Yours opinion about hedging strategy | Forex Factory

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Yours opinion about hedging strategy

  • #1
  • First Post: Apr 29, 2009 11:09am Apr 29, 2009 11:09am
hello
Im newbie in the forex that i think:/ I started trading 1,5 year ago but i was loosing money:/. Five months ago i red about hedging strategies. How that strategy looks.
buy 0,01 lots and sell 0,01 you take profit 5 pips for each position when you close one of this position you waiting with second, when the market goes angaist 40 pips you take 0,02 sell or buy and take profit is 30 pips for new position and the loose position have the same take profit. When you are still loosing you buy 0.04 after 30 pips loose and take profit 20 you going that for this moment when the market goes reverse and you closing all positions.
I thought that is extra system bu yesterday:/
I had micro account with 500$ and it rises to 618$ in month
But yesterday open 2 positions at 1.3010 on EUR/USD buy position was closed but sell stayed:/ the markets was rising and i was selling 0.02, 0.04, 0,08 ........ i waited for reverse from market but nothing gonna change the charts was going up. When i see that im very close to blown up my account a closed all positions and a loose 200$.
if i had more money a could buy more and take profit.
And here ive got question to you.
This system is good??? where is the fail? i havent enough money?? or the system is poor??
Im waiting for opinion
sorry for my mystakes n english i hope you understanding me
  • #2
  • May 3, 2009 10:50pm May 3, 2009 10:50pm
Quoting quantz
the markets was rising and i was selling 0.02, 0.04, 0,08 ........
If you double your position size, without limit, as price moves against you ('averaging down'), you'll eventually encounter a trend that's long enough to cause irretrievable drawdown. The same logic applies to any method that uses progressive sizing. Eventually a sequence will occur that makes recovery impossible.

There are a lot of these types system at FF. Do a forum search for 'Martingale' for more info.
  • #3
  • May 4, 2009 4:59am May 4, 2009 4:59am
your system will win most of the time. but when u lose, u blow up the account no matter how much money u have becoz ur SL is margin call. The trick for your system is to earn as much as u can before it blow up. there is always a case where you will "need more money to open position". Your system will only work 100% if u have unlimited money. if u have unlimited money, u will never lose.
  • #4
  • May 4, 2009 9:22am May 4, 2009 9:22am
with the no hedging rule coming out. u gotta head overseas 2 test your idea out. but hedging doesn't really make u any money. after u close the buy/sell position, your account stays the same. this hedging is used by futures traders 2 protect their core positions if any major or unexpected event shows up. not 2 make money.
  • #5
  • May 4, 2009 6:45pm May 4, 2009 6:45pm
"Hedging" is one of the worst strategies out there. It does not give you any edge, and only makes you money when the market is ranging. If you want to trade ranges, then do so, by opening buy OR sell positions, not both! If you're looking to Straddle the market, buy a straddle(option) or a strangle(option). So, either you straddle the market using options or have a directionaly bias (bet long or short). Don't "Hedge".

There are much better strategies on this forum. Why don't you research those, and see if you like any? Don't waste your money "hedging".
  • #6
  • May 5, 2009 7:57am May 5, 2009 7:57am
thanks for answer i belived this system becouse my friend was downloaded a EA`s with this system:/ when i show profit with this system i was very pleased. When i opened live account for month my profits was good. I lost becouse i hadn`t money:/.I know that i must take if unlimited wallet, then I will never lose but this is theory but it have right. But i have never met before move about 350 pips without 40 pips reverse. I will send a picture of this strategy for better view. But after yours opinion i started searching for something new.
  • #7
  • May 5, 2009 9:55am May 5, 2009 9:55am
Quoting quantz
thanks for answer i belived this system becouse my friend was downloaded a EA`s with this system:/ when i show profit with this system i was very pleased. When i opened live account for month my profits was good. I lost becouse i hadn`t money:/.I know that i must take if unlimited wallet, then I will never lose but this is theory but it have right. But i have never met before move about 350 pips without 40 pips reverse. I will send a picture of this strategy for better view. But after yours opinion i started searching for something new.
U never see it before doesn't mean it will never happen. U might be making money for 6 months but when something that u never see before happen , all your 6 month profit is gone and your account blow up.
  • #8
  • May 5, 2009 10:23am May 5, 2009 10:23am
here is picture of this strategy.
click right and save as... and you see in better quality
Attached Image (click to enlarge)
Click to Enlarge Name: picture.GIF Size: 82 KB
  • #9
  • Edited 3:28pm May 6, 2009 3:00pm | Edited 3:28pm
Quoting quantz
here is picture of this strategy.
click right and save as... and you see in better quality
Wow - unlimited averaging down AND no stoplosses AND full Martingale (doubling pos size at every step)......... all in the same EA! Possibly the most dangerous system I've ever seen. Looks like you only had to go back a few days to find a scenario where it required a risk of 1024 units just to gain 1 unit.

