Forex Hedging

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  • FOREX HEDGING SYSTEM _________________________________________________ FIRST EDITION

    V 1.03

    -

    SYSTEMATIC SUMMARY V.2 &

    TIME SAVERS GUIDE

    Created by BOB*AND*KATIE The contents of this folder are protected by copyright law.

    Please do not reproduce or distribute without proper written approval.

  • FOREX HEDGING SYSTEM _________________________________________ FIRST EDITION

    __________________________________________________________________________________________________

    TABLE OF CONTENTS THE BASICS SECTION 1: Beginning Forex SECTION 2: Understanding the Terms SECTION 3: Studying Charts SECTION 4: Interpreting News FOREX HEDGING SYSTEM SECTION 5: Introduction SECTION 6: Account Configuration SECTION 7: Identifying Market Types SECTION 8: Entering the First Trade SECTION 9: Trading Intraday Fluctuations SECTION 10: Backtracking Profit/Loss SECTION 11: Getting Into and Out of Limbo Periods SECTION 12: System Support & Resources Forex Hedging System Systematic Summary V.2 Forex Hedging System Time Savers Guide

  • SECTION 1: BEGINNING FOREX For new traders.

    Forex (Foreign currency exchange) is the most exciting market to trade because it is the worlds largest. Everyday an estimated $1.9 trillion dollars is traded internationally. Banks, international corporations, governments, and financial institutions play major roles in the direction of the market. The Forex market is unique in that it has no central location, and trading occurs 24 hours a day (excluding weekends). This is very appealing for traders because it allows them to set their own schedules. When you decide to begin trading, youll have to choose a broker. Individuals are required to trade through brokers because access is not available to them directly. Most brokers require a minimum deposit of about US$250 and higher to trade live accounts. Experienced traders would recommend using a demo account for a period of time before attempting to use real money. Most brokers offer demo accounts free of charge for thirty (30) days. Since demo accounts act no different from live accounts, we wont differentiate the two from this point forth. Once your account is open, youll use the trading platform as supplied by your broker of choice. Some key things to look for in this environment are: Balance, Equity, Used Margin, Usable Margin, Commission, Premiums, and Profit/Loss.

    Balance is the total amount of funds in the account. It will only change once youve closed a trade. Equity is the total amount of funds in the account reflected by the value of your current open orders. For example: If the balance is $1,000, and there is one open trade profiting $100, the equity will be $1,100, whereas the balance will be $1,000 until the $100 open order is closed. Used margin reflects the amount of funds currently in use for open orders. The amount of margin used for an order is determined by the level of leverage youve chosen. Usable margin is the amount of money remaining to secure new orders. Some brokers may charge a commission, however, in most cases this is not a factor, as brokers earn money from set spreads. When you hold open orders, you will either earn or lose premium costs depending on the type of position youre holding. For example: With the EUR/USD pair, holding a sell order will earn interest. Holding a buy order will cost the trader interest. P/L (Profit/Loss) reflects the total value of all open orders. For example: If one open order of EUR/USD is profiting $50.00, and another order of GBP/USD is currently losing $20.00, the P/L will be $30.00.

  • SECTION 2: UNDERSTANDING THE TERMS A quick Forex glossary.

    Ask (Offer): The price in which a broker is willing to sell. Bid: The price in which a broker is willing to buy. Bid/Ask Spread: The number of pips between the Bid and Ask price. Most brokers earn their commission through spreads. Bear Market: A market currently experiencing a declining trend in price. Bull Market: A market currently experiencing an upward trend in price. Gain Barrier: An exclusive term invented for use with this system. The Gain Barrier is the minimum number of pips in the profitable direction a trader is willing to take before closing the order. A trader should extend the Gain Barrier to account for all previous Loss Barrier triggers. Hedging: A strategy used to offset market risk, whereas one position protects another counteractively. Intraday: Within a day. Long: To go long is to buy with intentions of selling later at a higher price. Loss Barrier: An exclusive term invented for use with this system. The Loss Barrier is the maximum

