Three pairs hedging/Renko

Hello.
This concept was started by cash4u2 in the thread “Three Pairs Hedging “.
I think that adding the renko factor is sufficient to start a new one.


Thank you cash4u2.


I did a couple posts in the previous thread that explain my concept. I am re-posting a 30 day forward test here, with the hope that some will see the potential and contribute to make a back-test possible.

Here is 1 month of forward testing with 1 setting. Started Dec 5 and ended
Jan 5 (I used peppertone demo. They are good for 1 month only).

I used 0.30 lot in all 3 pairs. It made 781 trades for a total of 234 full round lots traded. $5000 account made $2761.56/55.23% . Total DD was 7.83%.

I hope you see the need to get into a good backtest for the strategy. I mean if these stats would be similar every month, it would be wise to place a 10% safety global SL for the account and even if get triggered twice per month , the account still would in the profit at the end.

Thx jeuro
Could you re-explain your renko strategy ?

And also why your strategy is better than SSB/BBS

I did post the basic concept of the strategy in cash4u2 thread. I think that is sufficient to grasp the idea. The strategy is still a 3 pair hedging. Executing the trades in renko just help to maintain the math in case 1 pairs spike up or down; Avoid having to execute all 3 pairs at simultaneously the exact time, etc.


I don't understand the question “why the strategy is better than SSB/BBS
This is set to buys EU, buy Uch and sells Ech.


Sell EU, sell Uch and Buy Ech should have a similar overall results mathematically. But I don’t have any set running like that, so I don’t know. If I could back-test , then we would know very quick.

You mean we don't execute all three trades at same time. We buy EU and UCHF at same time when we see an up renko bar and ECHF only sell when we see a down bar? A little confusion here....?

OK, At least I should make a few clarifications. But I repeat, I do not want to spend the whole time
trying to explain how the strategy works because it takes away from time that we should spend trying to back-test and fine tune, so wen can all benefit.


Kikij, yes, trades are NOT executed at the same time. We use renko to execute trades when a bar close (whatever pips the renko chart is set to), Therefore would be just a coincidence that all 3 pairs or 2 pairs will trigger at the same time. If you set EU and Uch , say, in a 20 pips renko chart, you will see that the 2 pairs almost never print bars at the same time.

Jeuro, you will not get far without explaining the system exactly. After all, this is the "Trading Systems" thread, and it's not enough to say "it's just like that other system over there." If you want us to help you, please explain the system, step-by-step, clearly.

from post http://www.forexfactory.com/showthre...96#post5267296

Example using EUR/USD, USD/CHF , EUR/CHF.

These 3 pairs would make an impeccable (perfect) hedge "IF" mt4 or mt4 broker would allow decimal lots size
like 0.21025451. but they don’t, therefore we can use a fix equal lot for all 3 pairs, say 0.30 and here is were we use the renko chart to compensate for the UN-impeccable hedge and take advantage of the fact that EUR/USD and USD/CHF are negative correlated (not always) and that
EUR/USD*USD/CHF=EUR/CHF (always, but between a small inefficiency factor)


To set the EA we “assume” that EUR/USD and USD/CHF are perfect negative correlated. Example:
say the current prices are EUR/USD= 1.2985 and USD/CHF=0.9385 … then EUR/CHF=1.2186 (1.2985*0.9385)


If we are assuming perfect correlation, this means if EUR/USD moves 20 pips up, then USD/CHF would move 20 pips down and we would have 1.3005, 0.9365 and (1.3005*0.9365)1.2179. In other words EUR/CHF moved only 7 pips down.


Therefore I would set the EA for EUR/USD and USD/CHF in a 20 pips renko charts and EUR/CHF in a 7 pips renko chart. EUR/USD buy only, USD/CHF buy only and EUR/CHF sell only. ..no TP, no SL but set to CloseALL when in X profits.


To get a better picture, the EA would buy EUR/USD at close of the 20 pips renko bar (if the bar is up bar). If the closed bar is a down bar, EA does nothing. For USD/UCH would do the same and for EUR/CHF would do the opposite (sells only in the 7 pips renko chart)


i ended up setting a grid of pending orders

open buy eurusd 1.3020
pending buy 1.3040
pending buy 1.3060
pending buy 1.3080 e cosi via

open sell eurchf 1.2120
pending sell 1.2113
pending sell 1.2106
pending sell 1.2099

open buy usdchf 0.9230
pending buy 0.9250
pending buy 0.9270
pending buy 0.9290

you don't need a renko chart, i believe this system is very powerful, great idea.....

Sure, why using Renko or why using any chart at all. We can just write down the prices of the three pairs at the moment when we open the terminal and then set pending orders 20 and 20 and 7 pips away from these initial prices. Or enter manually when prices have moved that much. No need for any kind of candles nor EA.

One important question - if it is correct to use equal lots? Pip values of EU and CHF pairs are different and also volatility is different. Shouldn't we equalize the lots somehow?

