Hedge saved you, who will save Hedge ? - page 23

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ale mariani:
Hedge is just a martingale with 1:1 rate.
I have programmed many kind of hedges and in the end I arrived to the conclusion that if ur base rate of succeful operations is below 50% even also 49% no any kind of hedges will be also successful in the long term, because it is just like as you delay all to a more rare event where you bid with all your tradesize possibility.
The same of doing a big big operation at beginning of your trades in the end. 
Hedges, Martingales, Grids are all ways to postpone to more rare events the decision if your EA will be profitable or not. So just if this event is very rare also the strategy can be profitable and it depends just from the base successful rate, not enough 50%. If you are not sure of this the only way to be in some way safe is to start with very low amounts that means be less profitable in the time.
The ONLY real way to be very profitable in EAs is to have a strategy that basically and costantly has a successfull rate of at least 60-70% of operations (with 1:1 distance SL/TP). If u have that in the hands then u can also decide if apply an hedge or not to that strategy...but at that point the hedge will be useless because u can work with bigger tradesizes with simple SL.
(Another problem is also that well working hedges are very difficult to be programmed, hours and hours to study any case, go up, go down, go up after being down etc. and getting crazy with magic numbers)

This should be placed as a paragraph in any forums RULES text (with a required checkbox), so that any wishful beginner, would step into Forex strategy forums, with a better mindset and expectation.

 
Code2219 or probably 2319:

This should be placed as a paragraph in any forums RULES text (with a required checkbox), so that any wishful beginner, would step into Forex strategy forums, with a better mindset and expectation.

thanks

I can add that if u have a successful rate of 43-47% of operations like it could be on a pure random system on EUR/USD 30 pips / 30 pips...it is not that rare having for example 5-6 wrong operations in a row. And hedges are very profitable just if ur system don't go beyond 2-3 wrong operations in a row and very rarely more where u will have to face big drawdowns. So what can warrant u that u won't occur in such kind of combination of events? Just a good trade system with high percent of successful rate for me.
My idea after many many tests is like this. If someone else has found "the trick" to be profitable also starting from random...im very happy from him, but I haven't found yet )
 
Joel Simmons:

HMMM, 

I guess you where were I left off as well. I am still wondering if a grid will work as well for recovery, and have played around with a few ideas in the past..........but i am not very mathematical (as most programmers are). I know for sure a mathmatical person who understands this riddle could figure this out......only a matter of time.  It does seem your kind of going the same direction i was going though......... as well as the same results (decreasing the drawdown also decreased the profit). In backtesting, i also have many situations where similarly priced pairs react the same on using the same set file. However i do my testing typically starting from 2003, and it seems like each pair has a situation in it existence where it will trade too often (except for maybe a few). I dont take the few pairs that never show this behavior into account because the potential is always still there. 


Anyhoow, enough ranting. What software are you using to combine the backtesting outputs? I would love to give it a try.


What i found is that expanding the entries (which lowers the drawdown) also keeps the trade "cycle"' open longer. So the issue I've ran across is what happens if 2 or 3 pairs go into drawdown at the same time? So even though the worst drawdown may be....20% of $1000 for example............then the potential is really 60% if you add 3 pairs. Of course they may all do their drawdowns at different times which it would make it %20, but in the worst situation, they would all drawdown at the exact same time. So your starting balance is really $1000 per Pair Added. 


Would you happen to have created a quick file i could test? You could send me a limited exe or just PM me and i could help you speed the time frame up on what barriers you may run into. It seems you have the technical and mathematical skill that i do not have.  This could be a win win for us both.

I'm using MT5, unlike MT4 with MT5 can use many pairs in the same tester run - on the other hand, you only have brokers' historical datas with its own spec, directly downloaded. But beware, a broker which just changed its offer from account of spread 50 to spread 10, will deliver older-to-the-offer datas with a spread 50 .. 

... so finally it's not really relevant to use it.

About the margin, this one sticks to a limited risk whatever the number of symbol used, if the margin is exceeded it'll treat it as a normal deal, I've found that by accepting losses & renouncing to bigger profits it was possible to gain in stability. 

The starting balance is 1000$ for the 3 pairs. 

Finally I could eventually capture a video of the order processing you could watch at. 

 

 
ale mariani:
thanks

I can add that if u have a successful rate of 43-47% of operations like it could be on a pure random system on EUR/USD 30 pips / 30 pips...it is not that rare having for example 5-6 wrong operations in a row. And hedges are very profitable just if ur system don't go beyond 2-3 wrong operations in a row and very rarely more where u will have to face big drawdowns. So what can warrant u that u won't occur in such kind of combination of events? Just a good trade system with high percent of successful rate for me.
My idea after many many tests is like this. If someone else has found "the trick" to be profitable also starting from random...im very happy from him, but I haven't found yet )

17 consecutives losses :-] To make it short, I don't care losing 17 times 0.01 lot (0.17 lot) if I'm prepared for.