    number of pips a trader is willing to lose before placing a security hedge against the order. Leverage: The ability to control large dollar amounts of a commodity with a much smaller deposit. Trading leverage determines the equivalent margin requirements. For example: 100:1 leverage allows a user to trade with 1% deposited funds. 400:1 leverage allows a user to trade with 0.25% deposited funds. Limbo Period: An exclusive term invented for use with this system. A period of time in which the current market price resides between the open pricing of two hedged orders. For example: One open order of EUR/USD is long at 1.2500. A hedged order of EUR/USD is short at 1.2600. While the current market price is 1.2550. In this case there is a 50 pip divergence between the two orders. Limit: A price set to determine the number of pips into the profitable zone before closing out an order automatically. Margin: The amount of funds in an account needed to open a position, or keep a position open. Margin Call: Occurs when a broker closes all open orders due to insufficient usable margin.

  • Pip: The smallest increment, or movement in price, sometimes referred to as ticks in other markets. Pivot Point: Price point found between a previous market days highest and lowest price. A pivot is used to help determine the next movement in the market. Pivot point can be found using the following formula: Pivot = (High + Close + Low) / 3 Rally: Trend momentum pushing the market into a continuous direction. Resistance: Barriers used to determine price points that a bullish market is unlikely to penetrate. Resistance levels can be calculated using the following formulas: First = 2 * Pivot - Low Second = Pivot + (First - Support) Third = High + 2 * (Pivot - Low) Security Hedge: An order of the opposite position placed to protect the losses of another order whose Loss Barrier has been triggered. Short: To go short is to sell with intentions of buying later at a lower price. (Trailing) Sling Shot Peak: An exclusive term invented for use with this system. The highest number of pips an order moves into the profitable direction before showing signs of a reversal in the value of Sling Shot Reversal. .

    Sling Shot Reversal: An exclusive term invented for use with this system. When seeking a Trailing Sling Shot Peak, the value of the Sling Shot Reversal is used to determine a change in market direction. Stop: A price set to determine the number of pips a trader is willing to lose before backing out of an order automatically. Support: Barriers used to determine price points that a bearish market is unlikely to penetrate. Support levels can be calculated using the following formulas: First = 2 * Pivot High Second = Pivot - (Resistance - First) Third = Low 2 * (High - Pivot)

  • SECTION 3: STUDYING CHARTS Basic understanding of Forex charts.

    Panel A Last The price of the last trade. Change The difference in value between the market open price and the last trade. Open The price the market opened with in the current session. High The highest price point the market has reached within the current session. Low The lowest price point the market has reached within the current session. Last Trade The time when the last trade took place. . Panel B Chart Type (Line) The area that defines the type of chart output. These outputs generally include Bar, Line, Area, and Candlestick. Time Frame (20 day) The amount of historical data to be displayed within the width of the chart. . Interval (30m) The smallest

    increment of time to be displayed on the chart. All data in-between these intervals will be averaged. Panel C Currency Pair (EUR/USD) The currency pair being displayed on the chart. Data The historical data is displayed as a visual fluctuation in price over time. Panel D Price Used to reference the pricing of chart data horizontally. The range of prices here is determined by the overall highest and lowest prices of the data being displayed. . Panel E Time Frame References time intervals vertically. The range of time is determined by panel Bs time frame variable and the current zoom factor.

  • SECTION 4: INTERPRETING NEWS How to benefit from market and economic news.

    Thanks to the internet, there are many sources of information to help a trader make judgments about future market activity. On the down side, theres so much information out there that it can become confusing. One market expert may contradict the opinion of another. This is expected and just goes to show that were all human and no one knows the future. Though the Forex Hedging System does not require a trader to be up-to-date with the latest breaking news, we definitely promote the idea of informing ones self to gain an advantage over unpredictable odds. We wont go into too much detail or plug any news sources directly in this article. The basic logic behind gathering news data to make decisions about market activity is to look for economic data, growth, current and upcoming events. You should study both countries of the pair you are trading and mesh that data accordingly. Some sources of market data include major news networks, market research sites, dedicated Forex web communities, blogs, etc. Your broker may even keep news accessible from directly within your trading station. Stay clear from analyzing the same source for all information, as that may result in a bias view. Search for Forex economic indicators and calendars. These sources generously provide information about upcoming events, as well as forecasts, previous changes, and the actual outcome once an event has taken place. These calendars are a great organizational solution for displaying

    many sources all in one location. Keep your own records. Reference those sources and build statistics about the ones that were most accurate for you. Some market news sites charge premium fees for their information, but may offer a thirty (30) day trial period. Others offer free data by showing advertisements to their users. Find out which sources work best for you and stay loyal to them. Traders keep those companies alive.

