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Attachments: Opinions and Experiences with Hedging and Martingale
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Opinions and Experiences with Hedging and Martingale

  • #41
  • Mar 2, 2021 2:20am Mar 2, 2021 2:20am
SwingMan,

Would You tell us what is Your experience with hedging?

The topic is actually very interesting and You seem to be quite experienced trader.

What is Your personal philosophy standing behind hedging?
Why a trader like You would need to hedge instead of just simply close a losing/earning trade?
  • #42
  • Mar 2, 2021 3:48am Mar 2, 2021 3:48am
Quoting marecki
SwingMan, Would You tell us what is Your experience with hedging? The topic is actually very interesting and You seem to be quite experienced trader. What is Your personal philosophy standing behind hedging? Why a trader like You would need to hedge instead of just simply close a losing/earning trade?
I think i have to disappoint you that i'm not a trader because i don't have time, more a theoretician, and develop EAs to make my life easier.

I analyzed triangle hedging (EURUSD-EURCHF-USDCHF etc.) here in forum many years ago:

2007!
Hedging the Hedge

2008
Zeusjoes Market-Neutral Hedge Strategy

or
Hedge trading player system derived from futures spread trading

The ideas of "Zeusjoes" and "Spieler" were very interesting and should be studied today as well, without rediscovering the wheel ...
I also analyzed/programmed the grids with hedgings and the martingales and now I have a variant in "Lazy Hedging" thread with sliding trailing, which may work satisfactorily with a decrease in DD.
  • #43
  • Mar 2, 2021 2:17pm Mar 2, 2021 2:17pm
Awesome way of trading MoneyZilla!

Do I understand correctly from images?:
1. You open trades manually according to market conditions
2. You are hedging and/or pyramiding according to Your current prediction of what will happen
3. When total gain of all the open trades are at predefined level You manually close (or EA automatically closes) all of them.

That is how it looks to me.
  • #44
  • Mar 2, 2021 3:08pm Mar 2, 2021 3:08pm
Quoting marecki
Awesome way of trading MoneyZilla! Do I understand correctly from images?: 1. You open trades manually according to market conditions 2. You are hedging and/or pyramiding according to Your current prediction of what will happen 3. When total gain of all the open trades are at predefined level You manually close (or EA automatically closes) all of them. That is how it looks to me.
This is not how it looks to me:-

1. Trades are opened by EA, has to run all the time, basket add requirements might be in Asia, London or New York
2. Looks more like scaling/averaging to me, but not as Martingale (potentially would blow up). You just have to have enough of the right trades to deal with the wrong trades
3. Agreed, *basket* level profit causes closure, don't leave basket danglers.

I could of course be wong, what do I know right?
  • #45
  • Mar 2, 2021 3:17pm Mar 2, 2021 3:17pm
Quoting swd
{quote} This is not how it looks to me:- 1. Trades are opened by EA, has to run all the time, basket add requirements might be in Asia, London or New York 2. Looks more like scaling/averaging to me, but not as Martingale (potentially would blow up). You just have to have enough of the right trades to deal with the wrong trades 3. Agreed, *basket* level profit causes closure, don't leave basket danglers. I could of course be wong, what do I know right?
Isn't it a kind of martingale at this point?
Attached Image (click to enlarge)
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If it was simple averaging the result should be around $0, but if I understand correctly it was closed at +$50.
Therefore I assumed it martingale.
  • #46
  • Mar 2, 2021 3:20pm Mar 2, 2021 3:20pm
Quoting marecki
{quote} Isn't it a kind of martingale at this point? {image} If it was simple averaging the result should be around $0, but if I understand correctly it was closed at +$50. Therefore I assumed it martingale.
If he used Martingale in some of those instances I think he would be a fool. I don't think he's a fool. But he can answer what he does, if he wishes to reveal. I would think twice about doing that.
  • #47
  • Mar 2, 2021 3:40pm Mar 2, 2021 3:40pm
I've been trying, just can't quite get it. I was long at the trendline touch but as you can see it didnt work out. Where it looks like I was stopped out is where the hedge order was activated. I wanted to close it when It started to bounce from the pink support line but it didn't go there yet at the time and I closed the hedge order when I saw the rejection candles thinking price was coming back up again. The tricky thing is managing the hedge and figuring out when its no longer neccessary.
Attached Image (click to enlarge)
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  • #48
  • Mar 4, 2021 4:51am Mar 4, 2021 4:51am
Quoting marecki
Awesome way of trading MoneyZilla! Do I understand correctly from images?:
Quoting marecki
1. You open trades manually according to market conditions
2. You are hedging and/or pyramiding according to Your current prediction of what will happen
3. When total gain of all the open trades are at predefined level You manually close (or EA automatically closes) all of them.

