The Barak Hedging Method 1 | Forex Factory

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The Barak Hedging Method 1

  • #1
  • First Post: Mar 3, 2006 1:04pm Mar 3, 2006 1:04pm
I tried this Israeli system by a great forexer named O.Bar.

Try to open 2 positions, via stop/entry order - at the same rate!!! e.g. :
buy gbp/usd 1.2031 and sell gbp/usd at the same time(hedge).

Very important : I use a stop of 20 and a trailing stop of 10 (the Delta is 20).

When both positions open i do the following :

The + position I trail the stop manually with a 10 pip stop - And I wait for a radical break which stops the losing position and continues my winning trade - works most of the time only on GBP/USD - london session (based on the big ben system ).

Use THIS only in peak overlap times - and :
Most importantly - I use Two Oanda accounts with this system - since the spread is minimal - thus - a loss is minimal at best.

This system works best in the London breakout session .
How would u guys improve it?
  • #2
  • Mar 3, 2006 1:19pm Mar 3, 2006 1:19pm
why not open one position and trail it at your so called "radical break".

  • #3
  • Mar 3, 2006 1:53pm Mar 3, 2006 1:53pm
Quoting Pip-Gandalf
I tried this Israeli system by a great forexer named O.Bar.

Try to open 2 positions, via stop/entry order - at the same rate!!! e.g. :
buy gbp/usd 1.2031 and sell gbp/usd at the same time(hedge).

Very important : I use a stop of 20 and a trailing stop of 10 (the Delta is 20).

When both positions open i do the following :

The + position I trail the stop manually with a 10 pip stop - And I wait for a radical break which stops the losing position and continues my winning trade - works most of the time only on GBP/USD - london session (based on the big ben system ).

Use THIS only in peak overlap times - and :
Most importantly - I use Two Oanda accounts with this system - since the spread is minimal - thus - a loss is minimal at best.

This system works best in the London breakout session .
How would u guys improve it?
How sucessful have you been with it? Do you have any results?
  • #4
  • Mar 4, 2006 12:22am Mar 4, 2006 12:22am
Quoting compsingh
why not open one position and trail it at your so called "radical break".

Because I don't know the direction of the radical break - Thus - with this system - it either hits the open short or the open buy - with a 50 pip push.
  • #5
  • Mar 4, 2006 1:14am Mar 4, 2006 1:14am
Sorry, it doesn't make sense.
  • #6
  • Mar 4, 2006 2:17am Mar 4, 2006 2:17am
Quoting Munch_Munch
Sorry, it doesn't make sense.
Timing - is all that matters.

First : Read the big Ben strategy for the cable.
Than : Use The Barak Hedging system as illustrated before :

Why it works? : Because : in the cable the "radical break" is > than the range of the open hedged trades - and it occurs within fraction of a minute - the smart thing about it - is that when it happen - it will trigger one of your hedged positions - and will stop the other with a minimal loss (since the range of the Hedged positions - is 20 pip stop - which is < than the "radical break statistical range = > 50 pip ") .
This system will catch the "radical break " from pip 1 (with the loss of the hedged position) - because it is open in real time .
Am I clear ? Munch?
  • #7
  • Mar 4, 2006 2:43am Mar 4, 2006 2:43am
Quoting Munch_Munch
Sorry, it doesn't make sense.
Here is an illustration:

U open the two hedged positions at 100 each:

Buy = 100
Sell = 100

The price goes to 110 - it doesnt affect anything.
The price goes to 90 - it doesnt affect anything .
Than the price jumps to 55 in lieu of the Big Ben Strategy (Frankfurt/London etc...) - than what happens is : the Buy position is stopped at 80 (20 pip loss) - and the sell position catches a 45 pip profit (use Oanda to get a min spread).

In other words - what i am saying is : absent this method there is no way you could atch a radical break from pip 1 - and ride it correctly . In this manner u will catch it and most times you will profit .

