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Mathematical hedging strategy without a stop loss 22 replies

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Attachments: Hedging/averaging trades without prediction
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Hedging/averaging trades without prediction

Quoting sampat
{quote} People tend to focus on mathematical part of trading but ignores phycological part. Trading is 90% plus phycological. Lets say I have system of 20 pip stop loss on a pair and instead of stop loss I do hedge and wait to retrace to next support or resistance and cut looser or average down on entry where I think market reverse or continue. This way trader is increasing win rate. One can argue there is no guarantee that price will retrace etc. etc. Yes thats why overall daily or weekly loss threshold should be there when trading hedging/Martingale...
Dancingphil also emphasized hedging too, he said he never took a SL always hedged if a trade went against him, search him up on FF.
Quoting venividivici
{quote} Dancingphil also emphasized hedging too, he said he never took a SL always hedged if a trade went against him, search him up on FF.
He usually did it to “balance” the bad trade, which gave him a real advantage, having because of that an extra opportunity to close one of the legs in the next set up it was presented to him . He mentioned the benefits of the psychological part too.
If he would had set a stop loss, that extra opportunity would have been impossible as he traded 2.5 lot per 1000 $. His broker also played an important role, they close his trades when 80% of the equity was gone , now we have 50% stop out on the majority of the brokers . He was a great trader and his style was not for everyone.
I'd only suggest that number 10 is backwards.


Instead, I think an easier/better plan is to close negative trades, unless you already have one or more positive trades with enough gains to offset at least some of the loss (or potential loss). Let positive trades stay open as long as you need, to acquire pips that are used to 'potentially' offset trades that are, or about to go negative.
Quoting sampat
{quote} People tend to focus on mathematical part of trading but ignores phycological part. Trading is 90% plus phycological. Lets say I have system of 20 pip stop loss on a pair and instead of stop loss I do hedge and wait to retrace to next support or resistance and cut looser or average down on entry where I think market reverse or continue. This way trader is increasing win rate. One can argue there is no guarantee that price will retrace etc. etc. Yes thats why overall daily or weekly loss threshold should be there when trading hedging/Martingale...
You are very right, I had 1 win 1 loss previously. Now that is converted to 1 win and 1 BE, bcoz of heging. When price goes against me, with clear sign. I hege when, next setup is ready, I close winner, and open another trade. New trade gives me pips, older one cuts at BE.
Quoting Indigo45
Hello everyone, I do use hedging technique, but in different way. suppose if your win and lose ration is 50/50. then you can make it 100% as I do. I open a position suppose SELL (sure after my own analysis), if it goes wrong by 20-30 Pips and I expect that short term direction is changed. I hedge the position and open BUY. This is my losing trade that is hedged at -30 pips When days max movement is achieved suppose market moved upwards (I use my own way to judge, will share my technique), I Close the position that is showing profit (BUY closed and...
I just want to ask that the hedged trade (buy in your example) is of same lot size as original trade ? And how would u manage if the buy trade reverses in sell direction after u open a buy.
Quoting Akhter
{quote} I just want to ask that the hedged trade (buy in your example) is of same lot size as original trade ? And how would u manage if the buy trade reverses in sell direction after u open a buy.
I prefer same size. Lets say if I have buy EUR/USD at 1.03 with stop of 1.0280, instead of stop loss I put hedge at 1.0280 and wait for a next support or resistance,
Scenario 1 :
Lets say if EUR/USD moves to 1.02 and I see good support I close 1.0280 with profit and open another 1.02 buy order with stops of both at 1.0180 (if i see breakout)
EUR/USD needs to move only 10 pips for me to breakeven and close the trade.

Scenario 2 :
Lets say after executing your pending order at 1.0280 it starts reversing back, than I wait till next resistance lets say 1.04 and if market shows consolidation and reversal I close buy and open short

In above two scenarios, I may close looser ones if it respect technical levels.

