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HEDGE TRADING
Ability to have two trades opened in the opposite direction on the same currency pair.
When do we use it? 1) Anytime 2) Instead of a stop
When trade goes 10 pips against us, we add another trade in the direction of the move.
For example: We sold at 1.9850, and bought at 1.9860 because price went that way. To exit with a profit we
needed to add new sell orders under the 9850 area or buy orders above the 9860 until the point were we started
to make money
5 Level Hedge: Locate major support/resistance area and have 3-5 orders in that area.
If support or resistance doesn’t hold, start opposite trades as soon as we are done with our 3-5 orders. Next, wait
again until you have more positions that are making money and close all open orders at that point, or if we get
into a consolidation period, exit each time you have 10 pips on any of the open trades and re-open the same trade
that was closed if we get to the buy entry of that trade again.
For example: We located a major resistance at 1.9934, and we sold there, but price didn’t go down right away, so
we added more sells at 1.9944, 1.9954, and at 1.9964. But price still went higher, so we started to add buy orders,
and we went long at 1.9976 and 1.9986 and then price started to reverse. We added a fifth sell at 1.9976. At this
point price went a little bit lower and we started to take 10 pip profits on each trade that gave it, and we were
re-opening the trades that got closed next time we were at the entry points. After few hours price went down, we
added more sell orders bellow the 1.9934 entry and overall we got more pips on the short positions than what we
lost on the two buy positions.
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