  • SECTION 5: INTRODUCTION Basic information about hedging.

    Why was this system created?

    I created the Forex Hedging System because it was important for me to not feel like I was gambling when I first started demoing my Forex account in late 2005. I quickly came to the realization (after much analysis) that the Forex fortune teller simply did not exist. No single indicator, news source or market expert alone could give me reliable enough forecasts to satisfy my lack of comfort when it came to trading with real money. I decided not to rely on the advice of others, but rather to figure out a way to make this whole Forex thing work for me. After countless attempts to make a profit, I came to find that after several good trades I would ultimately end up losing all of my gains with a single losing trade. This got frustrating. I knew that I couldnt predict or control the market, so I had to figure out some way to govern the unpredictable outcomes in my favor. Thats when I discovered hedging... What is hedging? Hedging is when a trader takes both positions (short and long) of a currency pair. If both pairs are equal in order size, the market could go in either direction and the trader will not win or lose.

    For example: If a trader hedged 1 lot of the EUR/USD pair, and the market moves up 20 pips, the long order would see a +20 pip gain. The short order would see a -20 pip loss. The counteracting balance causes no change in Profit/Loss (P/L).

    Fig. 5.A Trader takes both positions at current price. The value of P/L is zero. Market price moves up 20 pips. The value of P/L is still zero.

    Hedging, in its simplest form, eliminates profit, loss, and risk in general. Hedging is neutralization. Most traders dont understand the purpose of choosing this strategy, and rightfully so. For the traders that do implement the hedging capability, its generally used as an alternative to closing out bad orders. Until now With our Forex Hedging System you will learn how to use hedging to your advantage in any market condition, both for limiting risk, and generating profit.

  • SECTION 6: ACCOUNT CONFIGURATION Setting rules to your Forex account.

    Make sure hedging is available First, you will need to make sure that you are trading with a broker that allows hedging capabilities. We recommend FX Solutions, LLC (www.fxsol.com). If you are currently trading with broker that does not offer hedging, dont worry, its no problem. Simply demo an account with a broker that does allow hedging for 30 days before making any sort of educated decision to switch. We strongly recommend all of our users to trade a demo account before implementing a live account with real money. Account Rules For use of this system, our Forex account is configured in the following way: Lot size: 1 = 1,000 Unit size Leverage: 400:1 Trading smaller sized lots (referred to as mini lots) is great for smaller balance accounts. For accounts trading bigger sized lots, small lot sizes give greater control when it comes to backtracking profit/losses (See: Section 10). 400:1 leverage allows a trader to only deposit 0.25% equivalent margin requirement. This greatly

    increases your margin usability while decreasing the risk of margin call. For example: Traders who deposit US$1,000 will be able to make currency trades up to $400,000. If youre uncertain how to apply these changes to your account, contact your brokers live help for assistance.

  • SECTION 7: IDENTIFYING MARKET TYPES Get familiar with your currency pair(s).

    The purpose of this section is to become strongly familiar with market activity. To get a feel for your currency pairs habits, youll want to review previous data from Forex charts. Many of these charts are available online at no cost. Instruction Set 1. Determine market trend. Set your charts to show the previous years worth of historical data. You may notice that the pair has taken several turns during this time frame. This will help you become more familiar with what the pair is capable of and the amount of time trends tend to hold their strength. Next, take a look at the previous 1-3 months of data. Look for an overall trend line. Is it a bearish or bullish market? Always keep the overall market trend in mind and remember not to try to fight it. 2. Determine pivot point, resistance, and support barriers. Consider examining the previous 10 days of data. Using the following formulas, determine the pivot, resistance, and support levels: Pivot = (High + Close + Low) / 3 Resistance 1 = 2 * Pivot Low

