At Binary Options Edge our friend @MTH2014 wrote:

Would be intereting to calculate if this is true. As this is not a question of money management but of good entries, I’m not sure how to calculate it … Any ideas, pros or cons?

I wonder if it is a physiological thing (for me)

Hmm, do you mean ‘psychological’ ?

‘Physiological’ might mean that your trades are causing you a stomachache, or worse. I don’t hope so!

As announced earlier, I would like to come back to the topic Reward to Risk Ratio, RR.

To kick off a discussion, let me start with two links to external sources this time, which at least at a first glance seem contradictory in their respective conclusions.

First Hanover @ FF again, see here, and one quote from that post:

RR (in the conventional…

[Read more]

Okay see attached on hedging …

Good point! Now let’s put on our accountant’s glasses and change our action on your scenario slightly, without changing the scenario itself:

Replace ‘open short hedge’ by ‘close trade’
Replace ‘short closed’ by ‘re-enter trade’

Taking the nit-picking accountant’s view: what would be the difference between…[Read more]

Okay see attached on hedging …

Good point! Now let’s put on our accountant’s glasses and change our action on your scenario slightly, without changing the scenario itself:

Replace ‘open short hedge’ by ‘close trade’
Replace ‘short closed’ by ‘re-enter trade’

Taking the nit-picking accountant’s view: what would be the difference between…[Read more]

The question is, can’t we take advantage from it?

Sure we can, as long as we are correct about predecting that the market will stay in that range while our trade is open. My point is, that this is not ‘market-neutral’, like claimed by some authors. If price leaves the range and starts to trend, we loose.

Now think about using two equal sized o…

[Read more]

The question is, can’t we take advantage from it?

Sure we can, as long as we are correct about predecting that the market will stay in that range while our trade is open. My point is, that this is not ‘market-neutral’, like claimed by some authors. If price leaves the range and starts to trend, we loose.

Now think about using two equal sized o…

[Read more]

“A hedged grid made of limit orders can only be profitable as long as the market stays in a well-defined range …”

The question is, can’t we take advantage from it? For instance, we could define that range and will only use a hedging strategy whenever prize is inside that range?

“… and prices will return to the center reliably, and a hedged…[Read more]

Once I’ve thought that hedging would be the solution for everything. … That would work fine for some time. But in the long run the market will reach an extreme state …

That’s the point: relying on hedged grids consisting either of limit or stop orders, is a pseudo-strategy heading straight for the annihilation of the account. If your entry s…[Read more]

To hedge or not to hedge?

Pro hedging: http://www.forexfactory.com/showthread.php?p=6544091#post6544091
Contra hedging: http://www.forexfactory.com/showthread.php?p=8868124#post8868124

My personal conclusion: from a pure system developer’s perspective, I would always follow the contra arguments. When it comes to highly leveraged trades in…[Read more]

Before addressing R:R, like announced in my earlier post, let me come back to expectancy with another link. Hanover @ FF put together some conclusions on the ‘area of tension’ between expectancy and possible attempts to increase it by MM / TM methods here:

http://www.forexfactory.com/showthread.php?p=2240127#post2240127

The rest of that thread…[Read more]

Once I’ve thought that hedging would be the solution for everything. My strategy was simple:

Open two positions at the same time, one long and one short (regardless any strategy).
Wait until one position reached your profit traget (e.g. 50 pips).
Close the trade that reached the target.
Open a new trade in the same direction of the trade…[Read more]

Your position handling and trade management will only influence your results if you overcome the 0.5 threshold (you make more than wins than losses).

Absolutely correct! Trade management and money management will not turn a losing strategy in a winning one, on the long run. If the expectancy of your pure entry and exit strategy is below 0.5, you…[Read more]

Side note, sorry if it is slightly of course but hedging for me is the answer to SL, material for another video

Good point! The old discussion: why hedging if you could also exit your original trade and re-enter it later, when you would close your hedge?

Talking about EAs: when looking at hedged trades from a system developer’s perspective, which…[Read more]

@Pipatronic: Is that the system you’re working on recently? If so, I’d either try to reconstruct and recode GGs OBV divergence indicator or I’d ask GG if you could get a mql4 copy of it. If you don’t have the mq4 file you could one day be confronted with a no longer working indicator …

A very interesting paper and I think that PipMeUp made some good conclusions. I think he’s right with all scenarios.

Nevertheless, I believe that the risk/reward calculation is only half the truth. IMHO the risk-reward ratio is not fixed as it is usually discussed as this would imply same probabilities for moving up and down at any point in time.…[Read more]

Hi @Joakim,

I’ve tried to summarize it in the below image.

To show these yellow (smallest), red (longer) and blue (longest lookback period) channels, I’ve used Simplex’s RiverBed_v1_1_post indicator which has been posted at this forum. The yellow channel now should show the high/low range of last 5 candles, the red of the last 15 candles and the…[Read more]

Hmm … look at the examples in pipatronics video. The question is: How would you trade this. Before I did own experiments I’ve thought that we get trading signals whenever one true bar engulfs the preceding one. However, as you may see from the examples in the video, if we see the engulfing in most cases the trend is over. Ok, we could trade it…[Read more]

Yes, maybe. However, regarding the true bar idea I had the same problems as you. One will just know the size of last true bar when the next has formed …