Wednesday, May 10, 2006

Forex Trading Strategy: Hedge Hog (GBP/CHF)

This is known Hedge Hog strategy but with diffrent currency pair, diffrent set up, incredibly high returns and drawdown, but i think it is really worth a look.

Here is what to do:
Every day at 24:00 GMT go to your account and put on Hedge Transaction on GBP/CHF or with open price at current level.
Set Take Profit: 20 pips
Set Stop Loss: 450 pips
for both transactions (LONG and SHORT)

I made back tests for last 3 years and this are the results:
leverage 1:10 (starting capital 10 000$, lot size 1 lot)
3 pip spread included in results
system shows average 13,37% monthly return
largest drawdown is 4 100$ which is about 41% of starting capital
Maximum loss in single trade -284 pips


I know that drawdown and maximum loss are very disappointing they are quite high, so you may want to decrease leverage from 1:10 to 1:5 drawdown will be then much more acceptable, but ofcourse avg. return will be only 7% monthly.

If you are interested then go ahead and try this system out with a demo account.
As always email me for spreadsheet with backtest results.

14 comments:

Mike said...

Greetings, can you please email me the spreadsheet for this? Email: dreamlinercaptain@gmail.com

Thank you.

Mike said...

Also, you were not very clear in posting the rules, here are some more questions:

1. Do you open new orders each and every day?

2. When do you close out the losing orders? Do you just let them run and hit the stop loss, which would obviously wipe out your account?

3. What money management do you use? I take it you use micro lots on a huge account if you open new orders every single day.

Can you please be more specific and give us the details of how you trade this?

Thank you.

Mike said...

I guess this strategy proved to be unprofitable and this blog died. No answers to questions, no emailing of spreadsheet. It's a shame.

Daniel parker said...

"Great post! Very useful information.
Review and personal experience and proven experience of many others, trading without a strategy proven effective for failure!
Many merchants find themselves at the beginning of their careers with large losses of the Forex trading market, the main reason is usually the big eyes and be tempted of the merchant to earn huge sums in a moment.
Most traders start without a basic knowledge of early attempt to make any estimates regarding the movement of the gate or the index and typically they are wrong.
Unfortunately, the mistake was made after the investment and pen when losing trader fresh want to return the money and take over once bet based and again wrong so quickly by trading without professional knowledge and without a good strategy for trading forex, finds himself in our merchant with a tremendous financial loss.
from that reason its very important to LEARN fx trading well and to adopt your own strategy.

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Rakiba Tahsan said...

Whatever, long time trading analysis is not useful for me as my trading capital is below 500$! That means, short term trading analysis is useful for me! This is way, I prefer to use daily market analysis of TradingBanks! This ECN broker provides professional market analysis in everyday! So, I can use small stop loss trading position here with huge TP points!

Digital Equity said...

Whether you have a good strategy or not, even a worst one but you can always make a good profit if the conditions from the broker is right. Some broker provides huge spreads and slippages and re-quotes for which clients fails to earn money. I personally prefer mxtrade.com as one of the best broker. This broker provided me with lower spreads, no slippages and better execution than any other broker i have experience with. Truly a great broker indeed.

Unknown said...

Hedging is one kind of forex trading style. And this strategy basis on different currency pairs, we know and understand this strategy from this article and it will be very much helpful for us to use this kind of strategy in our trade. To know more this kind of strategies I am looking forward here. Though I’m getting know about this kind of strategy like hedge hog, scalping from the broker ECNCAPITAL.COM

Unknown said...

I usually do not use any other strategy from blog post. But this post is exceptional in my view. I found this post very useful. But this type of trading is really risky. Often many traders avoid this type of trading. But I like this very much. It helps me to earn from this unpredictable market. I got support from my broker AAFX, while trading hedging. This broker instantly execute my every order I take.

Unknown said...

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