And as for losing : well : if u trail your stop wisely/manually (since a trailing stop would not work because of the large delta ) - u could gain almost every time.

And lastly, The whole point of this forum is to post your trading ideas and get ideas to improve it - so - instead of criticising me - please offer ideas to improve this system .
  • #8
  • Edited 3:58am Mar 4, 2006 3:36am | Edited 3:58am
"U open the two hedged positions at 100 each"

Buy = 100
Sell = 100

The price goes to 110 - it doesnt affect anything.
The price goes to 90 - it doesnt affect anything .
Than the price jumps to 55 in lieu of the Big Ben Strategy (Frankfurt/London etc...) - than what happens is : the Buy position is stopped at 80 (20 pip loss) - and the sell position catches a 45 pip profit"

That's assuming it doesn't doesn't go up to 110, go down to 90, hit all your stops and skyrocket or plunge the wrong way before going towards the assumed 45 pip profit.

That's 2 positions instead of 1. That's double work.

If you use Oanda for that, Oanda's tightest spreads for EUR/USD and EUR/GBP are about 1.5 pips. When you open 2 positions you are already disadvantaged by 3 pips. Unless Oanda considers a buy and sell position at the same price as a closed position under the first-in-first-out, in which case those 2 positions isn't a position.

When prices become volatile, Oanda tends to widen its spreads, to about 7-10 pips.

Sorry, it really doesn't make sense.
  • #9
  • Mar 4, 2006 5:13am Mar 4, 2006 5:13am
Quoting Munch_Munch
"U open the two hedged positions at 100 each"

Buy = 100
Sell = 100

The price goes to 110 - it doesnt affect anything.
The price goes to 90 - it doesnt affect anything .
Than the price jumps to 55 in lieu of the Big Ben Strategy (Frankfurt/London etc...) - than what happens is : the Buy position is stopped at 80 (20 pip loss) - and the sell position catches a 45 pip profit"

That's assuming it doesn't doesn't go up to 110, go down to 90, hit all your stops and skyrocket or plunge the wrong way before going towards the assumed 45 pip profit.

That's 2 positions instead of 1. That's double work.

If you use Oanda for that, Oanda's tightest spreads for EUR/USD and EUR/GBP are about 1.5 pips. When you open 2 positions you are already disadvantaged by 3 pips. Unless Oanda considers a buy and sell position at the same price as a closed position under the first-in-first-out, in which case those 2 positions isn't a position.

When prices become volatile, Oanda tends to widen its spreads, to about 7-10 pips.

Sorry, it really doesn't make sense.

Munch, I have two seperate accounts in Oanda !!!!! And I use each to Hedge the other - Thus - it is not relevant "first in first out" !!!!!
Secondly , you said : "
That's assuming it doesn't doesn't go up to 110, go down to 90, hit all your stops and skyrocket or plunge the wrong way before going towards the assumed 45 pip profit."
If u read my whole idea : it could never hit both stops, since there is a 20 sl range - and if it hits one stop - it would usually be in the "radical break" since price consolidates in a 20 pip range - thus it would continue to profit of +30 pips - and if i than trail it manually - i could gain more!!!

If you use common sense - u should enter this position at the Pivot point (mid consolidation) - calculated based on last movements.
Empiric trial is the test - and it worked for me - thus sometimes I use a 22 stop loss at one position and 19 at the other to cover the spread....

MY question to u Munch is : Assuming that u did try this method - what would u improve ? (remember - two sep accounts at Oanda)
  • #10
  • Mar 4, 2006 5:46am Mar 4, 2006 5:46am
Quoting Pip-Gandalf
I tried this Israeli system by a great forexer named O.Bar.

Try to open 2 positions, via stop/entry order - at the same rate!!! e.g. :
buy gbp/usd 1.2031 and sell gbp/usd at the same time(hedge).

Very important : I use a stop of 20 and a trailing stop of 10 (the Delta is 20).

