Expert Advisors: Triangle Hedge
The Expert Advisor touches upon the topic of opening positions on synthetic symbols (portfolios). In the case of Triangle Hedge we are talking only about synthetics of the NewSymbol = Symbol1^(+-0.5) * Symbol2^(+-0.5) type, i.e. extremely limited functionality. Which is actually a good solution, in the absence of other options in MT5 at the moment.
One of the reasons for using such a hedge could be the task of catching short-term multi-currency arbitrage situations and trading them. A full implementation of this case can be seen here.
Portfolio trading, on the other hand, is needed for many strategies. Calculation of lots for each symbol in the portfolio depending on the corresponding weighting coefficients can be seen here.
The “Hedging” Myth (based on dailyfx article)
Helping traders around the world means that I have seen many different methods to trade this market, both good and bad. One of the most damaging methods I’ve come across is the idea of ‘hedging’ a Forex trade by opening an opposing trade in the same currency pair and holding both long and short positions simultaneously. This not only incurs greater trade cost (by paying additional spread) but does not protect your position against additional losses.
Hedgers attempt to lock-in their profit or loss on a trade by opening an opposing trade, but if the spread widens, this negatively affects both sides of the trade. If the trader is over leveraged on these trades, a wider spread could incur a margin call and liquidate both positions. Worst of all, you would most likely be filled at the widened spread prices, adding insult to injury.
So now we know, hedging is not the proper way to secure a profit or a loss. Only the closing of a position can do that. Hedging also can be dangerous around widening spreads and can cause margin calls, so we need to limit the amount of leverage we are using to 10x or less.
I dont think hedging is a good strategy either. but, I guess it isnt the spread what makes hedging a bad choice, spread can only widen to a certain limit, most of the time that limit is meaningless for margin and it doesn't continues much, it has a periodical intraday pattern.
what makes hedging a bad choice is the panic, it is mostly applied in panic situations. someone with a clear mind can catch a good possibility of success with a hedging strategy.
The “Hedging” Myth (based on dailyfx article)
Helping traders around the world means that I have seen many different methods to trade this market, both good and bad. One of the most damaging methods I’ve come across is the idea of ‘hedging’ a Forex trade by opening an opposing trade in the same currency pair and holding both long and short positions simultaneously. This not only incurs greater trade cost (by paying additional spread) but does not protect your position against additional losses.
Hedgers attempt to lock-in their profit or loss on a trade by opening an opposing trade, but if the spread widens, this negatively affects both sides of the trade. If the trader is over leveraged on these trades, a wider spread could incur a margin call and liquidate both positions. Worst of all, you would most likely be filled at the widened spread prices, adding insult to injury.
So now we know, hedging is not the proper way to secure a profit or a loss. Only the closing of a position can do that. Hedging also can be dangerous around widening spreads and can cause margin calls, so we need to limit the amount of leverage we are using to 10x or less.
you can develop this strategy action like a ring inefficiency. Always the raport between 3 symbol must be = 1. But from time to time it is not equal 1 and then, if condition are perfectly to have a valid ring, in mod automatically EA must open 3 position in the market on same time, of course all pairs have different number of lots . And when the market reach a profit from all 3 pairs the EA will close all deals instantly. This method it is full hedging. This works in teory. BUY your ability it is to develop an EA who can scan always the pairs ( price market) and when detect a raport not equal with 1 then can be an opportunity to open positions.The EA must be capable to form ring with 7 pairs,6 pairs ,5 pairs, even 4 pairs and to scan every moment and form rings , many rings ( a lot of rings) , and also keep scanning the swap ( for every day) for every pair .
If you have intention to develop an EA , I can give you more advise.
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Triangle Hedge:
Author: Atsushi Yamanaka