Daily Scalping Hedging/ATR Discussion

Scientist,
Example of straddle vs hedge.
Buy and sell 1 lot at 235.00, SL of 50. Price moves to 235.50. Your sell order is stopped out with a 50 loss, and your buy is in profit by 50-spread(10 for example) at this instant you are down 10 pips. you need 235.70 to break even on the sell trade AND the buy. 10 spread for both orders. You can look at this any way you want as far as your actual SL. It would really be a 40 SL+ spread from entry, but regardless, you have to make up 10 pips somewhere on each trade.

A straddle with a buy order at 235.50 is hit. You now only have to have a move in one direction for 10 pips to BE vs 20. Even with the hedge it is easily a double loss as your SL from the sell is hit, a reversal of trend occurs and your SL for the buy is hit.

The range protection in the straddle is the straddle itsself, a window for price to move until a trend developes. The reason your hedge tests work is you are infact protecting from the range, however your protection is costing you 10 pips.

just trying to explain it the way I see it and not discourage your out of the box thinking.

C.E.O.,

Thanks a lot for your feedback. I always enjoy your posts and insights.

You are right about loosing pips everyday on the hedge. I noticed that my self and I didn't include this into the equation; the demo is down about $500 though I didn’t get any major hit. Infact, I would have been break-even if we didn’t have this awful spread.

As you may have notice I’m trying to include some market logic in to this system. I bet the same could be done with success on the original Daily Scalping system. But personally I’d rather stick with one at a time as it gets very time consuming trying to manage more than one thread/systems.

Also the increase in lots could also be applied at the original sys when volatility is expected (either price driven, or event driven).

If I get enough time I will try to apply my reasoning into the original system and compare results. But until then I’m curious how this relatively simple version turns out. Specifically when increasing lots.

Thanks again

I made a mistake today so I took a hit of about 200 pips unnecessary. Makes you appreciate EAs

It wasn't such a bad idea entering 2 lots today after all. The cost of the spreads though would bring me to about B/E. A move above 236.70 would find me in profit.

Chart in about an hour when I exit.

Looking back at my previous trades, I might as well use a break-out strategy. I'll be looking for something that trades about the same way but will save some pips from the spreads.

Thank you