I'm not about to argue that the median line hedge strategy can't be done with conventional order types with similar outcomes. My point is that, IMHO, when market appears to be headed for a range I would rather use a strategy that makes profit REGARDLESS of price direction. Perhaps that's purely pschological, but I for one, hate stress.
While I'm at it, here's another subtle advantage I gained from hedging the median line. On one occasion while price was within the range, I noticed price was headed up towards strong resistance. I had no open positions, so I simply opened a long, then as price moved closer to resistance, I opened the short side. In effect, I had two potential winners for the spread cost of one. Did I pay for the spread of both positions? Technically perhaps, but as far as my equity at that time showed, the answer is NO! At that point I was sitting pretty knowing that all I needed was for a strong reversal near the range extreems to return price back home, safe and sound. If price broke out, I had the insurance that I wouldn't lose much because of my resting buy and sell stops that were convieniently located just beyond the 100 pip mark (just outside the range extreems)
That was some of the easiest money I ever made. Yes, I could have made money with simple stop and limit orders, but I would need to watch the charts more closely, knowing that one spike in the wrong direction could put a good sized loss on the books right away. Give me a flat range and a phoney hedge feature any day over a range and conventional order types.
Sometimes, easy does it.
While I'm at it, here's another subtle advantage I gained from hedging the median line. On one occasion while price was within the range, I noticed price was headed up towards strong resistance. I had no open positions, so I simply opened a long, then as price moved closer to resistance, I opened the short side. In effect, I had two potential winners for the spread cost of one. Did I pay for the spread of both positions? Technically perhaps, but as far as my equity at that time showed, the answer is NO! At that point I was sitting pretty knowing that all I needed was for a strong reversal near the range extreems to return price back home, safe and sound. If price broke out, I had the insurance that I wouldn't lose much because of my resting buy and sell stops that were convieniently located just beyond the 100 pip mark (just outside the range extreems)
That was some of the easiest money I ever made. Yes, I could have made money with simple stop and limit orders, but I would need to watch the charts more closely, knowing that one spike in the wrong direction could put a good sized loss on the books right away. Give me a flat range and a phoney hedge feature any day over a range and conventional order types.
Sometimes, easy does it.