    Resistance 2 = Pivot + (Resistance 1 Support 1) Resistance 3 = High + 2 * (Pivot - Low) Support 1 = 2 * Pivot High Support 2 = Pivot - (Resistance 1 Support 1) Support 3 = Low 2 * (High - Pivot) The overall range of the Support/Resistance barriers reveals the current wave structure. It is likely that all intraday fluctuations and rallies will fall in-between these price points. 3. Determine intraday fluctuation range. Theres no formula for determining the current range of intraday fluctuations. Youll have to examine the current 1-3 days of data. These types of ranges are always linked by rallies and fall within the most recent Support/Resistance range. These are the ranges intraday traders will ride using the Forex Hedging System. A rally will eventually occur and a new intraday fluctuation range will mature.

  • SECTION 8: ENTERING THE FIRST TRADE How, when, and why.

    This section explains the right time to begin the Hedging System. Well classify Trade #1 as the first order placed. Trade #2 will represent the hedged position protecting Trade #1. You will need to assign values to variables to determine how you wish to work the system. Were including recommended default values. . Instruction Set 1. Define a Gain Barrier This represents the minimum number of pips youre willing to take before considering closing the order. Default value is 10. A value is not always necessary, as some traders may want to take both positions immediately (setting the value to zero). Warning: Do NOT use a traditional limit order with this type of trade. 2. Define a Loss Barrier This represents the maximum number of pips youre willing to lose before securing a protective hedge against a losing order. Default value is 10. The Loss Barrier is like a stop order, but in this case an ENTRY STOP ORDER (hedge) occurs when its triggered.

    Warning: Do NOT use a traditional stop order with this type of trade. 3. Trailing Sling Shot Peak and Sling Shot Reversal The Trailing Sling Shot Peak represents the highest number of pips reached in the profitable direction before the market takes a reversal in direction against the profitable order in the value of the Sling Shot Reversal. Default value for Sling Shot Reversal is 10. Once an order is profitable above the Gain Barrier, the Trailing Sling Shot Peak seeks the highest amount of positive pips beyond the Gain Barrier in which to create a point where, if the market should reverse against the order in the amount of Sling Shot Reversal, you close the order. See: Systematic Summary V.2 for strategies. 4. Placing Trade #1 As with conventional trading strategies, youll want to place your first order in a position where signs indicate a profitable trend. The best time to enter a trade is when a trend is taking momentum; however, you could theoretically enter the market at any time with the Forex Hedging System and still have a favorable outcome.

  • 5. Placing Trade #2 This is the hedge order. The following will allow you to determine when to place the hedge. Continue only when each IF statement is true. If you reach a point where a statement is true, take the appropriate action associated with that text. IF TRADE #1 IS PROFITING: If the market goes in your favor after placing Trade #1 continue If the price satisfies your Gain Barrier requirement continue If the price continues to push your Trailing Sling Shot Peak continue One of the following outcomes will now occur. Take the appropriate action. If the price declines/reverses in the amount of your Sling Shot Reversal Close the order (Note: You could also hedge the order.) IF TRADE #1 IS LOSING: If the market is moving against you after placing Trade #1 Continue If the price triggers your Loss Barrier requirement Hedge the order now. Please read the Systematic Summary V.2 located towards the end of this manual for more details.

    Review our Time Savers Guide for helpful suggestions about setting up alerts and automated orders for maximum efficiency. . For more information, and alternative representations, please visit our web site.

  • SECTION 9: TRADING INTRADAY FLUCTUATIONS For traders who wish to place multiple orders within one day.