When both positions open i do the following :

The + position I trail the stop manually with a 10 pip stop - And I wait for a radical break which stops the losing position and continues my winning trade - works most of the time only on GBP/USD - london session (based on the big ben system ).

Use THIS only in peak overlap times - and :
Most importantly - I use Two Oanda accounts with this system - since the spread is minimal - thus - a loss is minimal at best.

This system works best in the London breakout session .
How would u guys improve it?
Hey PG,

I've considered doing this before with one of my price based strategies. (Vegas 1HR Tunnel)

This would not be a daytrading version however.

Looks like you've done the work to back test! I can't add to improvements, but this is an intriguing Entry strategy.

Thanx for sharing
HJ
HeavyJ -"Posterboy for Spellchecker!" "Will work for pips!"
  • #11
  • Mar 4, 2006 6:43am Mar 4, 2006 6:43am
I won't try this method.

And two accounts? Frankly, I've heard of fund managers using one company to handle all his customers accounts, the gain or loss simply move from one customer's account to another's.

I won't even think of it as a method.

Good luck to you.
  • #12
  • Edited 3:42pm Mar 4, 2006 6:51am | Edited 3:42pm
Quoting Munch_Munch
I won't try this method.

And two accounts? Frankly, I've heard of fund managers using one company to handle all his customers accounts, the gain or loss simply move from one customer's account to another's.

I won't even think of it as a method.

Good luck to you.
So I guess we can put you down as uninterested! We got it!

I'm not ready to jump either. I keep an open mind though.

NOTE TO PIP GANDALF: I don't know if you had considered Interbankfx or not. They allow hedge positions of equal value to be open in the same account and there is no spread on the opposing position.

The Cable has been at 4 pips spread for some time there. This may reduce your costs.......... I dunno!

HJ
HeavyJ -"Posterboy for Spellchecker!" "Will work for pips!"
  • #13
  • Mar 4, 2006 8:13am Mar 4, 2006 8:13am
LOLOLOLOLOLOLOLOL this method makes sence to me but whats more funny is the topic poster trying to explain it to munch munch LOLOLOLOLOL
  • #14
  • Mar 4, 2006 8:15am Mar 4, 2006 8:15am
Hi

I would like to understand this syem correctly. This is my understand of the sytem so far.... Please correct me if i am wrong.


Assumptions:
1) London session "without a breakout" remains within 20 pips range.
2) If there is a break out i.e. the pair moves more than 20 pips it tends to move at least 50 pips in the same direction.
3) We dont know which direction the market is heading.
hence,
1) We open a position on both sides, i.e. we are long and short.
2) When the market is not breaking out then both our positions will not be stopped out.
3) When there is a breakout it will hit one stop loss.
4) We trail the winning position with another stop loss.


Now if the above is correct , why dont we have a stop entry on either side @ the range of 20 pips , where you would normally have your position stopped out.

This way if it moves in a particular direction 20 pips, it will fill the order and head towrads the expected range of 50 pips.


In your method one would have a 20 pip loss and a 45 pip profit. In the method I suggest we would only have the 30 pip profit.
  • #15
  • Mar 4, 2006 11:12am Mar 4, 2006 11:12am
Quoting huskins
Hi

I would like to understand this syem correctly. This is my understand of the sytem so far.... Please correct me if i am wrong.


Assumptions:
1) London session "without a breakout" remains within 20 pips range.
2) If there is a break out i.e. the pair moves more than 20 pips it tends to move at least 50 pips in the same direction.
3) We dont know which direction the market is heading.
hence,
1) We open a position on both sides, i.e. we are long and short.
2) When the market is not breaking out then both our positions will not be stopped out.
3) When there is a breakout it will hit one stop loss.
4) We trail the winning position with another stop loss.


Now if the above is correct , why dont we have a stop entry on either side @ the range of 20 pips , where you would normally have your position stopped out.

