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True Hedge System

  • #1
  • First Post: Jul 25, 2007 8:26am Jul 25, 2007 8:26am
Greetings,

I found this system on another forum. The forum is not very active at all, so I thought I would post it here to get feedback. I will also try to post an EA and strategy tester report if I can. Here is the system:

True Hedge System:

EUR/USD

AT 0:00GMT place 2 orders BUY and SELL ,
BUY 2 lots 1.2110
SELL 2 lots 1.2108

THIS WILL GIVE A FLOATING TOTAL THROUGH OUT THE DAY OF -$8 (MINI ACCOUNT)

NOW AT THE END OF DAY CLOSE WHICH EVER DIRECTION IS IN POSITIVE PROFIT. NOW CLOSE THE OTHER SIDE BY 1 LOT.

REPEAT AND PLACE ANOTHER 2 ORDERS LIKE BEFORE BUY/SELL . LEAVE THE FLOATING LOSING 1 LOT TRADE OPEN.

NOW AT THE END OF DAY AGAIN CLOSE WHICH EVER DIRECTION IS IN POSITIVE PROFIT. IF THE PRIOR LOSING TRADES HAPPENS TO TURN AROUND IN POSITIVE THEN CLOSE THAT SIDE, OTHERWISE CLOSE THE OTHER SIDE BY 1 LOT.

THEN REPEAT ALL AGAIN

HOPE THIS IS CLEAR, SIMPLE AND EASY SYSTEM.
Attached Image (click to enlarge)
Click to Enlarge Name: StrategyTester.jpg Size: 28 KB
  • #2
  • Jul 25, 2007 8:29am Jul 25, 2007 8:29am
This is the EA that was included.
Attached File(s)
File Type: mq4 TrueHedge.mq4   10 KB | 2,502 downloads
  • #3
  • Jul 25, 2007 8:37am Jul 25, 2007 8:37am
done it before using micro lots

forget about mini lots unless ur account is thousands and thousands of dollars

i did it with gbpusd when it was trending from 1.75 to 1.90s and managed to survive and ranging conditions are the best

so its doable, very risky but doable. u just have to trade really small and u should incorporate a system in it so that when u get a really good signal u can place some convential trades with tp and stop loss to increase ur nav/equity

specifics will get u somewhere using a system like that otherwise ull blow the account so fast ud forget u even had an account

and i know coz ive traded that way in the past many times

did u get this off of strategybuilderfx forum? i did discuss it there months ago in some hedging thread so im wondering if u got it from me
although mine has some different components and more tech analysis oriented.
  • #4
  • Jul 25, 2007 8:39am Jul 25, 2007 8:39am
Yes, I am currently demoing this using a $1k account with micro lots. Thank you for your input.

Quoting boxingislife
done it before using micro lots

forget about mini lots unless ur account is thousands and thousands of dollars

i did it with gbpusd when it was trending from 1.75 to 1.90s and managed to survive and ranging conditions are the best

so its doable, very risky but doable. u just have to trade really small and u should incorporate a system in it so that when u get a really good signal u can place some convential trades with tp and stop loss to increase ur nav/equity

specifics will get u somewhere using a system like that otherwise ull blow the account so fast ud forget u even had an account

and i know coz ive traded that way in the past many times
  • #5
  • Jul 25, 2007 8:42am Jul 25, 2007 8:42am
If you open 2 longs and 2 shorts at the beginning of the day,

at the end of the day you have accomplished nothing.

You are out the cost of 4 spreads.
  • #6
  • Jul 25, 2007 8:48am Jul 25, 2007 8:48am
Yes, this is true; that is why I am in this for longer than one day.

Please check the strategy tester which I believe is a couple of months long.

Quoting billbss
If you open 2 longs and 2 shorts at the beginning of the day,

at the end of the day you have accomplished nothing.

You are out the cost of 4 spreads.
  • #7
  • Jul 25, 2007 8:53am Jul 25, 2007 8:53am
Quoting billbss
If you open 2 longs and 2 shorts at the beginning of the day,

at the end of the day you have accomplished nothing.

You are out the cost of 4 spreads.

