Some traders would probably say no, if your answer to this question is also NO, then have a nice day; If your answer is YES or MAYBE, then before you will jump out of your seat thinking you just found a holly grail of trading, please read carefully all stuff below and download and test a demo version of my newest EA, because it might also work for you!
So to prove the statement above, I've coded an EA that is using "back-and-forth" hedging mechanism it's NOT a martingale system , which I'll explain in the pdf manual.
This trading technique is probably not new and maybe it is also discussed many times on this forum. However, I couldn't find any EA for it so I've coded my own. Thus, just for the illustration let's say you have just entered a "sell" trade and you are now waiting to see what will happen next. Let's think about this situation for a moment. Then what can we say regarding the future market direction? Unless you are an extremely experienced trader, the answer is of course: However, the one and the only one peace of reliable information, that we have at that moment, is that the market will eventually go "up" or "down" w.
It can take a day, a week or even a month but the market will move up or down, simply because it has to! At any point in time, any price level we can open a "buy" or "sell" position and add several new positions by anticipating to new market movements.
Thus, when the first trade is a "sell" order and market moves several pips in the opposite direction up , then we could open a new "buy" position, and vice-versa. While doing this back-and-forth hedging we could also calculate the new Lot size required to cover for our previously opened trade s at our original TakeProfit, but ALSO at our original StopLoss level! By doing some simple mathematical calculations we can easily discover that the Lot sizes of our new recovery trades are not necessary always bigger than the previous ones.
This is so much better than a martingale system which will just blow up your Lot sizes just within a few trades. Of course there are some constrains, w. For example we need to make sure our open trades will not eat up our freemargin, which we will use to open new trades in case of market direction change.
Furthermore our account size needs to be large enough to be able to cover for some equity dips and the required margin. Our StopLoss and TakeProfit levels need to be carefully chosen to minimize the resulting recovery lot sizes.
We also need to make sure the system can survive several recovery attempts, when market will be ranging. The wise recommendation for ranging condition is to exit at the best price and take some small losses.
Furthermore, we need to add some on-the-fly correction for our spreads, slippages and swaps and commissions. To help the system a little bit we will also add a BreakEven with a TrailingStopLoss mechanism and will also automatically close all positions when our pre-set ForceTakeProfit target is hit. Nevertheless, this type of trading could have some potential for success when positions are opened manually or according to a proven trading system.
How about the risks involved in this kind of trading? It depends on several factors like: As I said before the most important is to avoid ranging markets and assuring our account has sufficient FreeMargin for opening new trades. Otherwise the system will not be able to recover and it will take a loss. The only way to find out the limits of this system is to play.
When the settings are properly chosen you will see, that it is really very very hard to lose money with this system. There is no free lunch: No free lunch theorem - Wikipedia, the free encyclopedia. That does not mean a lot to US residents that a lot of brokers allow hedging unless they want to be targeted by the law enforcement. If you do not like this strategy, ok just skip this thread and go forward, do not waste time here.
I wish you the best. This is a forum, it is free to say anything or you can save the universe with a free strategy , so dont be offended. I was thinking how to improve this system even more and I think I have succeeded in doing that. So the main problem occurs during the ranging market conditions. Then the EA will keep opening buy and sell positions every time the price will cross the recovery line levels. In worst case scenario it could open even 10 positions or even more.
This will totally destroy the FreeMargin level and introduce a risk of "unfinished recovery" cycle. The idea is to shift the recovery levels closer to the market, each time a new recovery trade is opened. Doing so, the EA would be targeting lower and lower recovery levels and this would increase the chance of successful recovery.
To test this improved recovery system the EA version The entry logic is:. This is of course the stupidest entry algorithm ever, so normally your account would be wiped out in several days. So let's run a backtest from until now and see if this system can survive this worst case random test.
So as you can see, apparently this strategy can withstand even 7 years of random trading! What nbtrading was trying to tell you that US residents can not use that EA. They are obliged by the law to use US regulated brokers, and US forex brokers regulations prohibit single symbol hedging among other things. To add comments, please log in or register.
So everything started with the following simple question: We can take this one peace of reliable information and use it to our advantage. And here is how: The only way to find out the limits of this system is to play with it and adapt the parameters according to desired trading behavior. Link to this EA: Hi nevar, If you do not like this strategy, ok just skip this thread and go forward, do not waste time here. Hi Chris This is a forum, it is free to say anything or you can save the universe with a free strategy , so dont be offended.
Sounds interesting, will go through it.. Hi guys, I was thinking how to improve this system even more and I think I have succeeded in doing that.
So my idea was to introduce a "moving recovery target" mechanism. The entry logic is: Link to the full statement: CoensioRecoveryEaV01 So as you can see, apparently this strategy can withstand even 7 years of random trading!
I'll post the updated EA versionMore...