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Author Topic: Hedging & Anti_martingale Strategy  (Read 3970 times)
FXHedgeMan
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« on: March 12, 2010, 06:35:40 pm »



Hi All

Something I emailed Support about, and thought it quite worthy, as this will kick ass!

Re:
Thank-you for your quick response.
 
Just wondering.  My friend and I have been using HedgeFXpert, you may/may not have heard about them.
 
It is a great EA, except for a few bug issues which their support has now fixed most of them.
 
This HedgeFXpert trades about 175 - 200 trades per day!!! Great for rebates, and great for income, if they can get it RIGHT! It will be the BEST EA on the market, if they can soon fix it correctly with feedback/s that they are receiving.
 
Now, what I have told them is that they may need a Martingale or preferably an Anti-Martingale strategy in their EA.  Please read below.
 
I have only just started using your EA, and noticed that it is slow.  Instead of using the Martingale first, and hedging as a second priority, perhaps the other way around would place this EA in a better position.  That is it will open both a Buy/Sell position straight away, with an Anti-Martingale strategy placed to increase the lot size of the winning trade/s to offset the losing one/s.
 
The HedgeFXpert opens many trades at a time, and places pending orders (Buy/Sell), to be placed when a winning trade is closed.
 
They are working at finalising this EA, but they may/may not do what my friend and I have offered.  Thought I'd share this with you, to see whether you cam implement something like this.

--------------------------------------------------------------------------------

Re:
Money Management - "Anti-Martingale"

Last week i touched on the 'martingale strategy' as a money management method (if you missed it, read more about it here). Next up for a brief examination is the "anti-martingale" method.

Anti-Martingale simply implies doing the reverse of what martingale does. Instead of doubling up the trading lot size for every loss, you double it up for every win. For instance, in a 50 pip stoploss and 50 pip take profit scenario you would do the following:-

Trade 1 @ 0.1 lots is WON.
Trade 2 @ 0.2 lots is WON.
Trade 3 @ 0.4 lots is WON.
Trade 4 @ 0.8 lots is WON.
Trade 5 @ 1.6 lots is WON.

If you experience a losing trade anywhere in the sequence, you drop back down to the first lot size in the progression. Once you complete 5 (or any other defined number of wins) you stop doubling up your lot sizes and bank the profits. The sequence above traded on EURUSD would have resulted in a gain of (50+100+200+400+800 = 1550) $1,550.

Of course, you won't always get five wins in a row and it may take you a number of losses before you get there!

This strategy, as with the original Martingale strategy, is not one you will find many professional traders using (at least not that many that i've come across, and not with the strategy in its original form as presented here!). It may have an application in strategies which have very frequent streaks of losses or wins. It is no where near as risky as the original Martingale strategy since you are not required to double up your lot sizes indefinitely, which is a real bonus - but on the negative side, trading this money management system will likely see you lose many many series in a row on occasions before you "hit" your five in a row.

Trading professionally, you are potentially likely to see traders increase their lot sizes when winning, but not by doubling up in quite the manner highlighted above. Increasing lot sizes when you are in the midst of a winning streak is a well known method to maximise your gains - as any trader will know, when a strategy is working in your favour and the market is on your side - it can be plain sailing and plentiful winning trades. When the market is not behaving well for your strategy, the opposite can occur. An adapted Anti-Martingale is best placed to take advantage of these opportunities when applied carefully.
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