Open-Close Trending with Hedging Discuss
In order to start this thread. I would first like to thank tKimble for introducing the basic system to Forex Factory. The system he brought to the Forex Factory was truly ingenious. The threads for his system can be found here: http://www.forexfactory.com/showthread.php?t=19391
I wanted to bring the tweaks I made to his system to the wider public at Forex Factory for analysis. Based on the corrections I've seen, you can operate and profit in both trending and range-bound markets. System details are as follows:
GBPJPY opening and closing trend hedging system rules
The 25-period linear weighted moving average is applied to the median price (HL/2), the +50 level and the -50 level are applied to the 1 hour chart (H1)
Basic rules:
1. Open a long position when the price breaks above the +50 level.
2. Open a short position when the price falls below the -50 level.
If in a long position, adjust stop loss to +50 level every hour
*Example: Direction North SL moves to 25MA -50 hourly.
If in a short position, adjust the stop loss to the -50 level every hour
*Example: Direction South SL moves hourly to 25MA +50.
** Do not adjust your stop based on your current position.
*Example: Currently holding a long position with 25MA down.
* If the price falls below the -50 level, close the current long position and open a short position
* If the price breaks the +50 level, close the current short position and open a long position
Hedging rules:
All the above rules are the same except for the following changes.
1. Only close your position according to the basic rules if it is at a positive or neutral point.
2. If your position is in negative pips, place an equally sized position in the opposite direction at the +/- 50 level to hedge your current position.
** Treat any hedging position in the same manner as all other positions within the rules above.
Example: A northbound hedge position became positive and remained positive when the market reversed below the -50 level. (Your northbound hedge position will only be closed if your price is below the -50 level and your hedge position is + or neutral as stated in the hedging rules above). At this point you will close the hedging position.
***Always keep a pending hedge to protect your current position if things go against you.
*** Do not place SL at your current location until it is in positive territory. Protect your winnings.
Lot size rule adjustment:
** If you use a fixed percentage of your balance (e.g. 2%), add additional lots to adjust your position when the price passes the +/-50 level.
I wanted to bring the tweaks I made to his system to the wider public at Forex Factory for analysis. Based on the corrections I've seen, you can operate and profit in both trending and range-bound markets. System details are as follows:
GBPJPY opening and closing trend hedging system rules
The 25-period linear weighted moving average is applied to the median price (HL/2), the +50 level and the -50 level are applied to the 1 hour chart (H1)
Basic rules:
1. Open a long position when the price breaks above the +50 level.
2. Open a short position when the price falls below the -50 level.
If in a long position, adjust stop loss to +50 level every hour
*Example: Direction North SL moves to 25MA -50 hourly.
If in a short position, adjust the stop loss to the -50 level every hour
*Example: Direction South SL moves hourly to 25MA +50.
** Do not adjust your stop based on your current position.
*Example: Currently holding a long position with 25MA down.
* If the price falls below the -50 level, close the current long position and open a short position
* If the price breaks the +50 level, close the current short position and open a long position
Hedging rules:
All the above rules are the same except for the following changes.
1. Only close your position according to the basic rules if it is at a positive or neutral point.
2. If your position is in negative pips, place an equally sized position in the opposite direction at the +/- 50 level to hedge your current position.
** Treat any hedging position in the same manner as all other positions within the rules above.
Example: A northbound hedge position became positive and remained positive when the market reversed below the -50 level. (Your northbound hedge position will only be closed if your price is below the -50 level and your hedge position is + or neutral as stated in the hedging rules above). At this point you will close the hedging position.
***Always keep a pending hedge to protect your current position if things go against you.
*** Do not place SL at your current location until it is in positive territory. Protect your winnings.
Lot size rule adjustment:
** If you use a fixed percentage of your balance (e.g. 2%), add additional lots to adjust your position when the price passes the +/-50 level.
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