Hedging EA with High DD issues, how to overcome this ?

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Hiya to all,


I would like to get opinions form fellow traders , and lots of help !!!

I have an EA hedge system that i purchased, it can profit up to 150$ per day depending on markets , but the issue i am having is when i back test this, the trends  blow the account, as its using a trade multiplier going against the trend , which most hedge system seem to do, now what methods can we use to keep the DD low, and keep the equity up ?

1) if the risk factor or equity loss gets above say 5% of your account , account recovery kicks in , what could this be ?

2) when trending down, start to multiple the orders (sell orders )  in the direction of the trend to keep up with the opposite orders that are losing equity

3) keep placing orders but do not close them , let them ride, 

4) increase the lot size order say from 0.01 to 0.05 along the trend and dont close them until equity increases until whenever ????  

5) double up on the winning profitable trades 

6) multiplier stops at a certain lot size say from 0.01 to 0.20 the start to go down from 0.20 , 0.019, 0.018 etc  or goes back to 0.01 

anybody looked into this ? any other ideas that would work , 

so i can go back to the programmer and ask them to add the input to the EA ?

thanks guy for any help you give !

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"Hedging" does not cause any draw-downs. What you are referring to is a martingale strategy and such strategies will always blow an account sooner or later.
 
 
 
you
Keith Watford:
"Hedging" does not cause any draw-downs. What you are referring to is a martingale strategy and such strategies will always blow an account sooner or later.



Your right , they all blow accounts , hence worried to use it, the problem i had was orders to far from current market price, had to wait ages for the orders to close, or blow account !!

ok what if after a certain amount of profit the hedges closes , ? then opens new hedges order around current market price , that way there will not be any orders gaining more and more losses far away from the current market price.?

 
Or the hedge trys to close the orders furthest from the current price , using the most profitable orders ? 
 
if you close orders of only one type you will find yourself unbalanced on the other side. If you start closing a buy and a sell position to balance loss and gain, the system will slow down and for return to have profit you need a long time.
 

Your EA should stop trading for the day when your risk appetite has been exceeded. 

Sometimes you have to accept a small loss, before it balloons to a bigger loss if you continue further. 

There are times when market does not offer system predictability to any EA. I have encountered days like this.

This applies to every EA and trading methodology, not just your hedging EA.

 
googs666:

Hiya to all,


I would like to get opinions form fellow traders , and lots of help !!!

I have an EA hedge system that i purchased, it can profit up to 150$ per day depending on markets , but the issue i am having is when i back test this, the trends  blow the account, as its using a trade multiplier going against the trend , which most hedge system seem to do, now what methods can we use to keep the DD low, and keep the equity up ?

1) if the risk factor or equity loss gets above say 5% of your account , account recovery kicks in , what could this be ?

2) when trending down, start to multiple the orders (sell orders )  in the direction of the trend to keep up with the opposite orders that are losing equity

3) keep placing orders but do not close them , let them ride, 

4) increase the lot size order say from 0.01 to 0.05 along the trend and dont close them until equity increases until whenever ????  

5) double up on the winning profitable trades 

6) multiplier stops at a certain lot size say from 0.01 to 0.20 the start to go down from 0.20 , 0.019, 0.018 etc  or goes back to 0.01 

anybody looked into this ? any other ideas that would work , 

so i can go back to the programmer and ask them to add the input to the EA ?

thanks guy for any help you give !

what you mentioned is not hedging it is grid martingale. and martingale will blow up your account soon or late.

because there is no way to escape that too dangerous risk to reward ration.

because risk is your whole account and reward is a little comapred with your risk.

 

I do not know if it's possible, can you reverse the strategy (by parameters)?

Close the losing side, when the loss is still small and let the side in gain to grow (hopefully)

In the absence of trend, you would have many small loss closures (that maybe you can recover when you catch a trend)

 

This is the nature of the strategy. I think you have no control to sort of modify the EA.

It seems to me that the strategy is a bit too risky to keep adding position at predefined levels rather than opening position that has an edge.

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