This way if it moves in a particular direction 20 pips, it will fill the order and head towrads the expected range of 50 pips.


In your method one would have a 20 pip loss and a 45 pip profit. In the method I suggest we would only have the 30 pip profit.
----------------------------------------------------------
Ok - U are quite correct in the overall understanding of the system .
But - here is the trick - since the consolidation area changes - the mean changes as well - thus you can open two hedged trades in a different mean range - and if u use a stop of 19 at one position and a stop of 24 at the other - you will cover the spread costs anyway!!!

To illustrate :


+10 pip - over 5 ma = Double hedged position 1 (using entry stop)

_______________________________________> current rate

-10 pip - over 5 ma = Double hedged position 2 (using entry stop)

In other words = in this manner i cover a range of 50 pips (either the first doube hedge would hit - or the other ) . The trick is - to have no losses : and this is achieved when there is a sl diff between each open hedged position,ibid - thus at the max - if u trade it manually - and hit hits in a good rate attributed to the positive hedged position - u could end up with a risk free profit . Remember that it all happens in a fraction of a minute(the break out) !

In your illustration - there is no real range - it is more of a gamble - the whole game is range control.

Now - I should stress the fact that i have been using this system for a month - and it generated a consistant profit - and at the worst scenario a couple of pip losses - but it is not perfact .

So lets put our heads together to perfact it.
And as for Munch Munch - its fine that u don't wish to try it - But being open to new ideas is cardinal to success.
PS I am trading with real money - at 50:1 - I have no prob with such a lev because the worst scenario could lead only to a couple of pips loss . Its all about probabilities - and this system is mostly : win win / or win - lose (for a very limited pip).
  • #16
  • Mar 4, 2006 1:05pm Mar 4, 2006 1:05pm
Will you post your trdes here every day ? so that we can get a consitant result.

I.e. fix up atime lets say at 3 AM EST and post the trde out here.
  • #17
  • Mar 4, 2006 1:29pm Mar 4, 2006 1:29pm
It seems to me that you're quite satisfied with the entries so what is left is the exits.

To improve the system, have you tested different type of exits a trailing stop at 10 pip on the is British pound is pretty tight. You must get stopped out only to see the market, continuing the direction you were in at times.

Letting profits ride is always a good objective. Have you tried ATR stops channel stops timing stops progressively tighter stops, breakeven etc.

I can see this type of system actually adding contracts. The next day, because you're still not out of the old position.

After all exits are the only way you make profit
A truly wise man, always has more questions than answers.
  • #18
  • Mar 7, 2006 3:12pm Mar 7, 2006 3:12pm
Hi Pip Gandalf, I'm intrigued by this idea as well, I've been demo trading and looking for a way to trade either side of a break-out by including a hedge. I second Huskins request that you post some real examples (including time of entry & exit) so we can get a rough idea of how it works in practice. Of course if you want to take the trouble to regularly post trades, that would be great too. Unfortunately, being a novice, I can't offer any constructive criticism that would help you improve the method, but thanks again for sharing it with us.
  • #19
  • Mar 8, 2006 7:15pm Mar 8, 2006 7:15pm
Quoting Pip-Gandalf
Here is an illustration:

U open the two hedged positions at 100 each:

Buy = 100
Sell = 100

The price goes to 110 - it doesnt affect anything.
The price goes to 90 - it doesnt affect anything .
Than the price jumps to 55 in lieu of the Big Ben Strategy (Frankfurt/London etc...) - than what happens is : the Buy position is stopped at 80 (20 pip loss) - and the sell position catches a 45 pip profit (use Oanda to get a min spread).
This is exactly the same as:

Put a buy stop at 120 and a sell stop at 80. This way you only need 1 account and you don't pay the spread twice.

Simon
  • #20
  • Mar 12, 2006 2:24pm Mar 12, 2006 2:24pm
Please in order to be sure we understood, post some positions....
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