    The benefit of Intraday Hedge Trading is that it takes advantage of small changes which occur numerous times throughout a given market day. Any user of this system is capable of profiting in both directions during these fluctuation periods, while remaining risk-free if the market should rally off unexpectedly. Instruction Set 1. Closing out the profitable order The following will allow you to determine when to close out one side of the hedge. Continue only when each IF statement is true. IF AN ORDER IS PROFITABLE: If one order has reached the Gain Barrier requirement Continue If one order continues to push your Trailing Sling Shot Peak Continue One of the following outcomes will now occur. Take the appropriate action. If the price declines back down in the amount of your Sling Shot Reversal Close the profitable order Jump to Instruction 4 If the price continues to move the order into a profitable zone Consider the highest point to be a

    Trailing Sling Shot Peak. Once the price reaches its highest point, then declines in the amount of your Sling Shot Reversal value, close the profitable order. When the last case occurs, its possible that the market has rallied creating a large negative order in counteraction to the profitable order that was just closed. (For help backtracking the negative order after a rally, see Section 10.) 2. Determining when to Close the remaining order or rehedge At this point, youre backtracking a negative order after closing out of a profitable one. The momentum of the Sling Shot Reversal being met means that momentum is built in a direction which favors further backtracking of the remaining negative order. Although this order is negative, treat it as Trade #1 (from Section 8). Consider the current price of this order, at sell out point of the opposing order, to be zero for determining the new Gain Barrier and Loss Barrier. If you have already triggered a Loss Barrier on a rehedge, increase the Gain Barrier of this step to account for Loss Barrier gaps. The following will allow you to determine when to close out your order or rehedge after closing one side. Continue only when each IF

  • statement is true. . IF THE MARKET DIRECTION IS IMPROVING THE VALUE OF THE UNHEDGED ORDER: If the market goes in favor of the unhedged order continue If the price satisfies your Gain Barrier requirement continue If the price continues to push Trailing Sling Shot Peak continue One of the following outcomes will now occur. Take the appropriate action. If the price declines back in the value of your Sling Shot Reversal Close order now.. If the price continues to climb Consider the highest point to be a Trailing Sling Shot Peak. Once the price reaches its highest point, then declines in the amount of your Sling Shot Reversal value, close the order. IF THE MARKET GOES AGAINST THE VALUE OF THE UNHEDGED ORDER: If the market is moving against the unhedged order Continue If the price drops below your Loss Barrier requirement Rehedge now. When you rehedge after an open negative order reaches the Loss

    Barrier requirement, its possible to get into a state of Limbo. Limbo is a period of time when the current market price resides between two hedged positions. (For help with Limbo Periods, see Section 11.) Please read the Systematic Summary V.2 located towards the end of this manual for more details. Review our Time Savers Guide for helpful suggestions about setting up alerts and automated orders for maximum efficiency. . For more information, and alternative representations, please visit our web site.

  • SECTION 10: BACKTRACKING PROFIT/LOSS Reverse methods to improve orders.

    Backtracking is the process of using reversed methods to improve negative positions. Since we use counteractive hedging positions in this system, these situations are inevitable. There are two scenarios in which you will have to use backtracking methods: Instruction Set 1. Backtracking a negative order after cashing out of the positive counterpart and rehedging. In this scenario, youve already rehedged against your negative order. Once a new intraday trading range has matured, youll continue the same technique of trading fluctuations in order to generate positive pips, however, in this case you will only close out orders opposing this negative order. This process will add value to your balance and you can close out individual lots of the negative order as youre generating positive results from the opposing. . You may generate enough positive pips using one way fluctuations to knock out a decent portion of the negative order, but we recommend eventually closing out of the negative order to avoid a Limbo period. 2. Dumping a negative order first in the event of a rally formation.

    If you happen to notice a rally taking momentum, you may want to consider dropping out the negative order while leaving the profitable order in a position to continue its gaining streak. This isnt highly recommended by us, as committing to the loss is risky with the open possibility that your positive order will begin to decline in value. In this scenario, after closing out of the negative order, you would allow the trailing Sling Shot Peak to continue its course until it has reached its maximum. You would then close out your remaining profitable order after the market price has declined in the amount of your original Sling Shot Peak value. After doing so, you will have no more open trades. Begin the trading loop again. Warning: Perform this method at your own risk.

