RE: [margrids-battle-chest] RE: Breakout Hedge with your set file
EOGORFX
Hi Daniel
Thank you for the detailed reply.
Sorry for the delayed response I’ve been travelling and it was hit and miss with accessing the forum.
I have been out of live trading for the past few weeks as I was unable do any screen time.
When I reviewed Mark’s posts also I can read his methods for protecting the account when the basket is getting larger and when a breakout looks likely as the price is approaching the outer DC 2OO period line value.
Also I try to lock in any decent hedge gain or close it if the hedge falls back below the entry trigger price and below the DC line ( as otherwise it will re-open the hedge)
All the best
Ed
From: margrids-b...@googlegroups.com [mailto:margrids-b...@googlegroups.com] On Behalf Of dan...@danielalexander.info
Sent: 24 July 2013 3:23
To: margrids-b...@googlegroups.com
Subject: RE: [margrids-battle-chest] RE: Breakout Hedge with you set file
Hi Ed,
Yes, the 2x breakout can be a substantial risk......if you let it be so.
The trick is to monitor the highs and lows of the channel and check what basket level will receive breakout protection. You then need to check where your initial stop will be placed, and calculate the max % risk to your account. If that % is too high, then either lower the level at which you take a breakout, or tighten the stop (or mixture of both).
Once you are in the breakout trade, this ideally does need some monitoring.
I had breakout on the euro yesterday.
I removed the original basket at breakeven and let the hedge trade gather a few extra points before closing that. Euro baskets were FATPed at the point of breakout. I then restarted on USD/JPY which looked more range bound.
My aim is to: 1) never get a breakout hedge, by choosing suitably consolidating pairs within pre-defined ranges; 2) FATP if a breakout hedge occurs and manage the resulting situation the best way possible; 3) try and ensure all breakouts are roughly zero or positive in the long run...of course some will have to be losers, but these can be managed to be as small as possible; 4) FATP before the end of each week for target % on the equity to reduce market exposure.
Yes, you are right about hedge needing to get to +30 before stop goes to -70 from entry. Remember these are the default auto settings. You will need to manually close or take some manual operations depending on the scenario. Especially, you should not let the auto settings give you a breakout hedge at level 19 with a stop 500 points away....this could be really bad!
This all takes a bit of practice, but it's not too difficult to get comfortable.
Manual operations will be easier with the Chameleon and Rick's lines. Also the Chameleon could give some protection against "false breakouts": eg L1 of the AM could be just 50% of the lots of the M file, so that you're still net short. Only if price continues north to L2 of the AM, go net long here....which ensures that if you go x points above a range and then plummet, you will avoid a loss. Of course you can still hit L2 and plummet, but depending on your analysis, an L1 trigger without switching trade direction might be easier to manage.
Hope that helps
Daniel
-------- Original Message --------
Subject: [margrids-battle-chest] RE: Breakout Hedge with you set file
From: "EOGORFX" <eog...@gmail.com>
Date: Wed, July 24, 2013 1:22 pm
To: <margrids-b...@googlegroups.com>Hi Mark
I see big risk with the Breakout Hedge multiplier = 2x when it triggers especially when the basket is at higher levels say >12 and a subsequent large retrace occurs.
Am I correct in saying that the hedge must reach +30 pips before the hedge trail is set to 100 behind i.e. -70 below the trigger price?
If it retraces before the +30 then the trail stop is set by the price value of the Hedge Channel Period = 150.
So the price could fall back a very long way and then incur a large loss?
When I see the Hedge trade loss increasing rapidly as the retrace happens I find intense pressure to close it and take the loss early
I appreciate your comments.
I can see that the AM protection is a better way to go than the breakout hedge and I look forward to Rick’s new Chameleon project which should help reduced the risk.
Your BT on the AM without stops looks super but perhaps that also has high risk.
All the best
Ed
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