It might take 5 days to blow the account. It might take 50 years. But one thing is guaranteed: it will happen..... suddenly, unexpectedly, at any time.

No market analysis required - simply double up every 30 pips, as the position moves against you. Ask yourself this question: why don't the world's top traders quit analyzing the markets, and simply use an EA like this? The answer is obvious.

[EDIT]
It's true that the further the market moves in a certain direction, the greater the probability that it will reverse. The probability increases, but it doesn't double (and certainly not every 30 pips). Hence doubling your pos size isn't justified - you're simply escalating the risk-to-return ratio, with each step. Instead of doubling up 12 times, it would be better to wait for a 12x30 = 360 pip move in one direction, and then bet on a reversal, using consistent position size (1 lot) and with a stoploss in place. That's still not a great system (trading against momentum), and setups would occur much less frequently, but it's infinitely preferable to blowing your entire account in one trade.
  • #10
  • May 6, 2009 3:30pm May 6, 2009 3:30pm
Quoting hanover
Wow - unlimited averaging down AND no stoplosses AND full Martingale (doubling pos size at every step)......... all in the same EA! Possibly the most dangerous system I've ever seen. Looks like you only had to go back a few days to find a scenario where it required a risk of 1024 units just to gain 1 unit.

It might take 5 days to blow the account. It might take 50 years. But one thing is guaranteed: it will happen........

Hanover,
I'll think you'll agree that the system I'm linking to, holds the honors as the worst ever posted on this board.
No Stops- Martingale - An indicator that repaints. The guy is serious about it.

http://www.forexfactory.com/showthre...ght=martingale
  • #11
  • Edited 4:04pm May 6, 2009 3:54pm | Edited 4:04pm
Quoting billbss
Hanover,
I'll think you'll agree that the system I'm linking to, holds the honors as the worst ever posted on this board.
No Stops- Martingale - An indicator that repaints. The guy is serious about it.

http://www.forexfactory.com/showthre...ght=martingale
Bill, I only had a quick look at the system you "recommended" (LOL), but I'm afraid I'd have to place them first equal. At least your candidate attempts to use some kind of TA...... such as it is.

Best wishes,
David
  • #12
  • May 6, 2009 4:03pm May 6, 2009 4:03pm
Quoting hanover
Bill, I only had a quick look at the system you "recommended" (LOL), but I'd have to place them first equal. At least the system in your link attempts to use some kind of TA...... such as it is.

Best wishes,
David
I think it safe to say that both systems are extraordinary
  • #13
  • Last Post: May 7, 2009 9:13am May 7, 2009 9:13am
Quoting billbss
Hanover,
I'll think you'll agree that the system I'm linking to, holds the honors as the worst ever posted on this board.
No Stops- Martingale - An indicator that repaints. The guy is serious about it.

http://www.forexfactory.com/showthre...ght=martingale
Hey,
I Have finished red this post thats system is more complicated than mine
The system that I wrote is really simple to automated trading.
When you have 1000$ for micro lot = 0.50$ yours account will be safty for 10 steps that over 300 pips becouse first step is after 40 pips second is after 30 pips... and all you need is reverse about 30-40 pips i think thats really possible
when you have not enough money to buy next step you will ver nervus and dissapointed:/ and you will pray for a little reverse
I supose when you have good money managment thats system have chance to make money but you always must remeber that you sitting an the clock bomb
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