1. Automatic opening.
2. Imperfect indi reports the direction. ~50% of the time indi is confused, reporting wrong short term direction.
3. EA closes based on 100 net pips gain per signal count.
Quoting swd
{quote} This is not how it looks to me:-
Quoting swd
1. Trades are opened by EA, has to run all the time, basket add requirements might be in Asia, London or New York
2. Looks more like scaling/averaging to me, but not as Martingale (potentially would blow up). You just have to have enough of the right trades to deal with the wrong trades
3. Agreed, *basket* level profit causes closure, don't leave basket danglers.

1. Yes. EA watches for indi's signals. Then executes according to direction. EA cannot compensate in fully, the indi's mistakes. Just partially and only sometimes. When indi is right + whatever the EA managed to compensate, it is easy... closing orders happens.
2. Call it Averaging. Do not do multipliers. I have a support for these, but the account size required is 6-7 digits and therefore, for now, I am not using them. Doing MERGING, instead. This does confuses most on FF hedge haters. As I merge instances of 0.01 each. Instead of opening 6 individual instances of 0.01 each, I merge them into one 0.06 trade.
3. A closure closes everything and starts over from 0. All previous data is deleted and signals accumulation is neglected.
Maadik Hugiis. IQ 69.
  • #49
  • Mar 4, 2021 9:15am Mar 4, 2021 9:15am
Quoting MoneyZilla
2. Call it Averaging. Do not do multipliers. I have a support for these, but the account size required is 6-7 digits and therefore, for now, I am not using them. Doing MERGING, instead. This does confuses most on FF hedge haters. As I merge instances of 0.01 each. Instead of opening 6 individual instances of 0.01 each, I merge them into one 0.06 trade.
Hi MoneyHedgeZilla!

Every new order is the same size?
Observer effect
  • #50
  • Mar 4, 2021 9:39am Mar 4, 2021 9:39am
Quoting ryuryu
{quote} Hi MoneyHedgeZilla! Every new order is the same size?

Yep. However, the algo that creates new instances and merges new trades into the instance or merges new with old instances is quite complicated. Even varies from version to version...
Maadik Hugiis. IQ 69.
  • #51
  • Mar 4, 2021 9:43am Mar 4, 2021 9:43am
Quoting MoneyZilla
{quote} Yep. However, the algo that creates new instances and merges new trades into the instance or merges new with old instances is quite complicated. Even varies from version to version...
Definitely you are a master in hedging.
Can I ask what's the lot size you are trading and maxx DD you reached?
Till now I didn't find any hedging grid or whatever that is safe eneough (i mean DD<10%)
  • #52
  • Mar 4, 2021 10:27am Mar 4, 2021 10:27am
Quoting Merka
{quote} Definitely you are a master in hedging. Can I ask what's the lot size you are trading and maxx DD you reached? Till now I didn't find any hedging grid or whatever that is safe eneough (i mean DD<10%)

Unfortunately, the low draw-down hedges do have not so great returns. Typical is a draw-down of 2-3-4% having a return of 8% to 20%. Some might do 25-30%.

This is great for already money made individuals, which I am not...