I'm sure anyone can do it, if he knows how to approach the problem the right way - since I opened the thread, I've myself took almost a year and in the meantime I cursed hedging & this kind of strategies more than once .... out of darkness comes the light ! ;)

 
Icham Aidibe:

Hi,

I was "playing" with hedging to explore possibilities : it's very tempting, since it allows purely & simply to recover from a bad position taken. 

The risk of these strategies is well-known : lot management. Comes ALWAYS a point, where the margin is stressed, the logical solution being to accept & cut losses, often with bigger losses than normal if you retried many times.

Is there any way to get out of a failed hedge ?   Have you ever seen such a method that could limit damages made by a failed hedged deal ? Overbidding ad vitam aeternam is definitively not the solution.

do not hedging with less than $10000 or 10000 cents =$100 in cent account.

this way you can protect your account

 
Icham Aidibe:

Hi,

I was "playing" with hedging to explore possibilities : it's very tempting, since it allows purely & simply to recover from a bad position taken. 

The risk of these strategies is well-known : lot management. Comes ALWAYS a point, where the margin is stressed, the logical solution being to accept & cut losses, often with bigger losses than normal if you retried many times.

Is there any way to get out of a failed hedge ?   Have you ever seen such a method that could limit damages made by a failed hedged deal ? Overbidding ad vitam aeternam is definitively not the solution.

your question is not true when you did not show your exact strategy because we have a lot of hedging strategies and which one ha its own risk.

 
Icham Aidibe:

17 consecutives losses :-] To make it short, I don't care losing 17 times 0.01 lot (0.17 lot) if I'm prepared for.

I'm sure anyone can do it, if he knows how to approach the problem the right way - since I opened the thread, I've myself took almost a year and in the meantime I cursed hedging & this kind of strategies more than once .... out of darkness comes the light ! ;)


yes but u need to start with very low lots, because u know that u could use even 17 times the tradesize and lose exponencially more.
But if i have one that with SL/TP is profitable and there are, I can risk more with tradesize because i know it wont go to increase.
So where is the advantage in your system? I think there isnt because the first attempt will be with a very small tradesize and u can get just a very small gain with it comparing with ur equity.
I think hedge can be used like an equalizer, balancer of high changing of prices, but it is not easy at all to forecast when maybe the price return on itself or it goes away definitively. 
At the base always a good EA...thats my idea...or not that much advantage. No trick can do miracles if ur EA is unable to guess the right way at beginning. 
I really would like if it could exist something I dont need to guess anything.
 
Icham Aidibe:

I'm using MT5, unlike MT4 with MT5 can use many pairs in the same tester run - on the other hand, you only have brokers' historical datas with its own spec, directly downloaded. But beware, a broker which just changed its offer from account of spread 50 to spread 10, will deliver older-to-the-offer datas with a spread 50 .. 

... so finally it's not really relevant to use it.

About the margin, this one sticks to a limited risk whatever the number of symbol used, if the margin is exceeded it'll treat it as a normal deal, I've found that by accepting losses & renouncing to bigger profits it was possible to gain in stability. 

The starting balance is 1000$ for the 3 pairs. 

Finally I could eventually capture a video of the order processing you could watch at. 

 

Yea a video capture would be awesome. Or even a backtesting report showing the trades. In either situation, let me know which trades are just your normal trading pattern, and where does your recovery mechanism begin.  I have 2 more ideas on how make mine better, but i have to type it up to explain it better. 

 
Rafael Grecco:


That's exactly what I don't like about hedges and averaging systems. Once trades start to stack up, we either accept the risk and wait for it to recover (eventually reaching a margin call) or we cut losses once drawdown reachs a certain number (like 10% in your example).

What we must do is not allow the EA to reach such point. I already managed to do it using the independent trades closings, as I explained before (I am working on increasing the profit with minimal risk). I don't know what strategy you are using, but once we manage to find a way to overcome this problem, there's a good chance our EA will be (very) profitable.

There is only one way to be profitable with all your so call profitable EAs.

The key is to accept a small lost when you know the trend may carries on almost forever.

E.g You start with $ 1000.00 after 3 month you have gain $ 1000.00 profit. The total balance is now $ 2000.00

Now an event occur and you know that the trend might carries on almost for ever against you, why not accept to loos $ 200 which you have made let say in the last 2.5 weeks?

and start again making money, surly your account will not die after loosing $ 200.00

Within the next 5 month you could be far above the current profit.


NB: Progress is better than perfection, always remember that in the world of Forex. 

 

FINALLY ! One year has passed since I released my first prototype of hedging system. It was promising, but unfortunately limited to metaquotes servers with old spreads (1). Everywhere else it has been a total fiasco.

And few days ago, I started working on a class that seeks to lighten margin by managing partial closings ... it's something relatively advanced ... and now, once implemented, I got my old EA to handle many instruments with "common" spreads (test since 2012.01.01 = 8 yrs)

I'm just starting a test on the whole market watch to fully explore it - unsure but I'm optimistic.

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