Three Pairs Hedging

This is a really nice technique in terms of hedging. I am surprised that so few traders have heard of this kind of hedging. In stocks and options it's called "Pairs Trading" hedging, where one goes long on one stock and short on another. You kind of do this by having 2 currencies every time and some are "short" and some are "long". But not exactly.
Has anyone tried back testing this kind of strategy over a long time and lots of pairs / triples ? That would be interesting.
NICE WORK !

What is everyone's results? I find I only win when I go in one direction. example on a e/u/j when all pairs goes up I win with ssb and vise a versa on a bbs.
The balance between maybe still out with same size lots.


b-cat

I've only taken 2 trades with this - I won my 1% on the account balance using a SSB on the GBPUSD / USDCHF / GBPCHF... So I'm in on my second basket with that same pair - going again for my 1%... First basket took a couple of days.

I'm using Steve's Trade Manager to manage the basket by comment: TPH (Three Pair Hedge)...

Here is a Link....for those who are interested

http://www.forexfactory.com/showthre...99#post2029899

Open these trades since Sunday Asia open...waiting for 100pips TP to close all:

Dear cash4u2

I'd like to ask one thing, because I am testing this thing since last night and current I am in plus +40 ( pips ) means +400$ with 1.0 Lot. I did tried this ...
GBPUSD = Buy
USDCHF = Buy
GBPCHF = Sell

So if I would be done this way

GBPUSD = SELL
USDCHF = SELL
GBPCHF = BUY

At this moment I would be in minus -40 ( pips ) and -400$ with 1.0 Lot.
P.S. I am in floating plus at this moment..

So I would like to know how much it can go in minus maximum or plus ?
Maybe anyone tried this and know the answer ? For example yesterday I was thinking the maximum it would be around +15 pips or -15 pips without spread.
But today I can see that I was wrong... I can see that it is in +40 pips now I don't know how much will it grow, but I will leave it and see what could be the maximum plus or minus. So if anyone knows the correct or around number please share. Thanks a lot.

BUY/SELL:
AUD.USD
EUR.USD
GBP.USD

OPTIONAL:
BUY/SELL (COUNTER TO ABOVE)
USD.CAD

or if you REALLY wanna be BRAVE and take a chance also trade following same direction as first 3 pairs:

EUR.AUD
EUR.CAD
EUR.CHF

trick is not hold for all day, 1-2 hours max AT CERTAIN TIME(S), back test it

hello my friend,thank you for sharing your very good idea, i have to tell you that
i am trying your idea on demo and i am up $1000 for just 4 days !!! it is a great
system with any hassel,keep going bro,thanks again.

Excellent persia...I booked 100pips as well, but it was only a demo

Which pairs you did this strategy on? what was your exit strategy?

Let the pips be with you.

hello dear,i did BBS on GBP/USD - UDS/CHF - GBP/CHF,i let them be on profit by
themselfs,no stop no target point as you know,i think this is one of the best
strategy i have ever seen on this market.
regards

Yes persia, I did the same method, and hit my 100pips target, but I had a drawdown of almost 80pips!

I will use the EA: CloseTrades_After_Account_Profit_Reached, next time in order to close all orders when account profit is at +100pips.

It is a simple EA, and I tried to see if one can add an extra statement to close all trades if account loss is -100pips, so it would make it a simple 1:1 Risk/Reward ratio.

There is no AccountLoss statement in MT4...wonder if I can attach the similar EA to a seperate chart, but setting the AccountProfit to -100...for those coders out there, would this work, or any suggestion?

Many thanks!

you'll find that here:

http://www.forexfactory.com/showthread.php?t=71656

sq

Thanks sq.

So my thought was right - I can place negative # in AccountBalance statement for total account loss. I did update the EA code so I can have only one EA to close all trade if profit is 100pips or loss is -100.

Here is the code, and additional statements are in red...since I know you are the master coder, could you verify I am right...thanks!

