DislikedIt sort of makes sense and it does not make sense....
I have been looking at this similar method and am not far of cracking this... the problem you have here, you could lose both your bets... and the other issue you have here if you lose your BOM the market trade, the hedge might not even pay off enough to cover your losses.Ignored
Yep that is the main risk. However the whole point of them giving you such a low return on your stake is that it is improbable that the level will be hit... like any other strategy it can never be perfect its all about stacking the odds in your favour, so choosing pairs that have no major news out to increase the odds of lower volatility, hedging if neccessary to decrease your overall loss if the trade goes against you. There is always the chance that the level will be hit but hey only risk what you can lose!
so far i have only had to hedge 3 times out of 45, the level is that far away... my prefered pairs are Eur/GBP or Usd/CAD, fundamentally the volatility should be lower since Britain/Eurozone should move similarly, and same with US and Canadian.
Hope that helps, and very interested to hear your strategy!