Hedging the Market, but with a little twist?

When you read about the Forex Market, the most two advice you get is to use a proper money-management, and to accept with a little profit and not greedy. Else the Market will take your money and you get out of the game.
And then the rest of the instruction you will get about the technical and fundamental analysis, and how you have to find your own strategy that have to be unique for your own trading style.

Well, someone like me that can't benefit from the amazing technical analysis, or the other tools, I have decided to hold on to the first two advices as a safe approach. So I want to hedge the market as follows:
Open the trading terminal with a 10000$ account. I go short and long with 0.1 so I have 10000 pips before I can be margin-called. My TP is 200 pips for each trade. I trade again same trade that have hit the TP every time I have a 200 pull back. That mean if I take the first TP I will wait with my drodown that was because of my first trade and not doing anything if the market keep going against it without any pullback of 200 pips. So if I have -600 pips and then the market go back to the -400, here I will trade same trade again. So if the market get back to the -600 pips, I will again take 200 pips as a TP and wait again. But if the market keep going back until breakeven for my first position, then I will close it, and wait again for a 200 pips pull back.

This hopefully will continue to do this twice or thrice in a month, so I can take some profit to add to my balance, and then withdraw whenever they become acceptable profits that can be withdrawn.
And of course I will hold on to my drodown, but because I have 10000 pips I will not be worried about a margincall. I have read about 16 years of historical data to several pairs, and found out that in many years the pair bearly will move 4000 or 6000 pips. So Don't you think with this I will manage to profit 30-50% every years so in the hope of 4 years trading I will get out with my capital plus 120-200%, and this is in itself accomplishment for me since I am not doing any kind of analysis. I am just investing my money.

I have wrote different topics about other ideas I have had a very little success with, but with this one, don't you think that the success is somehow garanteed due to the strict money-management I am using?
And don't you think this is a very simple idea that can be coded easier than all my previous ideas?
For example I posted this idea with very limited success.
https://www.forexfactory.com/thread/post/13885095

I hope you will tell me if any EA is exist to do this task, or if any here in the community that will help coding this for me I will really be thankful and appreciate the efforts he-she will put in coding this.
This idea is of course better done manually, but I need an EA just for the backtesting purposes to find out a proximit profits and drodown.

Hello, I have found that techniques like this are not consistently profitable - you may bet profitability more easily because you are working with such a long timeframe and therefore more likely to get lucky (even if you have >50% chance of success). In the end you may be able to achieve a higher profit with less risk, and less need for risk tolerance (seeing your account with such low amounts even if you expect a turnaround)

I suggest entering trades with a very basic indicator such as a MACD - which you can use on the daily bar which statistically shows the most long term success rate as daily bars are more difficult to manipulate. Enter with much less on your account and don't use a stop loss, but if the trade goes against you simply leave it open. Take all trades that give you a clear signal (MACD oversold to X, etc), and take profits on the ones that are successful - together, with your successful trades and when the market fluctuates your losses into a favorable direction, you can exit those with losses enough to be covered by your wins.

Test this a few times over 2 years with the daily bar - you may be surprised how much you can make while reducing the max drawdown you see in the strategy above.

And of course we trade a swap free account for this strategy to be worth the time and efort. Else the swap and commisions will blow any little profit

You are right about the entering trades using simple indicators. But the problem I could not found any EA that will allow me to give it a specific trades numbers that is allowed to be opened, and that will allow me to keep the trade that go against me open and just open another trade whenever a new signal is available until it reach my allowed trade numbers.
Because I also had this feeling about that I can make profit with this approach. But I want to backtest this before using it in live trading.

I hope if you or any in community that know a free EA that will allow me to enter the market using rsi or macd where I am able to take the TP and just leave the trades that go against me open and where I can limit the allowed open trades, that you will tell me about it.

I hope for more input about this idea since it seems for me that this approach is very safe, and can hold on in many years. But I like to hear your thoughts and comments about it

Hi,
Can you show me in graph/pic how your ideas works...sorry i kinda pic/graph person..lol..The reason i ask bcuz i think i already done this strategy before but i can be wrong...

I cannot sho you the idea in graphs or pics since I cannot deal with any visual interactions with the market. I only work with numbers.
But shortly it is that I whenever reach a TP I will put my limit order 200 pips away. Or the same TP pips number. And as soon as the market keep move on away from my pending limit order I will move it after it, until it decide to go back 200 pips to hit my limit order so it can give me another 200 pips.
If I had an EA, this task will be very simple since it have to be coded that whenever we have a 200 pips pullback enter the market. But since we do it manually so I will from now and then check the mt4 to perform this action.
But the big question is will I be able to make profit every while so I can withdraw it while I am holding on to my drodown? Or will I end in a dead zone for months and maybe years? I mean where the market might have moved away from my first trade in hundred pips while it have given me only one TP and then I will get a pullback so my limitorder get open, and then the market begin to dance up and down between my first trade and the third one that have started, without any TP.

