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What is the most effective way to have an EA catch a sudden strong momentum in one driection?
I'm currently using a trading strategy where I have large trades open over a long time. Always only buy trades (to avoid swap rates). I was thinking that I could sort of "buy insurance" against a sudden extreme price drop (caused by news or some other unexpected event) by having an EA catch a strong momentum price drop and place a sell hedge order with a trailing stop (of about 10-20 pips). That way the drawdown is minimized if the price keeps falling If the momentum changes, then the danger of the "wrong" momentum will have passed and I'll either make a profit due to the trailing stop, or if the momentum was not as strong as suspected, a loss. But I would not mind taking more losses than profits from this EA since its basic function ist to "insure" the buy orders from my main strategy.
Does anybody have a suggestion on how to program an EA to catch a sudden unusual price drop?
And what do you think of this basic idea in general? Is it a good idea? Or if not, why not?
Thanks for your thoughts