Hedge Wedge Trending System

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It seems to me that if you split your lot size up you will find it easier to drop positions if you see fit to do so.

Example 2% of 1,000

One trade would be a .4 lot position.

Instead of doing the above you could open 4 .1 lots and have the same effect as 1 .4 lot.

When it comes time to....remove a bad trade if you desire to do so, it would be easier to close a .1 lot

Quoting Gmak

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I think I get the fundamentals but remain unsure as to how such a system would operate in practice, though I keenly hope it works.

Surely there is a lot of ranging - even with a positive 50 shift, from within and without the hedge wedge boundary.

Such situations would lead to multiple unhedgings and rehedgings depleting your balance by spread each and every time.

I attatch a chart to explain what I mean. Perhaps I am missing something.

http://img03.picoodle.com/img/img03/...gm_763a765.jpg


I think Yezbick made a good suggestion on another thread



perhaps an incremental removal of hedging as trend develops (as a sort of hedge equivalent of increasing position) is more appropriate?

Perhaps not.

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Quoting yezbick

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tKimble,

I like the looks of the new system. I'm studying the effects of this system and will post my findings and any questions, I may come across.

Looks good.

yezbick

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Quoting tkimble

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One of the weaknesses of any trending system is that the price action has a tendency to stay to close to the actual trend. The simple premise is that prices always gravitate towards their means.

The idea behind this system is to create distance between the price action and mean thereby allowing for a longer adherence to price action during trending. This trading idea was inspired by Yezbick's work.

This is a very simple system. The rules are as follows:

1. Create a one hour chart
2. Create a 25 period weighted close moving average (WCMA) with 25 and -25 offset levels. This will create the WCMA wedge appearance.
3. Add a 50 period postive shift to the (WCMA)
4. The WCMA will appear as a Wedge on the chart.
5. Establish a spread Hedge (Long and Short simultaneous orders) whenever the price enters the Wedge. This is a neutral position.
6. Unwind the hedge (spread) whenever the price action leaves the wedge. For example, if the price is trending Long and exceeds the Long side of the wedge, remove the short side of the Hedge (spread) which will result in a Long position. If the price is trending Short and exceeds the Short side of the wedge, remove the Long side of the Hedge (spread) which will result in a Short position.
7. Once a trend has been engaged, enter an opposite side entry order to re-establish the spread should the price reverse. Do not place any stops. The opposite side hedge entry order will serve as the stop.


The attached chart illustrates the price action slicing through the Wedge that is created by the WCMA. This type of slicing action permits clean trade entry. Remember, the hedge wedge is a completely neutral zone where spreads are created which is an artifical stop...

TK

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Quoting yezbick

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tKimble,

I like the concept of hedging inside the +/- levels. It makes good sense. One thing I ran across though is the following.

It seems that the shift can cause losses. I have enclosed a chart below describing the issue in question.

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