Hi,
So basically you will buy and sell at same price with TP 200..so what happened to open trade when you hit TP? (you hoping price will reverse then you close that open trade?) for example Sell hit +200pips..Buy at -200 pip then hoping price will go up a little bit or more then close buy at like -150? with +50 pips profit..

Sorry, I have not updated this topic or responded to your post in a while.
No, what I am aiming to do here is to just take the tp 200 pips, and then leave the losing position open either until the market reverse back to point 0 where the trading began so I can repeat my winning position, or if the market just continue and cause my losing position to have bigger and bigger drodown until it reverse back 200 pips so I can repeat my winning position.
So this hedging approach is all about that the market reverse up and down. So if I was so unlucky we can imagine the following senario:
I enter a buy and sell with a TP of 200 pips, I take my first 200 pips, and then the market continue in the same direction and just reverse 50 pips and then continue, and reverse 140 pips and continue and so on until I get a drodown of 800 pips in my losing position and then it reverse 200 pips and I enter the same position that gave me 200 pips profit. And because my first position have a drodown of 600 pips let us imagine that the market begin to go up and down in these 600 pips without giving me any other profits in months.
This can happen.

So all my idea is build on that the market have to pull back the same pips number that I specify as tp before I enter the same trade again that gave me this TP. And this pull back is from any where.
So do you think this will in the long run let me gain profit if I use a very strict moneymanagement?

Hi aalaarajy,
So if you enter 2nd sell (when price reversed at 200 pips) do you buy/sell(hedging) again?

You mean if my secund sell not go in the right direction and just begin to gain drodown?
No, I will not enter a third trade in this sinario since I have a buy trade that have drowdown that is beeing decreased and decreased until it begin to gain profit until it hit it's TP. Now I will wait for a reversal.
So the reversal that I am looking for only if I have one trade opened in loss.

Hi aalaarajy,
I think the problem is if you still DD -800 or -600 minus your +200 pip profit and going up so how you going to cover that..

I do not need to cover it up right now. I can just keep taking TP's while the market is allowing me to gain TP's. And I will withdraw all the plus profits and leave only my initial capital. Since I have 10000$ account. And since I am only opening 0.1 or 0.2 trades. So I can just the leave the drodown while I withdraw all the plus profit that I gain out of my winning trades. And since I have read in historical data that it is so rare that one trading instrument will move 5000 pips to one direction in six months or nine months. You will only see these movements when you look at three or four years data. So for the GBPUSD when you look at it from 2002-2005 you will find it have moved 5240 pips. And while you continue looking in its data the movements begin to be slower and slower. So generally you will have 3-4 years before your account will be margincalled if you use a lot size that will give your accounts let us say six thousands pips.
So my question is do you think I will manage to both get my capital and 100-150% more with it in these 3-4 years if I withdraw all the TP's that I will acheeve?

Hi aalaarajy,
That 10k account real acc or demo? (there is a lot of difference between live and demo acc when u trade - your mind and fear will mix up)

Look i just saying from my past experiences and my personal opinion and hey i can be wrong but when people trade and expected something something i meant like okay i goin stop at +200 pips then hoping price will back up or down and saved your +200 pips profit anytime soon i'm sorry forex doesnt work like that it might work few times but...

Well, but if we imagine that we can control our imotions and fears and deal with the market as if we were managing a demo account. Will this idea give enough profit during a piriod of 15 or 18 months so you can feel that you have earned back your capital plus any amount of extra percentage that you can consider worth your time and efferts?

Also, I asked in another topic about if you experienced traders have seen trading instruments that usually go hand in hand with each other up and down, have you seen them sometimes change directions without any further reason?
I mean like gbpnzt and gbpaud. Or euraud and eurnzd, or gbpnzd and eurnzd, and so on.
Have you ever seen that if the first one go 800 pips up , that the secund one go down 400 pips or something like that?
If the changes is small and slow, this is not a problem. I talk about huge differences.
I ask about this because I think I can make a hedging approach out of those trading instruments. And also because I have noticed that they always seems to move side by side.

Hedging in the market has always been and remains a situation, or rather, an approach that many traders really like and at the same time has a fairly large number of details that you need to learn to keep under control and that you need to master in order to more or less accurately understand under what circumstances it is. It can be used to achieve the desired goals and to make profits. I am sure that not everyone succeeds in this, because people underestimate such approaches, they believe that they can deceive fate and that they will certainly cope with the moments that are happening. I do not see anything terrible in this, but no one has canceled common sense, everything requires study and education.

I think hedging can work well but for it to do that you need to have a big account to cushion any large moves. You may exit 1 of your hedging positions in profit only to have price then move more and force the other open position(s) to go deeper in a loss. What do you do then if your account is too small? This also shows that you need to pull the trigger at the right moment or else you may just be taking profit for one position only to have price still continue to move. We all know it is impossible to call tops and bottoms accurately all the time.

Hedging is not a useful strategy for the retail traders; it’s the most complicated one! I think, mathematics pays a vital role on hedging!