  • SECTION 11: GETTING INTO AND OUT OF LIMBO PERIODS

    How a little discipline can save you a lot of trouble. The only downfall of trading with constant hedges is the possibility of the current market price slipping between the open prices of two hedged orders. We call these Limbo Periods, as the orders can become inactive and seemingly inescapable. Most of the time this will not be a problem, as it would take a divergence of about 100 or more pips to separate two orders into exile. As your experience using this system increases, so will your ability to avoid Limbo all together. There are ways to stay clear, and discipline is definitely one of them. How to keep out of Limbo periods When you have an open negative order comparatively bigger than opposing orders, backtrack it or simply close it. Youve already made profit by keeping it open. Keep the account balanced so that hedged orders are not separated by a ridiculous amount of pips. If it works out that many fluctuations make one side of an order close out over and over while the negative hedge continues to grow, you might consider not jumping on every opportunity to close out of profitable orders. Wait until the market has moved in the opposite direction to keep things balanced. Remember, if it should rally in a continuous direction and never return, you have nothing to lose. Your orders are counterbalanced.

    If your orders are small, and you have a lot of available margin at your disposal, you may consider a new set of hedged orders. You could use the profit generating from this set to close out individual lots of your limbo orders until they are gone completely. Weve gone this route many times.

  • SECTION 12: SUPPORT & RESOURCES Think this is it? Absolutely not were here to help you until you learn our method of trading. It doesnt happen in a day, so were providing unlimited email support. Were putting together a web site to create an environment dedicated to learning this system. Youll be receiving emails occasionally with updates about our products and services. So please, when you have any questions, concerns or need further explanation for any part of this system, do not hesitate to contact us. We would be happy to provide you with assistance. We want to provide our customers with a quality product and a general understanding of our system. If you have any suggestions or recommendations, please let us know. We would be glad to include them in future revisions. Visit our future home on the web: www.hedgingsystem.com View our Systematic Summary here: www.hedgingsystem.com/members/system/systematic View our Examples section here: www.hedgingsystem.com/members/examples View our Online Trading Journal here: www.hedgingsystem.com/members/journal You may contact us by emailing: [email protected] Thank you, Bob and Katie

  • FOREX HEDGING SYSTEM - SYSTEMATIC SUMMARY V.2 by BOB*AND*KATIE

    Don't understand something? Let us know! We will make revisions just for you...

    Introduction The purpose of the Forex Hedging System is to protect profits, limit losses, test market direction, and backtrack profits. The following materials will guide you through the trading loop process of the Forex Hedging System. You will learn the structure of your order, when to hedge against the order, and when to close an order. Before we begin, lets introduce ourselves to the following terms:

    Gain Barrier: The Gain Barrier is simply the number of pips you'd like to obtain before taking any actions against a position. The Gain Barrier will be represented as a green dotted line in the profitable direction. Typically, we set the Gain Barrier to +10 pips from a position's entry point.

    Loss Barrier: Opposite of Gain Barrier. The Loss Barrier is the number of pips you're willing to "lose" before placing a security hedge against an order to protect it from further loss. Usually we set the Loss Barrier to -10 pips. When the Loss Barrier is reached, a counteracting order will be placed.

  • Trailing Sling Shot Peak: The highest number of pips reached in the positive direction before the market takes a reversal in direction against the profitable order.

    Sling Shot Reversal: The Sling Shot Reversal is the number of pips the market has moved in a reverse direction after reaching its maximum price at the Trailing Sling Shot Peak. Typically set to -10 pips from Trailing Sling Shot Peak.

    Limbo Period: When the current market price resides between two hedged orders. No profit can be made until either entry point is penetrated.

  • Backtracking: Using reverse logic to increase the value of a negative order after closing a positive order. For instance: You've closed out an order that was profitable. You now have an order that is negative. You now use strategies to improve that order as much as it will before closing it out (whether its still negative or not). Positive order - Negative order = Profitable Pips (See: "Closing the Hedge Loop" below)

    The Basics of the Entry Order Figure 1: The initial structure for every order placed. In this example, a BUY order is placed. The Gain Barrier is 10 pips above. The Loss Barrier is 10 pips below. When placing your entry order, setup an alert (Call Level/Email Alert) to mark your Gain Barrier and to let you know when it has been reached. Set up an Entry Stop Order to mark your Loss Barrier and to act as your security hedge.

    After placing the Entry order, one of two outcomes will occur: 1.) The Gain Barrier will be reached: Take no actions.

    OR...

