Open-Close Trending with Hedging Discussion Thread

Quoting x2012

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Hi Yezbick, could you please post a picture of your chart? On my charts, i'm seeing something different. I realize it might be different with every broker but the difference at the moment is too much.

Thanks

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Quoting El Nacho

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Can someone code an EA for this?

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Quoting brentmack

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Yezbick, I feel for ya, man!

It looks like your audience wants to do ANYTHING but learn and test your method.

But I'm alright with that. We've got to keep that bottom 95% freshly replenished with new recruits.

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Quoting Scientist

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yezbick,

do you use 2% of your equity or something else?

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Quoting yezbick

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Money management is as or more important than the system itself. I'm currently using 5%, but would recommend 1-3% for anyone that is testing this system. As there is some learning curve involved, and mistakes are inevitable while learning any system.

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Quoting howard

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Hi Yezbick

I would like to summerise this hedging method one more time to make sure everything is in order from the outset:

The method is exactly as described by TK (Open-Close) except instead of placing a stop you place a hedge, that is to say:

Entry is at one side of 25(+-50) channel, hedge and reverse on the other side of the channel and so on, all the time in the market.

Am I right?

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Quoting yezbick

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To get this thread started. I first want to thank tKimble for introducing the basic system to Forex Factory. The systems he has brought to the forex factory are truly ingenious. The thread for his system can be found here: http://www.forexfactory.com/showthread.php?t=19391

I would like to bring the adjustments I have made to his system to the general public of the Forex Factory for analysis. The adjustments from what I have seen allow you operate and make pips in both trending and ranging markets. The system details are as follows:



Open Close Trending Hedge System Rules for GBPJPY

25 period Linear Weighted Moving Average applied to Median price (HL/2) with +50 Level & -50 Level applied to a 1 hour chart (H1)

Basic rules:

1. Take long position when price goes through +50 level.
2. Take short position when price goes through -50 level.

Adjust SL hourly at +50 level if in long position
* example: direction is north SL moved up to 25MA -50 every hour.
Adjust SL hourly at -50 level if in short position
* example: direction is south SL moved up to 25MA +50 every hour.

** Do not adjust SL against your current position.
* example: in current long position and 25MA goes down.

* Close current long position if price goes through -50 level and open short position
* Close current short position if price goes through +50 level and open long position

Hedging rules:

All of the above rules are the same except for the following changes.

1. Only close a current position with the basic rules if your position is in positive or neutral pips.
2. If your position is in negative pips, place an equal size position in the oposite direction at the +/- 50 levels to hedge your current position.

** Treat any hedge positions the same as you would with all other positions in the above rules.
example: North bound hedge position goes positive and is still positive when the market reverses direction south below the -50 level. (only closing your north bound hedge position if your hedge position is + or neutral when your price goes below the -50 level as stated it the hedging rules above). You would close the hedge position at this time.

*** Always have pending hedge in place to protect your current position if it goes against you.

*** Don't place SL on your current position until it is in a positive territory. Protect your winnings.

Adjustment on lot size rules:
** If you are using a flat % of your balance (ex. 2%) then adjust your positions when the price by adding additional lot size when the price goes through the +/-50 level.

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Quoting Ebenst

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Hi Yezbick. I have been following this thread and am tryiing to get my head around on this hedging. I now have 2 orders open long and short with no pending orders. Can you please confim if this is correct or should there be a short pending order also.

Thanx

Eben

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Quoting Gmak

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I backtested from November and this system has worked very well. Hats off to the creator.

I was wondering what theory he might like to put forward with regards to increasing positions when traversing a long term trend.

In my backtesting I increased position every time the price rose or fell to the guide lines (touching from below for an uptrend, touching from above in a down trend) with the only caveat being one trade per hour, a significant (15 pip) retracement and then a further push/drop.

The result was a staggering amount of pips won, but an equally staggering amount of hedged trades.

I ended with 20 short and 20 long.

Nevertheless some form of adding position does seem to be profitable.

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Quoting Mina

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my only concern is swap rates because It seems you can hold on to that hedge for a loong time can anyone shed some light on this ?

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