I don't think you understand the theory here. At the end of the day, you will have 1 positive and 1 negative position. Close the positive position, booking that profit into your actual balance, then rehedge. Now you have 1 negative position and 1 position around -$0 (minus spread). At the end of the next day , ideally, you will have 1 negative and 1 positive trade again. The positive at this point could be the trade that was negative the day before, or it could have kept going. Either way, you would close the positive again, booking profit into your balance, and rehedge. Every day you would book profit while leaving 2 positions hedged. In a range bound market, I could see this creating some profit.
The basis of a democratic state is liberty. ~ Aristotle
  • #8
  • Jul 25, 2007 8:54am Jul 25, 2007 8:54am
Parameters:
OpenPosHandler
It controls how to close the open position...
0:never close till positif values at the end of the day
1:check everytick for TakeProfit ($) Level
2:wait till next end of the day and close no matter it's positive or negatives

MinInitialOrderProfit ($)
At the End of the day it will check the profit of the previously buy/sell order...
if it turns more than MinInitialOrderProfit it will be closed and
also the other half losing position..
If the profit is less than MinInitialOrderProfit no order will be placed on the next day..
  • #9
  • Jul 25, 2007 9:03am Jul 25, 2007 9:03am
Quoting Vensik
I don't think you understand the theory here. At the end of the day, you will have 1 positive and 1 negative position. Close the positive position, booking that profit into your actual balance, then rehedge. Now you have 1 negative position and 1 position around -$0 (minus spread). At the end of the next day , ideally, you will have 1 negative and 1 positive trade again. The positive at this point could be the trade that was negative the day before, or it could have kept going. Either way, you would close the positive again, booking profit into your balance, and rehedge. Every day you would book profit while leaving 2 positions hedged. In a range bound market, I could see this creating some profit.
I think that there is anyway a lot to improve regarding the spread.
consider these 2 variants.

1) what is the original solution:
open 2 longs and 2 shorts.
lets say that it went up 100 pips for 1 lot
you close 2 longs and 1 short.
result 100 pips. 4 spreads paid. 1 short order open.

2) another solution:
open 1 long and 1 short.
lets say that it went up 100 pips for 1 lot
you close 1 long.
result 100 pips. 2 spreads paid. 1 short order open.
  • #10
  • Jul 25, 2007 9:15am Jul 25, 2007 9:15am
In response to what Boxing said (What is up man?), perhaps more range bound pairs could be used instead of a big trender like EUR/USD. For instance, USD/CHF (compare the daily chart and you will see what I mean) or USD/HKD? USD/HKD actually has fixed bounds, 7.5 to 8.5, so it will not trend much in one direction before Hong Kong officials step in.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #11
  • Jul 25, 2007 9:50am Jul 25, 2007 9:50am
This makes more sense, cutting costs, reducing overhead. Thank you for your input.

Quoting jlpi
I think that there is anyway a lot to improve regarding the spread.
consider these 2 variants.

1) what is the original solution:
open 2 longs and 2 shorts.
lets say that it went up 100 pips for 1 lot
you close 2 longs and 1 short.
result 100 pips. 4 spreads paid. 1 short order open.

2) another solution:
open 1 long and 1 short.
lets say that it went up 100 pips for 1 lot
you close 1 long.
result 100 pips. 2 spreads paid. 1 short order open.
  • #12
  • Jul 25, 2007 9:57am Jul 25, 2007 9:57am
StockJay, did you post the below?

StockKJay has just replied to this thread.
Here is a copy of the post:
***************
I am curious if anyone has considered using 3 or even 4 lots instead of just 2 per side? It would greatly reduce exposure. When the beginning of the following day begins, the losing side will be just 5/4 or 4/3 compared to 3/2. Still close all the winners and keep just 1 loser open. Perhaps this will limit drawdowns in trending markets? Sure it will limit gains as well, but nothing happens quickly. This may also make you feel safer once deciding to go live, knowing that there is less risk.
  • #13
  • Jul 25, 2007 10:04am Jul 25, 2007 10:04am
Quoting Dreamliner
Yes, I am currently demoing this using a $1k account with micro lots. Thank you for your input.
just curious did u get it from the strategybuilderfx forum? coz like i said i discussed it a while back over there

good luck. ur gonna get alot of negative comments but like i said its doable especially if u incorporate a system with it. i know from experience
  • #14
  • Jul 25, 2007 10:23am Jul 25, 2007 10:23am
by the end of the day you mean at 00.00 the next day ?
  • #15
  • Jul 25, 2007 10:26am Jul 25, 2007 10:26am
Quoting Vensik
I don't think you understand the theory here. At the end of the day, you will have 1 positive and 1 negative position. Close the positive position, booking that profit into your actual balance, then rehedge. Now you have 1 negative position and 1 position around -$0 (minus spread). At the end of the next day , ideally, you will have 1 negative and 1 positive trade again. The positive at this point could be the trade that was negative the day before, or it could have kept going. Either way, you would close the positive again, booking profit into your balance, and rehedge. Every day you would book profit while leaving 2 positions hedged. In a range bound market, I could see this creating some profit.
I read it and understand it.

I've seen 100 just like it.

All of these hedging systems obscure the real underlying system.

Opening the hedges accomplishes nothing- they only cost extra spreads.



Let's look at the first day using this system. Each subsequent day will be exactly the same.

We will forget for a moment about the position left open. We'll come back and deal with that later.