One important question - if it is correct to use equal lots? Pip values of EU and CHF pairs are different and also volatility is different. Shouldn't we equalize the lots somehow?[/quote]

you can do that , but its' not necessary ...it's the number of pips every pair runs that makes the difference

Hello Tarrini, Thanks for re-posting here.


Yes, I do believe this system has a lot of potential to be a constant profitable system but needs fine tuning. But the fine tuning is a painful and slow task if we are unable to back-test. This is one of those cases that back-test will help, because is matter of math. Placing Pending orders manually will do the trick, but difficult to keep. Also keep in mind that for the given results I did use renko and it gets tricky when price retrace, say 50 pips and the go back up again. You need to replace the triggered orders. In some cases end up having 1 order on top of the other at the same price. That is how worked for the shown results.

The exact set I used for the results shown in post # 2 are:

EUR/USD
11 pips renko chart, TP=15, SL= 15 “Buy only”. “Every time when renko prints an up bar”


USD/CHF
11 pips renko chart, TP=15, SL= 15 “Buy only”. “Every time when renko prints an up bar”


EUR/CHF
5 pips renko chart, TP=7, No SL “sell only “ “ every time when renko prints an up bar” (yes, up bar)


I used renko 11/11/5 just to speed the test and have more action. It is somewhat the equivalent to use 20/20/7

There is no reason to test the same thing. The 30 days profitable forward should be enough merit
to want to run this setting on a couple years of back history. (but would be a good idea, if interested,
that you trade it a few hours or a day to understand the mechanics and be able to contribute in a more
personal informed way)


Is this the best setting possible ? I doubt it. That is why is important that everyone understand the concept first, meaning that, there is a combination Pips, Lot, TP, SL, Global TP, Global SL, that would work fine in long periods of time.


I believe the given set would work fine in normal EUR/USD- USD/CHF- EUR/CHF relationship.
But it could fail in special events like the Swiss intervention of September 6, 2011. Would it blow the account? Probably not if we use a safety measure. But if anyone analyze the situation, will find out that The normal negative correlation EUR/USD -USD/CHF got out of window and we had all 3 pairs going up at the same time.


I know that you traders and mathematicians would create many other settings that would works as well. But we still would be stuck having to run long and tedious forward test to proof the theory. That could take us an eternity.

Why there is no SL for EUR/CHF?

When I say that the system has “potential”, I do not say it lightly. I have been trading manually a long time, but it is only about 3 of years that I joined efforts with an excellent programmer and started to seek some math systems that could be automated and make our life a bit easier. And this system does have real potential.

I am getting old and trade forex for a living. This world is getting so crazy that I feel a sense of urgency to make as much possible in the shorter period of time. I feel that overnight the whole word can change and Currency exchange is no more. It was a lot easy back then when instead of having the Euro we had some other 14 currencies to work with. If a couple more Currency blocks like the Euro start happening, or if the dollar is replaced as a world currency, there is no way to know how would end up for us the make a living from it.


This is the main reason I am putting this up here. I believe the system would have some flexibility in settings that would allow many of us to use it discrete for some time. But not all people that come to these forums have the best intentions in heart. I guess that many just hunt for ideas ( or plainly copy files) to code the next crappy EA or tool/indicator to sell to novice traders or to honest but desperate people looking to feed their families. The reality is that any system that goes viral, becomes ineffective. I do apologize in advance if I do not answer questions that show no efforts to read, understand nor contribute.

Therefore, I believe the collective priority is to create/find way to back-test.

Like I mentioned before, we are able to code anything for mt4, but for lack of time we don’t want to get involve in rewriting our tool EA and a renko indicator in a different language used by multi-pairs strategy testers/platforms already in the market.

Ok, I did by best in post #12,

I a sense both of you guy are correct. We use renko just because is easy to code the algorithms to execute trades at close of bar instead of having to make a bunch of math calculations. Also easy to visualize the mechanics of the system.

If use we were to equalize the 3 pairs via "lots" or "pips range" and "execution time" (impossible to do exact ) We would have no risk. No risk, no possibility to profit. All entries would remain at a fix dd (the spread) forever.

Because the risk needs to be incurred somewhere and the profits need to come from somewhere. In this case from the EUR/CHF as shown in this stats:

Three pairs hedging doesn't work, if one of the pairs uncouples out of normal range your account will get blown to peices. This was one of the strategies I experimented with before I became profitable myself, I can assure you that you are barking up the wrong tree.

No doubht you'll follow the same path that I did and it will go like this:

1) add stop loss
2) add counter hedge pairs
3) remove counter hedge pairs and add martingale
4) end

As much as I understand from instructions, it is not usual hedging. If all trades - long EURUSD, long USDCHF and short EURCHF - are set to trigger after bullish candles then, if the first triggered entry is a good one, possibly other two will not trigger at all, and you just win the first one.

At least, that is how I see it logically. First entry is what you try to win and other two are just for backup.

But... I would not set SL if hedging three pairs like this. They equalize each other, and if money management is not too risky then sooner or later you win the hedge.

No calculations needed at all. We may very well skip all math and use simply ATR values for each pair for setting pending orders.
And the system certainly needs no EA.