on the way down (losing 10 points every 10), it's the same as buying at 0 and holding. With "every 10" the *closed* profit goes up and then goes down, with "buy and hold" the *open* profit goes up and then down. Same result for your account value.

But I don't think you do the "buy/sell every 10" on the way down. If I understand your example for George, you buy every 10, taking on bigger and bigger long positions getting deeper in the hole, while you also sell every 10 & close it 10 points lower. Which, as I discussed earlier, is the same as selling at the top of the move and holding.

I haven't thought through all the details of this, but I'm certain there's a way to work this without doing the "buy at 0, sell at 10, buy at 10, sell at 20" stuff, and still get exactly the same result. I believe it would be something like "buy at 0 and hold, and the first time it drops 10 from its high, close the long position for profit," or something close to that.

This is complicated enough that I can't simulate it in my head. I'd have to come up with a spreadsheet or Tradestation system or something like that to see how it works. Maybe it actually does work, as long as the market doesn't move too far. In the example you did for George, the buy side was over 800 pips in the hole before the retracement popped it out. If it had gone 10 pips farther, you'd have been 1200 pips in the hole. Sure sounds like a Martingale to me, that will "never blow up" until the day it does.

Maybe the sell side would be making profits to reduce that open loss. But if I understand it right, the sell would have only reduced the open loss by 90 for the 800 pip drawdown, 100 for the 1200 pip drawdown. So it looks to me like you're still risking a big blowup, like any ordinary Martingale.