The beauty of hedging

Back in 2008/2009 i did many experiments involving trades with scalps using predetermined Stops. It when smoothly as the equity gains almost 100%. But sooner rather than later a dry spell hits. As always with trend trading,S&R methods the consecutive loses are expected. But i didnt expect a 10 losing streak in a row. This has taken me back..which i dropped the whole strategy together.
Fast forwards years later, I slowly developed ways of hedging which allows me to minimize the risk and increasing the rewards at the same time. It almost always happens like this...a trade goes -200pips on Eurusd... trades on Eurgbp and Gbpusd ..+70+20+30+45 +80=205pips in total. Do the math as the loss is cut at the end..leaving in breakeven or a small profit. This is a far cry as whipsaw always hit SL years ago.

The pros of hedging:
1) Psychological advantage..hard to explain but its there
2) Protected from whipsaw action
3) Tight risk management
4) You can sleep at night instead of having closing the day in negative if your using SL
5)Make money first ..cut losers later...but there is no runaway trades

Hedging with EURUSD

As i continued trading towards H1 Tf , i encountered several runaway trades. I found a solution , to hedge the trade with eurusd in a step towards diversification. My exposure on eurgbp alone is not a very wise action especially in the long run. Nowadays i do not only check the correlation between eurusd and gbpusd, but i also looked for eurgbp and gbpusd. In usual days i usually has eurusd and eurgbp trades running at the same time, but also when both in a different direction,ex buy eurusd sell eurgbp.
I not only reduce a lot of DD,usually i ended up in profit as eurusd profits is larger than eurgbp loss. In a better situation, i even have a profit in both eurusd and eurgbp making for a terrific week.

Further experiments 2

It seems the newest strategy works in ranging and trending markets for now, this past few days i have been working on euro dollar booking in profits ,while maintaining hedges in the minus, as the pair range i continue booking profits and cutting the losers gradually when the profits is bigger than losers.Eventually the balance and even the equity rises, bigger suprise when the balance and equity rises even faster in trending markets today, as euro trends down.
This happens simultaneously with closing of some big losers but the profits is bigger than -ve positions. At some point there was 12 -14 positions buy and sell combine which i gradually close all but 4 today after i decided to call it a day. All of this without using a single tp or stop losses.
Another version i will test is using 200p fixed SL for all positions long or short . I wanted to know if i can cut dd faster and maximizing profits at the same time, yet in one condition.. the profits must be bigger than the booked SL's that was hit...seems a new kind of challenge.Time will tell between the two.

Further experiments

This past months have been great for pairs trading ,even with the chaos happening on the markets on the euro situation .Despite falling and rising,we kept booking more pips on eurgbp, albeit a much slower pace since we trade H4,one thing i noticed is that trades are getting fewer and more infrequent..this happens to narrowing range and crazy market movements. We did switch to H1 and even 15min to execute trades. But 15min tf is a unsafe but for quiet markets .I wont recommend even myself to trade those tf.

Due to this, i made experiments for EURUSD , i scoured the forums for information regarding hedging. One thing they did was booking the profits while at the same time ,reloading orders using limits orders,and closing the danglers which is losing positions gradually. I found that this shows promise , either a trending markets or ranging markets.It is a combo a both systems together, although i used a little MA to give me basic direction. This also in line with what a trader said. " Trading is not trading itself, but managing positions". A bit vague,but the philosophy behind is somewhat true. Will keep you posted.