HedgeEA - page 19
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Well I'm understanding what you are saying, If we look to the chart of gbpchf we can see an uptrend for so long, that we can see why this EA is so profitable with the default pairs...
Instead of your sugestion, I can make another, grab an ea that is working fine, like Terminator, and instead of stoplosses add hedging positions.
Regarding Hedge EA it can be used with other pairs that not have a common currency. If we could manage a very good entry point and a tralling exit this could make much more money...
I'm working on a comparation spreadsheet I'll post it as soon as complete.
If I understand what you are saying, then you are proposing something different from this EA. I've done this myself...I can't say successfully, but that's not to say it's a bad thing to do. I just didn't really time the hedging correctly, and in retrospect would've been better to just leave alone. Btw, I'm not saying this EA won't work.
It just seems to me that if we are going to use CHF/JPY to hedge yen exposure, which this EA does, then why not hedge it completely? But then we just end up with GBP/CHF. The way this EA works we're always going to be left exposed somewhere. I just can't get my brain around why I would choose to remain exposed GBP Long and CHF Short...basically this is what the Bollinger Band filter does, I think...make that choice for me.
Maybe the EA could be tweaked to open and close the different positions at different times in order to manage the exposure intelligently. Maybe that's an implication of what you are suggesting.
BWIf you look at a chart of gbp/jpy monthly, back up the zoom so you see back to 1978/80 years. You'll see it was very high. Now its comming off of an extream low. This pair has alot of Bull trend left in it to balance out the 2 extreams.
The market is all about balance as with every thing in the universe.
You cann't go wrong with buying gbp/jpy And if you hedge it completely you'll never take profit. The hedge just limmits the down side not eliminate it.
will this ea work? thats not a question because it "is" working.
Its just like most forex traders to take a working system and try to change it. Then they wonder where there money went.
Dave
will this ea work? thats not a question because it "is" working.
Its just like most forex traders to take a working system and try to change it. Then they wonder where there money went.
DaveDave:
I'm not necessarily trying to change the system, but I'm trying to understand exactly what is going on...so that I can integrate it with my other already profitable systems. This is necessary in order to trade the system correctly, and once I start trading a system I don't stop until it is "broken." Please don't mistake me for a grail seeker.
If what you really want is long exposure to GBP/JPY with a hedge to match, I think there might be a better way...currently investigating.
Kokas:
I'm looking forward to see what you come up with, because I think this might help me get around the intellectual difficulty I'm having. Also, excellent suggestion about integrating these ideas with another system...I've already been heading down that path with some of my own systems. Maybe I'll check out this terminator ea after my other current projects are done.
I guess I'm more interested in how the concepts behind this ea are being used in a real tradable manner, than in the ea per se. I've got many ideas about other ways to integrate the concepts. I think Kokas research might turn up something very useful, because it would integrate more currencies, further diversifying risk.
BW
Ok thats cool I'll leave that part up to you. The calculations for the hedge are beyond me. I am a technical trader. This is more mathmatical trading.
Although I can visualise what the concept is I couldn't put it together like he has.
I let the ea place orders last night in what looked to be a less than ideal entry point. Along with impatience, I wanted to see if it can be placed randomly and still be ok.
So far I havn't seen more than 50-60 pips on the negative side. Currently its at break even with gbp/jpy down pips and chf/jpy up pips. Making p/l at "0".
the gbp/jpy long was placed at the very top of the highest point. The break even price on gbp/jpy is at a price that hasn't been seen in years. Just testing a very poor entry point. so far it looks ok.
Dave
Yeah, I could tell you were possibly more involved in TA than myself. I mainly use support and resistance and just a few moving averages. Different strokes for different folks...I'll be interested to see how you're expirement turns out.
Btw, if you want GBP/JPY exposure to the upside while hedging the downside, you might want to look into currency options. SaxoBank offers some that will work, at least I'm fairly sure they will.
I still think this strategy may have a place in my trading plan...waiting to see what Kokas finds out.
Regarding Hedge EA it can be used with other pairs that not have a common currency. If we could manage a very good entry point and a tralling exit this could make much more money...
Kokas, I'm sorry I haven't really contributed much so far. Have you looked into using the Bollinger Bands as a way to help determine the best exit? I think the idea of using highly correlated pairs which don't share a currency might have a great deal of value.
BW
I do not think that using BB as the exit would be good idea. Only if attach to another condition.
The fact is that due to spread you will need to wait a while for recovery. If you exit too soon you will exit on loss. And again if the exit enter in some drawdown, in the recovery it will exit... This must be something like:
($Profit > x) AND (Upper BB on GBPCHF)
The problem is how to calculate this "x". It must be a function of lots traded, lot size. Any ideas?
I do not think that using BB as the exit would be good idea. Only if attach to another condition.
The fact is that due to spread you will need to wait a while for recovery. If you exit too soon you will exit on loss. And again if the exit enter in some drawdown, in the recovery it will exit... This must be something like:
($Profit > x) AND (Upper BB on GBPCHF)
The problem is how to calculate this "x". It must be a function of lots traded, lot size. Any ideas?Actually, I do have an idea. But first, if we are long GBP and short CHF, then we should always have a profit if we enter the trades when at bottom of GBP/CHF range and exit at top (Unless the BB is in a squeeze...which we can somewhat quantify). Even though we may not be totally hedged against JPY, creating synthetic GBP/CHF, the behavior in P/L should be similar to trading GBP/CHF.
I was going to write down the necessary analysis here...but it's wayyyy too long and complicated. Instead, I'll do a spreadsheet and post here. I'm not going to focus on the lot size at all...that can be manipulated. Instead I'm going to look at the behavior of the whole shebang over time...Ideally it should oscillate. We'll find out.
BW
I use this EA on $5000 demo account. The lots are 0.5 on GBPJPY(buy) and 0.9 on CHFJPY(sell).
The max negative profit these days is -230. What the max negative profit can be expected?
We dont know this Adria, I read somewhere that the maximum deviation was 300 pips on the past, but I do not know. And also I do not have data to set a realistic TP.
We need to continue the tests.