Key of hedging is to minimize loss not to make profit. If you put stops closer and do proper money management hedging is blessing.
Also dont hold hedge for more than a day or two.
If you keep hedge wider you will have to wait for longer time and longer swaps.
Quoting Akhter
{quote} I just want to ask that the hedged trade (buy in your example) is of same lot size as original trade ? And how would u manage if the buy trade reverses in sell direction after u open a buy.
Attached Image (click to enlarge)
Click to Enlarge Name: FF.png Size: 12 KB

Please refer to image.
if you use SL at suppose 30 Pips in trade#1 it means you are -30, and in Next trade setup (#3), you covered that lose of 30 Pips and 30-30 = 0 Pips. Result is 1 Win 1 Lose

While if you use Hedge, Your Trade Trade #3 is in 30 Pips profit and your Trade #1 and #2 hedge are at Break Even. and Results is 1 Win 1 BE
If my first trade is gone wrong, I hedge and leave it from my mind.

now second one gone wrong, I hedge and leave it from my mind.
I hedge usually at 25-30 Pips.
Price goes up or down, now matter, because trades are hedged.

when New York Closes, Price always retrace up to 30% at least. Here I CLose the Winners and Open New Positions. When price is upto 30 Pips, I Close all.
My losers are closed at Break even. and my last trade is my winner.

This does not happen daily, and may happen daily, but my wrong trades are hedged and managed this way, while my winners are treated separately.

Hope it is clear now.
(will share more details next week). Currently I am busy (out of laptop). This is very power full strategy.
Quoting sampat
{quote} I prefer same size. Lets say if I have buy EUR/USD at 1.03 with stop of 1.0280, instead of stop loss I put hedge at 1.0280 and wait for a next support or resistance, Scenario 1 : Lets say if EUR/USD moves to 1.02 and I see good support I close 1.0280 with profit and open another 1.02 buy order with stops of both at 1.0180 (if i see breakout) EUR/USD needs to move only 10 pips for me to breakeven and close the trade. Scenario 2 : Lets say after executing your pending order at 1.0280 it starts reversing back, than I wait till next resistance...
for you please.
Quoting Indigo45
{quote} {image} Please refer to image. if you use SL at suppose 30 Pips in trade#1 it means you are -30, and in Next trade setup (#3), you covered that lose of 30 Pips and 30-30 = 0 Pips. Result is 1 Win 1 Lose While if you use Hedge, Your Trade Trade #3 is in 30 Pips profit and your Trade #1 and #2 hedge are at Break Even. and Results is 1 Win 1 BE If my first trade is gone wrong, I hedge and leave it from my mind. now second one gone wrong, I hedge and leave it from my mind. I hedge usually at 25-30 Pips. Price goes up or down, now matter, because...
Quoting davelansing
{quote} Well, unfortunately, the "skill of the trader" mostly comes as hindsight...anybody can look at a chart, in hindsight, and say: "I would have never placed a trade there" referencing a point on a chart where, in hindsight, was the start of a runaway trend (i.e. runaway trend = no sufficient pip retracement to get you out of your losing basket of counter trades). Nobody has a crystal ball that will tell him/her where price will move, but the idea of the "skill of the trader", or lack thereof, seems to be a recurring theme among FF threads when...
Do you have link of Rob's post?
Thanks all for your posts and keeping this thread alive, lots of interesting points and ideas, this is what's it's all about in my eyes...

TRADE 53.......EG ....LONG @ 8614 no sl tp +5
Quoting Waveskierrob
Thanks all for your posts and keeping this thread alive, lots of interesting points and ideas, this is what's it's all about in my eyes... TRADE 53.......EG ....LONG @ 8614 no sl tp +5
TRADE 53 ....tp hit + 5.............running total +673
Quoting Waveskierrob
{quote} TRADE 53 ....tp hit + 5.............running total +673
TRADE 54 ...EG......LONG and SHORT @ 8620.....no sl tp +3
Quoting Waveskierrob
{quote} TRADE 54 ...EG......LONG and SHORT @ 8620.....no sl tp +3
LONG tp hit +3
added SHORT @ 8628 no sl no tp
Quoting Nefser
I'd only suggest that number 10 is backwards. Instead, I think an easier/better plan is to close negative trades, unless you already have one or more positive trades with enough gains to offset at least some of the loss (or potential loss). Let positive trades stay open as long as you need, to acquire pips that are used to 'potentially' offset trades that are, or about to go negative.
Don't really understand 10 is backwards it's not a recommendation it's just the way it is with my style of trading, what you're saying is let profits run and close loses which it the total opposite of what we are doing here, we've tried this and fail, hence why we are thinking outside the box....thanks for your post
Closed both SHORT + 8622 -2 +6 = +4
TRADE 54 +7...........running total +680
TRADE 55.....EG.......pending LONG @ 8625 pending SHORT + 8615 no sl tp +5
Quoting Waveskierrob
TRADE 55.....EG.......pending LONG @ 8625 pending SHORT + 8615 no sl tp +5
LONG triggered
Quoting Waveskierrob
{quote} LONG triggered
LONG again 8620 no sl no tp
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