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Averaging and Hedging System

  • #1
  • First Post: Edited 4:30pm Aug 25, 2011 3:32pm | Edited 4:30pm
Here is a method that I've received from a person that has been trading it successfully for a few years. He's been getting a 50% return on a monthly basis. His English is very poor so I couldn't really understand how the system works but here is what I got so far:

Example: open buy @ 1.6020 with TP 1.6030 with .3 lots. If floating -12 pips, open buy again @ 1.6008 with .4 lots and change buy TP to -6, to 1.6024(Change tp of the 1st order too). If price goes to 1.6000 (floating -20 pips) open hedging position - open sell @ 1.6000 with TP 1.5990(.3lots). Then after that you just continue the same thing, -12 pips average down and -20 hedge. Also, here is the lot progression. .3, .4, .4, .5, .6, .7, .9. 1.1, 1.3, 1.5.

Supposedly his biggest drawdown is around 10-15% and consistently makes around 50% ROI each month.

Hopefully someone with more experience can understand it and make some sense out of it.

Here is his myfxbook that has been started a couple of weeks ago where his past trades can be viewed and maybe deciphered from the past trades: http://www.myfxbook.com/members/sabi...-system/154199

Tropics
  • #2
  • Aug 26, 2011 1:16am Aug 26, 2011 1:16am
Quoting tropics
Here is a method that I've received from a person that has been trading it successfully for a few years. He's been getting a 50% return on a monthly basis. His English is very poor so I couldn't really understand how the system works but here is what I got so far:

Example: open buy @ 1.6020 with TP 1.6030 with .3 lots. If floating -12 pips, open buy again @ 1.6008 with .4 lots and change buy TP to -6, to 1.6024(Change tp of the 1st order too). If price goes to 1.6000 (floating -20 pips) open hedging position - open sell @ 1.6000 with TP 1.5990(.3lots)....
Sounds interesting. Does he use an SL on these? Or what point does he close losing trades? From his myfxbook link, it seems like he would be carrying significant open DD positions. His open trades are hidden for the same reason.

the hedge and averaging distance sounds too aggressive. maybe x2 or x3 of those values could result in lesser trades and maybe lower DD.
  • #3
  • Aug 26, 2011 10:13am Aug 26, 2011 10:13am
I am not sure about closing losing trades since he hedges them. According to him his max drawdown is 10-15% but of course that could also be false.

Quoting bravester
Sounds interesting. Does he use an SL on these? Or what point does he close losing trades? From his myfxbook link, it seems like he would be carrying significant open DD positions. His open trades are hidden for the same reason.

the hedge and averaging distance sounds too aggressive. maybe x2 or x3 of those values could result in lesser trades and maybe lower DD.
  • #4
  • Aug 30, 2011 12:08pm Aug 30, 2011 12:08pm
Looks like it's still going pretty good. Really impressive. One needs a very large account to be doing this. The other day when i was monitoring, he looks like was in a bit of an open drawdown with about 20 averaged positions open, but was able to get out of it when GU retraced a bit. I do see the possibility that the account could get blown away some day though, he;s been surviving pretty well.

Anyone figure out when he starts hedging? It looks like it keeps averaging forever, but is not very clear when it starts hedging.
  • #5
  • Aug 31, 2011 2:34am Aug 31, 2011 2:34am
I don't think it's hedging individual trades. Rather, start with a buy grid, once the price moves goes down by 20 pips start a sell grid. Start a new buy or sell grid as soon as the existing one closes. The new trades open with a multiplier of 1.2 (with the lots rounded to 2 decimal places) at each new level, which is 12pips down from the previous level.

The only part that eludes me for now is exactly how the TP's are adjusted when averaging down.
  • #6
  • Aug 31, 2011 9:38am Aug 31, 2011 9:38am
Quoting skoda2008
The only part that eludes me for now is exactly how the TP's are adjusted when averaging down.
I believe they reset the TP to TP-6 on all the existing averaged positions. So everytime another position is added on to average, the TP is reset by -6 on all the positions within that chain.
  • #7
  • Sep 1, 2011 1:50pm Sep 1, 2011 1:50pm
Holy Grail !!!

If nothing else, putting those words in here will make this thread show up on most search results.
  • #8
  • Sep 2, 2011 10:25pm Sep 2, 2011 10:25pm
Skoda and Bravester, I think that you are both right in regard to the system rules. It would be interesting to see how it would perform if someone created an EA for it.
  • #9
  • Sep 3, 2011 1:42pm Sep 3, 2011 1:42pm
Hi Tropics,
It seems like he's using an EA for this. Any chance you can ask him to share with you.
I am pretty interested in this system. Think about it it is just an infinite averaging system banking on the hope that a pair can never go in 1 direction without significant pullback.
If i have some time i may run some backtests (visual or automated) to see whether this system holds any weight in the long term. I have a feeling it will, but we need to know the tipping point of the system.
  • #10
  • Sep 3, 2011 6:31pm Sep 3, 2011 6:31pm
I've already asked him and even offered to pay for the EA, but it doesn't seem that selling it will ever cross his mind.