//+------------------------------------------------------------------+
//| CloseTrades_After_Account_ProfitLoss_Reached.mq4 |
//| Copyright 2007, Tradinator |
//| [email protected] |
//+------------------------------------------------------------------+
#property copyright "Copyright 2007, Tradinator"
#property link "[email protected]"


extern double My_Money_Profit_Target=100; //The amount of money profit at which you want to close ALL open trades.
extern double Open_Loss_To_CloseTrades=-100; //|The amount of money at which you want to take a loss & close ALL open orders.

int Slippage=5;
int i;
//+------------------------------------------------------------------+
//| expert initialization function |
//+------------------------------------------------------------------+
int init()
{
//----

//----
return(0);
}
//+------------------------------------------------------------------+
//| expert deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
//----

//----
return(0);
}
//+------------------------------------------------------------------+
//| expert start function |
//+------------------------------------------------------------------+

int start()
{
if (AccountProfit()>= My_Money_Profit_Target || AccountProfit()<= Open_Loss_To_CloseTrades)
{
for(i=OrdersTotal()-1;i>=0;i--)
{
OrderSelect(i, SELECT_BY_POS);
int type = OrderType();

bool result = false;

switch(type)
{
//Close opened long positions
case OP_BUY : result = OrderClose(OrderTicket(),OrderLots(),MarketInfo(OrderSymbol(),MODE_BID),Slippage,Pink);
break;

//Close opened short positions
case OP_SELL : result = OrderClose(OrderTicket(),OrderLots(),MarketInfo(OrderSymbol(),MODE_ASK),Slippage,Pink);
break;
//Close pending orders
case OP_BUYLIMIT :
case OP_BUYSTOP :
case OP_SELLLIMIT :
case OP_SELLSTOP : result = OrderDelete( OrderTicket() );
}

if(result == false)
{
Sleep(3000);
}
}
Print ("Account Profit Reached. All Open & Pending Trades Have Been Closed");
return(0);
}

Comment("Balance: ",AccountBalance(),", Account Equity: ",AccountEquity(),", Account Profit: ",AccountProfit(),
"nMy Account Profit Target: ",My_Money_Profit_Target);

return(0);
}

i finished the week with $1100 total,i think we donut need to add anything i mean anything to change the course of this system,is it beautiful by its nature,
DD is not to much,i am gonna test it live as soon as possible,all credit goes to
cash4u2.

@Persia:

How much floating minus pips did you ever experience before gaining your profit?

That's correct.
However you must make sure that these values are consistent: don't set them to 0 for instance...

I would rather suggest something like this:


So you can use 0 to selectively disable tp or sl.

As Steve always says: everyone should learn mql4


sq

max - 100 pip

Hello Ladies and Gentlemen,
sorry that I was not here for a while, but I had some problems with my internet connection and had to wait for my new cable modem.

It's great to read that some people trying the three pairs hedging are happy with it, I am too ;-)

@josid
Could you change the code of the newHedgingEA.ex4, that it is also possible to enter the pairs manually, because it allows only to trade GBPUSD, USDCHF and GBPCHF.

I would also like to use it with other pairs and because I use FBS.com I need also suffix like GBPUSD.s and GBPUSD.u, hope you can handle that.

It would also be great to have a Moneymanagement, which allows to enter risk percentage of equity, and increases the lotsize automatically.

All the best
cash4u2

The better question would be what was your lot size for each pair traded?

The lot size is irrelevant in the big picture.

This strategy will work during the correlations ranging or if you are on the right side of the correlation IF you use a static lot size between the triangle.

Why? Because thats the nature of the beast in the market. It usually will range enough to give you profit OR if you are on the right side and the trend continues.

So does this mean you should save paying extra spread and work with the unfactored pair? Maybe not is my answer and it relates to the fact that in proper triangular arbitrage you are playing with market inefficiency.

The answer to that question is properly demonstrated by using a perfect hedge with the right lot ratio's. Once the hedge is in place you are net the spread/slippage until an inefficiency kicks in to make it better or worse.

Triangular arbritage tries to take advantage of this by opening a triangle during peaks and valleys of times when big money is pouring in. You can close when the the inefficiency moves in your favour. However you have to deal with slippage and brokers that will make your life miserable.

How do you overcome this? You can colocate your black box to somewhere near your liquidity clearing server and play on the interbank with more than $500k... thats really the only way... there is obviously alot of people already doing this which is the reason the market is so efficient.

The risk is that your triangle doesn't kick in with trades at the right time at the right price and you are left exposed more than the spread in which case you cannot determine your loss. This makes the strategy for general purpose traders like us unlimited loss and minimal gain.

You can backtest using JForex and find a proper money management scheme that may get you 10-15% per year but that's probably pushing it. The good thing is you can test as far back as you want... since your strategy doesn't change you should be able to figure out if your wasting your time or if consistent returns can be made over the long term.(10-15 years)

Jag