Hedging Strategy for
intraday trend trading. You enter a potential trade in the direction
of the trend. Find the trend the H4 and H1 charts after go on M15 or
M30 chart as your trading and timing. Spreads low is important when
using hedging strategy but also know how to take advantage of volatility is even more important.
Currency pairs for this
strategy are some of the more volatile pairs such as the, Eur/Jpy,,
Gbp/Chf, Eur/Aud, Gbp/Usd, Gbp/Jpy, Aud/Jpy.
Visual explanation for
examples of a Hedging Strategy that use the martingale for money
management with multiplier 3.0. This multiplerer is not good kill the
account. I recommended max multiplier 2.0. this multiplier is always
dangerous. See the two progressions:
first multiplier
3.0= 0.01 – 0.03 -0.06 – 0.12 – 0.24 – 0.48 – 096 – 1.92
second multiplier
2.0= 0.01-0.02 – 0.04 – 0.08 – 0.16 – 0.32 – 0.64 – 1.28
Example hedging strategy
Example: Buy 0.1
lots at 1.9830. At the same placing Sell Stop 0.3 lots at 1.9800.
If the TP at 1.9860 is not reached, and
the price goes down and reaches the SL or TP at 1.9770. Then, you
have a profit of 30 pips because the Sell Stop had become an active
Sell Order (Short) earlier in the move at 0.3 lots.
But if TP and SL at 1.9770 are not
reached and the price goes up again, you have to have a Buy Stop in
place at 1.9830 in anticipation. At the time Sell Stop was reached
and became active Sell 0.3 lot (pic: number 2), you have to
immediately place a Buy Stop of 0.6 lots at 1.9830 (pic: number 3).
If price goes up and hits SL or TP at
1.9860, then you have a profit of 30 pips too.
If the price goes down
again without reaching any TP, then continue anticipating with Sell
Stop of 1.2 lots, then Buy 2.4 lot…and next. Continue this sequence
until we meet the profit. Lots: 0.1, 0.3, 0.6, 1.2, 2.4, 4.8, 9.6,
19.2, 38.4 and 76.8.
6. With this example I
use 30; 60; 30 configuration (TP 30 pips, SL 60 pips and Hedging
Distant 30 pips). Otherwise, you can try 15; 30; 15, 60; 120; 60.
Also we can try to maximize profits by testing 30; 60; 15 or 60; 120;
30 configurations.
7. Considering the
spread, choose the pair with the tightest spread like Eur/Usd.
Usually the spread is only around 2 pips. The tighter the spread, the
more absolute that you will win. I think this may be the “Never
Lose Strategy”…let the price move to anywhere it likes; you’ll
still get the profits anyway. Actually the whole "secret"
(if there is any) is to find a "time period" that the
market will move enough to guarantee the pips for your profit. This
strategy works with any trading method.
Asian Breakout using Line-1 and Line-4.
Actually, you can use any range (pips) you want.You just need to know
which time period market has enough moves for the pips you want. And,
one more important thing is not to end up with buy-sell-buy-sell too
many times until you run out of margin.
Trading Line-1 and Line-2 (10 pips)
will also win.
Don’t be confused, this method is
very simple, only 2 things:
1. Choose 2 price levels (H, L, ) at certain time (you decide), if breakout H then buy, if
breakout L then sell. TP=SL= (H-L).
2. Every time you have a loss, increase
the buy/sell lots in this number sequence: 1,
3, 6, 12, and 24...etc. If you choose
your time and price range correctly, there should not be a need for
this many trades. In fact, you should never have a need of more than
one to two entries if you properly time the market.
3. Learning to take advantage of
momentum and volatility is a key element in learning to use this
strategy. As mentioned earlier, timing and Time Period can be a
crucial ingredient for your success. Even though this strategy can be
traded during any market session or time of day, it needs to be
understood that when you do trade during off-hours or lower volatile
sessions such as the Asian Session that it will take longer to
achieve your profit goal. Thus, it’s always best to trade during
the prime hours of the European/London Session and/or the New York
Session. In addition, we
all know that the strongest momentum
usually occurs during the opening of any market session. So, it’s
these times that can help you to trade with a much higher probability
of success. MOMENTUM + TIMING = SUCCESS
March 29, 2007 is a typical example of
a dangerous day for trading with this strategy because there is a ranging market. Sideways,
consolidating prices, or short oscillation markets will kill anyone if not
recognized and traded properly. If you learn to enter the markets
using the signals generated by the trading model included with this
strategy, you will find that you will usually hit your initial TP
target 90% of the time and price will not get anywhere close to your
hedge or initial stop loss.. In this case, the hedging strategy
replaces the need for a normal stop loss and acts more as a guarantee
of profits.
The above examples are illustrating
using mini-lots; however, as you become more comfortable and
proficient with this strategy, you can gradually start increasing the
number of lots trades with an initial goal of working your way up to
standard lots. The consistency that you will achieve by being able to
make 30 pips any time you want to will lead to the confidence
necessary to trade multiple standard lots. Once you get to this level
of proficiency, you profit potential is unlimited.
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