Let's look only at the hedges.

Keep an eye on your equity number.
You open 2 longs and 2 shorts.

At the end of the day your equity is 8 pips less than it was before you opened the hedges.

Thats it. You have gained nothing. You have lost 8 pips.

You close out 3 of the positions and leave a loser open.

Equity= still 8 pips less than when you began.




You open up another 4 position hedge.

At the end of the day the results will be the same. You are down another 8 pips from the hedges.

This will happen every day. You will gain nothing from the hedges and will lose an additional 8 pips every day.



You could have done the same thing this system does by not opening any positions at the beginning of the day and observing what price does that day.

At the end of the day open a single counter position.
ie. if price went up- open a short. If price went down- open a long.

Do this every day. When an open position is profitable at the close of the day, close it out.

This is all this system does. The hedges are expensive and needless.

If you take a pencil and paper and reason this out you will see what i mean.

Don't confuse it by thinking of "locking profit in". Just look at the change in your equity.
  • #16
  • Jul 25, 2007 10:36am Jul 25, 2007 10:36am
Quoting billbss
I read it and understand it.

I've seen 100 just like it.

All of these hedging systems obscure the real underlying system.

Opening the hedges accomplishes nothing- they only cost extra spreads.



Let's look at the first day using this system. Each subsequent day will be exactly the same.

We will forget for a moment about the position left open. We'll come back and deal with that later.

Let's look only at the hedges.

Keep an eye on your equity number.
You open 2 longs and 2 shorts.

At the end of the day your equity is 8 pips less than it was before you opened the hedges.

Thats it. You have gained nothing. You have lost 8 pips.

You close out 3 of the positions and leave a loser open.

Equity= still 8 pips less than when you began.




You open up another 4 position hedge.

At the end of the day the results will be the same. You are down another 8 pips from the hedges.

This will happen every day. You will gain nothing from the hedges and will lose an additional 8 pips every day.



You could have done the same thing this system does by not opening any positions at the beginning of the day and observing what price does that day.

At the end of the day open a single counter position.
ie. if price went up- open a short. If price went down- open a long.

Do this every day. When an open position is profitable at the close of the day, close it out.

This is all this system does. The hedges are expensive and needless.

If you take a pencil and paper and reason this out you will see what i mean.

Don't confuse it by thinking of "locking profit in". Just look at the change in your equity.
Agree! Equity will go down always but the balance up....... Eventually equity is gone and the account is gone.
  • #17
  • Jul 25, 2007 10:37am Jul 25, 2007 10:37am
No, I did not get it from strategybuilderfx I got it from another very slow forum. Thanks for your thoughts here.

I'm interested in everybody's opinions about doing it the way someone suggested above, say using 3 lots instead of 2, and then closing the 3 winners and 2 losers.

Quoting boxingislife
just curious did u get it from the strategybuilderfx forum? coz like i said i discussed it a while back over there

good luck. ur gonna get alot of negative comments but like i said its doable especially if u incorporate a system with it. i know from experience
  • #18
  • Jul 25, 2007 10:39am Jul 25, 2007 10:39am
Quoting chartguy
Agree! Equity will go down always but the balance up....... Eventually equity is gone and the account is gone.
Then the strategytester results graph is an anomoly, a one-time event, or just luck? I'm just trying to understand...
  • #19
  • Jul 28, 2007 11:24pm Jul 28, 2007 11:24pm
Hi Dreamliner, I came accross your thread Wed. afternoon and started trading at 0 hours GMT with 4 standard lots on a demo account. I closed out the 2 winning trades and the 1 loser on Thursday at the same time and did the hedge again. On Friday around noon, I closed out everything because I never carry trades through the week-end and I was up $840.00 I thought it was great! I'm a fairly new trader and I also have a live account where I only trade minis. According to the posts, I guess I was just very lucky. What do you think? I was planning to trade minis with it in about 2 weeks but I don't know now. I guess I'll just continue demoing it for awhile. Ed
  • #20
  • Jul 28, 2007 11:30pm Jul 28, 2007 11:30pm
I am glad you are profitable. I would say to definitely demo it for a month and then see where you are at. By the way, how exactly have you traded this, can you let us know?

Quoting eluv007
Hi Dreamliner, I came accross your thread Wed. afternoon and started trading at 0 hours GMT with 4 standard lots on a demo account. I closed out the 2 winning trades and the 1 loser on Thursday at the same time and did the hedge again. On Friday around noon, I closed out everything because I never carry trades through the week-end and I was up $840.00 I thought it was great! I'm a fairly new trader and I also have a live account where I only trade minis. According to the posts, I guess I was just very lucky. What do you think? I was planning to trade minis with it in about 2 weeks but I don't know now. I guess I'll just continue demoing it for awhile. Ed
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