I am more excited with hedges in the 20-50% draw-down area and doubling the account every 2-3-4 months. Have not found a secure setup like this, working within a max allowance of 200 or 300 trades per account. Even merging does not help... When hedging, 200-300 are the trades per pair (when merging). This really limits me and I am trying to find ways to lower down the number of trades dramatically...
Maadik Hugiis. IQ 69.
  • #53
  • Mar 4, 2021 10:59am Mar 4, 2021 10:59am
The teacher who gives without an account is you, my dear teacher. I wish you continued health and wellness. I congratulate you on your excellent ideas. I ask you to put us an electronic trader to implement this excellent idea on the same wonderful indicator with the work of Hedig in a triple sequence 1-3-9-27-81 will be successful Very God willing, with all my respect and appreciation
  • #54
  • Mar 4, 2021 11:16am Mar 4, 2021 11:16am
Quoting MoneyZilla
{quote} Unfortunately, the low draw-down hedges do have not so great returns. Typical is a draw-down of 2-3-4% having a return of 8% to 20%. Some might do 25-30%. This is great for already money made individuals, which I am not... I am more excited with hedges in the 20-50% draw-down area and doubling the account every 2-3-4 months. Have not found a secure setup like this, working within a max allowance of 200 or 300 trades per account. Even merging does not help... When hedging, 200-300 are the trades per pair (when merging). This really limits...
I think I get what you are doing. A suggestion might be to take a partial loss on an instance in order to close several trades and replace them with one trade of a combined size, say 0.10 amounting to $-30. Sort of like a pressure release valve on opened trade numbers. Everything carries on as normal. Equity has dipped by $30, BUT the loss taken is REMEMBERED against the instance and shows as -$30 + any other open losses on the instance. This does not change anything, the algo still works the same way and when the profit is returned for the instance say $5, the instance has to make $5 + $30 to cover the loss taken. Instance profit $35, real profit $5 for instance.
  • #55
  • Mar 4, 2021 8:08pm Mar 4, 2021 8:08pm
Thing is, trading with stop loss you have to manage your position size RIsk/Stop Loss

In hedging you manage margin, floating PL and swap, however you can keep your eyes in those alone, never having to to worry about graphical analysis.

I mean you can pick a side using a coin flip.

I Prefer to use moving averages and TRY to trade with the trend.


You can hedge using a stop loss also to avoid swap payment...
MTN
  • #56
  • Mar 5, 2021 10:12am Mar 5, 2021 10:12am
Quoting Marcelomtn
You can hedge using a stop loss also to avoid swap payment...
I think MoneyZilla's approach is very similar to mine. I use hedges, but I don't use them as only type of trade. If run tests with SL then there is no win. It's like casino where player has negative expectation (fees, swaps, slippage, misclicking etc) and casino always has positive. So that mean that more trades you made less chance to win.

But if I'm using hedge, then I don't use SL for the first/second/etc trade. Then I have an advantage. BTW swaps are not a problem at all. For me the biggest problem with hedges are "morning gaps" and "impossible wide spreads". This is the real problem. That's why I'm trying to close all at the end of the day if my % goal reached or even if not.
Observer effect
  • #57
  • Edited 11:25am Mar 5, 2021 10:50am | Edited 11:25am
Quoting MoneyZilla
{quote} Unfortunately, the low draw-down hedges do have not so great returns. Typical is a draw-down of 2-3-4% having a return of 8% to 20%. Some might do 25-30%. This is great for already money made individuals, which I am not... I am more excited with hedges in the 20-50% draw-down area and doubling the account every 2-3-4 months. Have not found a secure setup like this, working within a max allowance of 200 or 300 trades per account. Even merging does not help... When hedging, 200-300 are the trades per pair (when merging). This really limits...
Thank you @MoneyZilla.
20-50% DD is way out off my comfort zone and I understand you when you merge orders because of the 200/300 limits. I faced the same issue some times ago.
  • #58
  • Mar 5, 2021 11:40am Mar 5, 2021 11:40am
Quoting ryuryu
... "impossible wide spreads".
Maybe help you this indcator: https://www.forexfactory.com/thread/...7#post13418417
  • #59
  • Mar 5, 2021 12:32pm Mar 5, 2021 12:32pm
Quoting MoneyZilla
{quote} Unfortunately, the low draw-down hedges do have not so great returns. Typical is a draw-down of 2-3-4% having a return of 8% to 20%. Some might do 25-30%. This is great for already money made individuals, which I am not... I am more excited with hedges in the 20-50% draw-down area and doubling the account every 2-3-4 months. Have not found a secure setup like this, working within a max allowance of 200 or 300 trades per account. Even merging does not help... When hedging, 200-300 are the trades per pair (when merging). This really limits...
Wow 300 orders? you are doing some crazy fun hedging
MTN
  • #60
  • Mar 5, 2021 2:27pm Mar 5, 2021 2:27pm
Quoting SwingMan
{quote} Maybe help you this indcator: https://www.forexfactory.com/thread/...7#post13418417
Thank you! But the problem is this: for example you averaging every X pips. For example it is 50 pips. At the end of the day it was -35 pips, so -15 more and here we go. But next day open -400. What to do? Open averaging or not? Open where? Far away? But what for and why we have calculated the distance? ... that kind of problems I mean.
Observer effect
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