The FTC Hedge Advisor works by placing a strictly limited grid of orders in a certain range with a built-in hedging algorithm, which makes it possible to fully control the risks of the trading account balance. Up and down from the average price line (daily time frame), the space is divided into separate ranges of equal value as a percentage of the average line. In each individual range, the Expert Advisor opens and closes positions independently of other ranges.
A grid of orders operating in range 2 cannot open orders in range 3. In each range, the Expert Advisor accompanies only those orders that are open in this range, which fully controls the number of orders in the grid, making it impossible to set a large volume against the trend. This is the first mechanism regulating trading risks.
The second mechanism for risk management is the ability to hedge the entire grid of orders in each range when the price goes beyond this range. The hedging mechanism is regulated by the Hedging Coefficient parameter, which is set for each range separately and works as follows: for example, 5 orders with a total volume of 0.5 lots are open within the range. The hedging coefficient for this range is set to Hedging Coefficient =0.7. The volume of 0.5 lots is divided by 0.7 and the volume of the hedge position is obtained. When the price goes beyond this range, a hedge position with a volume of 0.71 lots is opened. A hedging coefficient of 0.7 increases the volume of the hedge position (hedge position volume = order grid volume / Hedging Coefficient).
In the hedge position settings (hedge settings) there is a parameter "Percentage of profit for closing the grid of orders", which is set to % of the negative balance of the grid of orders. This parameter is designed for an open hedge position to block the grid of orders with its profit, and at this point both the hedge position and the grid of orders will close together. For example, a grid of orders with a total volume of 0.5 lots and a hedge position with a volume of 1 lot is open. The percentage of profit for closing the grid of orders is set to 0.1. When the profit of the hedge position is 0.1% greater than the loss from the grid of orders, both the grid of orders in this range and the hedge position of this grid of orders will close together. Thus, the hedge position is designed to eliminate the grid of orders opened against the trend. In order for this algorithm to work, it is necessary to enable "Closing a position when Hedg-Net profit is reached" in the hedge settings.
For a hedge position, it is possible to close at the take profit specified in the points (TP Hedge parameter, when set to 0, this parameter does not work).
The parameter "Offset from the TP of the grid for closing Hedge" is set in points and makes it possible to close a hedge position depending on the TP of the grid of orders. For example, this parameter is set to 20 points. As soon as the distance from the hedge position to the TP of the order grid becomes less than 20 points, the hedge will close. This is necessary in cases where the hedge has not closed the grid of orders with the "Percentage of profit for closing the grid of orders" parameter and the price has turned in the opposite direction. In this case, if the volume of the hedge position is greater than the volume of the grid of orders, the hedge will make a loss. If we set this parameter to 1, then the hedge on the opposite movement will close along with the grid of orders.
After the price leaves the operating range, the following mechanism for tracking open orders is automatically activated for the open grid of orders: the TakeProfit5 parameter sets the take profit level for the grid of orders. It is set as a percentage of the distance traveled from the very first order to the maximum movement. For example, TakeProfit5=50, this means that the grid of orders will close (when the price is outside the range) when the price rolls back to the level of 50% calculated from the first open grid order to the maximum (when moving up) of the entire movement. If the price returns to the range, the take profit of the order grid will automatically switch to the TakeProfit2 parameter.
The Advisor's algorithm provides for the adjustment of the hedge position when opening a new grid order. For example, a grid of orders with a volume of 1 lot is open and the price has exceeded the range. At KoefHedge = 0.7, a hedge order with a volume of 1.42 will be opened. After a while, the price returned to the range and another order was opened in the grid and the volume of the grid is 1.2 lots. If the price goes out of range again, the hedge position will be recalculated and an additional 0.29 lot order will be opened. (1,2/0,7=1,71. 1,71-1,42=0,29). This is how the hedge position is adjusted so that the order grid is always hedged by the specified KoefHedge volume, which is an additional risk management mechanism. After opening an additional volume of the hedge position, all hedging orders are summed up and managed by the adviser as a single order of the total volume, but only of this range. In each individual range, the Expert Advisor manages positions only in this range.
Range 1 - The range is located above the midline and is bounded by the upper line at 9% and the lower line at 6% of the midline. With Use_M enabled, orders in the range are opened only for sale.
Range 2 - The range is located above the midline and is bounded by an upper line of 6% and a lower line of 3% of the midline. With Use_M enabled, orders in the range are opened only for purchase.
Range 3 - The range is located above the midline and is bounded by the upper 3% line and the midline. With Use_M enabled, orders in the range are opened only for purchase.
Range 4 - The range is located below the midline and is bounded by the lower 3% line and the midline. With Use_M enabled, orders in the range are opened only for sale.
Range 5 - The range is located below the midline and is bounded by an upper line of 3% and a lower line of 6% of the midline. With Use_M enabled, orders in the range are opened only for sale.
Range 6 - The range is located below the midline and is bounded by an upper line of 6% and a lower line of 9% of the midline. With Use_M enabled, orders in the range are opened only for sale.
Range 7 - The range is located below the midline and is bounded by the upper line at 9% and the lower line at 12% of the midline. With Use_M enabled, orders in the range are opened only for purchase.
