Hedging EA

How do you deal with a trade that does not go with your initial direction? If there is no stop-loss, it will enter into a bigger drawdown if you do not cut loss early. Another alternative to setting stop-loss is to hedge the trade with a bigger lot size in the opposite direction so that if price continues its trajectory, you can eventually close all the positions in breakeven or profit.

One such trading strategy is called "Sure-Fire" Forex Hedging Strategy. In theory, the strategy can reach your profit amount no matter how the market behaves. The only pitfall is that it is using martingale, which may result in margin call due to numerous positions being opened in a ranging market condition.

One possible tweak is to replace the martingale with a fixed lot size increase to avoid margin call. The downside of having a fixed lot size increase is that it will take a longer pip distance to reach breakeven or profit amount for each new position that is opened. However, if you see that the market is heading to a particular direction, you may add position along the way to reduce the pip distance to reach the target.

I have developed a hedging EA to automate the process. PM me if you are keen to test.