Note to the modo : Oh come on it's a serious topic !
As mother nature prefers it : profit/loss targets increased as there's hedge orders added.
This works sometimes, but i guess the only issue is the constant movement of TP level. It is understandable that because the lot size is bigger to move TP hirer because of the "momentum" of the new lot size. However sometimes, it good to get to breakeven so all trades can close, and restart the cycle. For example, after increase TP 4 Times, no longer increase TP, but close at Breakeven.
Yep, this is correct. I have a version that does this. For example, the first 4 movements might be 100 pips apart, but then as it keeps moving, it may go to 200 pips apart. Get hirer, ok, 400 pips apart. It takes out a lot of noise in the market so fewer trades are triggered.
The downside, as you move the recovery zone further apart, the lots themselves take bigger losses.
.08 on EURUSD
100 pip range loss = $80
200 pips range loss = $160
400 pips range loss = $320
I will say though that the GOOD does outweigh the bad moving the recovery zone. The key is not to have the normal trade pattern of 1,2,4,8,16,32,64 if you are moving the recovery zone (unless you plan to use $50,000 for such small overall profit).
Forum on trading, automated trading systems and testing trading strategies
What's your opinion on optimization? I need some advice.
Icham Aidibe, 2018.06.17 01:56
Hedging is the name of the principle and it could apply in many manners. "These strategies" I'm referring to consist in increasing the lot size to recover a lost position. It's a bit caricatural.
I think it's much more relevant used as a protection with the same lot size, increasing only when it's unmistakable. I prefer it so, it's more mature.
Yep, this is kind of where I ended up. If it does increase, make it very minimal. As I said before, even pattern 1,2,3,4,5,6 works to some degree. Also, even consider repeating pattern lots. 1,2,3,4,5,5,6,6. I think of it as weight distribution of which sides needs to be "heaviest". Perhaps i should share signal at some point. The only issue with this strategy is that trades can be held for up to 3 months, and I know this will piss off subscribers. But the drawdown is low so that it can scale up nicely if the patience is there. People on this site tend to want quick money.
yup so definitively against the lot*3 at each order... well I was just thinking about the thing - I guess it's just another suggestion in the ocean of martingales/hedge EAs/strategies :)
LOL, right, Great strategy if you manage millions of dollars for investors or join a prop trading company. But if you start will less then 20,000 then it may not be worth the risk.
For more exotics pairs like turkish lira, rubble, yuan, mexican pesos, south african rand etc... (huge spec difference) it just requires an adjustment.
Happy ending with hedging & cie.
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.