Quoting bravester
Hi Tropics,
It seems like he's using an EA for this. Any chance you can ask him to share with you.
I am pretty interested in this system. Think about it it is just an infinite averaging system banking on the hope that a pair can never go in 1 direction without significant pullback.
If i have some time i may run some backtests (visual or automated) to see whether this system holds any weight in the long term. I have a feeling it will, but we need to know the tipping point of the system.
  • #11
  • Sep 20, 2011 10:50pm Sep 20, 2011 10:50pm
Quoting tropics
I've already asked him and even offered to pay for the EA, but it doesn't seem that selling it will ever cross his mind.

Hi Tropic....
It seems your friend's ea promising.
Please ask SteveHopwood in this forum that really expert to develop any ea according to your friend's ea....
And don't forget to informing us here once developed....
  • #12
  • Sep 24, 2011 2:52pm Sep 24, 2011 2:52pm
He is not my friend.

Quoting hanifsan
Hi Tropic....
It seems your friend's ea promising.
Please ask SteveHopwood in this forum that really expert to develop any ea according to your friend's ea....
And don't forget to informing us here once developed....
  • #13
  • Oct 9, 2011 12:40am Oct 9, 2011 12:40am
Averaging and Hedging System EA

Introduce this Averaging and Hedging System to Steve Hopwood and ask him if he is interested to code it.

Contact:
http://www.forexfactory.com/showthread.php?t=216271

eTrader,
  • #14
  • Oct 9, 2011 3:57pm Oct 9, 2011 3:57pm
I already have a couple of months ago but he said that he didn't understand the system.

Quoting eTrader
Averaging and Hedging System EA

Introduce this Averaging and Hedging System to Steve Hopwood and ask him if he is interested to code it.

Contact:
http://www.forexfactory.com/showthread.php?t=216271

eTrader,
  • #15
  • Oct 9, 2011 4:34pm Oct 9, 2011 4:34pm
I think this guy here is doing the same thing..

http://www.forexfactory.com/showthread.php?t=318597


I have been following sabiq's myfxbook journal for more than a month and i can see that he doesnt follow the exact rules as defined in the first post. he almost got wiped out the other day when GU tanked 200-300 pips in that 1-2 day timeframe. seems to be a straight infinite hedge of each direction trades.
  • #16
  • Oct 10, 2011 7:43am Oct 10, 2011 7:43am
It is impossible to know if he is doing anything close to this system since he hasn't revealed anything yet nor probably will.


Quoting bravester
I think this guy here is doing the same thing..

http://www.forexfactory.com/showthread.php?t=318597


I have been following sabiq's myfxbook journal for more than a month and i can see that he doesnt follow the exact rules as defined in the first post. he almost got wiped out the other day when GU tanked 200-300 pips in that 1-2 day timeframe. seems to be a straight infinite hedge of each direction trades.
  • #17
  • Oct 10, 2011 10:09am Oct 10, 2011 10:09am
Quoting tropics
It is impossible to know if he is doing anything close to this system since he hasn't revealed anything yet nor probably will.
You are right. However, when he started that thread on the first post, he had his trade history posted, which he has since removed and hence it is impossible to tell looking at it now as to what strategy it was following. But when it was out there initially, i had looked and was amazed that it was the strategy being described on this thread.
  • #18
  • Oct 10, 2011 10:40pm Oct 10, 2011 10:40pm
Yes, that is weird. Without an EA this is pretty much worthless though. So if this wasn't in 'under evaluation' section of the forum, at least we would have had a chance of some programmer coming along and programming an EA. Unfortunately moderators have placed it under evaluation thinking that I have something to sell, even though I was fully transparent from the start.

Quoting bravester
You are right. However, when he started that thread on the first post, he had his trade history posted, which he has since removed and hence it is impossible to tell looking at it now as to what strategy it was following. But when it was out there initially, i had looked and was amazed that it was the strategy being described on this thread.
  • #19
  • Last Post: Oct 11, 2011 5:45am Oct 11, 2011 5:45am
what i meant was , this guy here :

http://www.forexfactory.com/showthread.php?t=318597

in my opinion has an EA that is using this strategy. He is willing to sell the EA and strategy. Anyone interested might want to get in touch with him to find specifics of the strategy. if it is the same strategy as here, then the EA he's selling might be worth it as well.
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