Dislikedok. would very much like to know how you get along and your final 'system' for hedge trading.
at present i believe there is no benefit on hedging and it can be very dangerous indeed. the only benefit i can think of is the psychological advantage one might get from it .Ignored
Lets call it "opposing positions trading" shall we? So here are my criteria based on 3 years of data that I have collected so far. This is designed and meant to be traded on day candles. I have NOT tested it on any higher or lower time frames...you all are welcomed to test on your own if you like. Perhaps you will even contact me and we can compare results.
Signals used:
Bullish:
- Piercing Line
- Bullish Engulfing Bar
- Hammer
- Bullish Harami (with following close above real body of Harami)
Bearish:
- Dark Cloud
- Bearish Engulfing Bar
- Shooting Star
- Bearish Harami (with following close below real body of harami)
If I see any of the above signals I will enter a long on the bullish or short on the bearish if it meet these validation criteria:
Longs:
- The last short was confirmed (ie market closed below the low of the signals)
- There at least 3 lower lows since the last CONFIRMED short signal
-----2 lower lows are acceptable during a strong bullish trend.
Short:
- Last long signal was confirmed (ie market closed above the high of the signal)
- There are at least 3 higher highs since the last long signal
-----2 higher highs are acceptable during a strong bearish trend.
Exit:
- 3 closed candles after any signal that fails to confirm (sideways market)
- close below low of long signals or above high of short signals
- Longs: con confirmation of short signal
- Shorts: on confirmation of long signal
Scale out: Only if price is 127% of risk (measured in pips) on close of opposing signal. Otherwise hold or exit as above.
As I've previously stated, I enter "opposing trades" based on the signal with NO directional bias. I have often seen that the market will trend, give and opposing signal, then continue in the original direction. The above method has me scaling out to lock in profit at the opposing signal (just in case the market turns around), then if the market continues I close the opposing trade and continue with the reduced original trade.
Again the numbers I have from the back testing are pretty impressive no matter what the chatter or presumed math says. I am still forward testing this and invite any who wish to join me. The more validation the better.