  • 2.) The Loss Barrier will be reached: Entry Stop Order placed (SELL order hedge).

    IF GAIN BARRIER IS REACHED: Let the market price advance until it reaches its highest point BEFORE taking a reversal in the amount of the Sling Shot Reversal. This is called the Trailing Sling Shot Peak. There are no tricks about it, it is simply the furthest the market pushes in the positive direction before it makes an apparent change in direction. Remember: It's beneficial to give your order some time to breathe. If the market price is only ~5 pips ahead of your Gain Barrier after reversing from the Trailing Sling Shot Peak, don't jump on the first chance to hedge against it.

    Once this happens, you have the choice of closing the order for profit, or hedging it with a counteracting position. Handling a Hedged Order Figure 2: Now that you have two orders hedged against each other, there is a new order structure.

  • If your Entry order was profitable, your structure will look like this:

    If your Loss Barrier was triggered, your structure will look like this:

    Again, one of the following outcomes will occur:

    1.) Buy order will reach its Trailing Sling Shot Peak and make a reversal (Sling Shot Reversal). Buy order is now closed out. Sell order remains open. Awaiting a rehedge or a close of the Sell order. Continue onto "Unhedged Structure"

  • OR... 2.) Sell order will reach its Trailing Sling Shot Peak and make a reversal (Sling Shot Reversal). Sell order is now closed out. Buy order remains open. Awaiting a rehedge or a close of the Sell order. Continue onto "Unhedged Structure"

  • Unhedged Structure Figure 3: After closing out one side of the hedge pair, you'll need to determine when to rehedge against the remaining order, or close it out completely. Regardless of your next action, you currently have the following structure:

    Treat this the same way you treated the "Basics of the Entry Order" in Figure 1. However, there are a few obvious differences you will need to consider. 1.) Increase your GAIN BARRIER to make up for the value of all LOSS BARRIERS triggered. If you keep reaching your Loss Barrier (2 or more times), you may want to increase the amount of your Gain Barrier and Sling Shot Reversal before closing out future profitable sides. This will more accurately predict true market direction. Keep your Loss Barrier the same at all times. After following these rules, treat the new hedge pair as you treated "Handling a Hedged Pair" in Figure 2. 2.) You will not want to close the unhedged side (even if it has reached a Trailing Sling Shot Peak) until it has exceeded the number of pips (profitable) to make up for all Loss Barriers taken. (See: Example 4 on http://www.hedgingsystem.com/members/examples/1.html ). Don't worry, this usually happens naturally. 3.) You're looking for an exit, not a rehedge. A rehedge will only be a security measure at this point. You're looking for a Trailing Sling Shot peak that allows you to close the remaining order as a profitable position. This will limit the growth of Limbo Periods. Be sure to study our examples: http://www.hedgingsystem.com/members/examples

  • Closing the Hedge Loop Figure 4: Once you've obeyed the above rules and brought your unhedged order into a profitable position, you will experience the following:

    This is the same situation as in "IF GAIN BARRIER IS REACHED" during "Basics of the Entry Order". All orders are now closed at this point and a new Entry is ready to be placed.

  • Forex Hedging System Time Savers Guide _______________________________________________________ 1.) Placing Order #1 A.) If order #1 is a BUY order, set up the following alerts: +30 pips (Seeking Trailing Sling Shot Peak) +20 pips (Seeking Trailing Sling Shot Peak) +10 pips (Gain Barrier triggered) ---------ENTRY-(NO ALERT)--------- - 10 pips (Loss Barrier triggered) set up the following orders: - 10 pips SELL ENTRY STOP ORDER This initiates the counteracting SELL order security hedge automatically in the event of a Loss Barrier trigger. B.) If order #1 is a SELL order, set up the following alerts: +10 pips (Loss Barrier triggered) ---------ENTRY-(NO ALERT)--------- - 10 pips (Gain Barrier triggered) - 20 pips (Seeking Trailing Sling Shot Peak) - 30 pips (Seeking Trailing Sling Shot Peak) set up the following orders: +10 pips BUY ENTRY STOP ORDER This initiates the counteracting BUY order security hedge automatically in the event of a Loss Barrier trigger. _______________________________________________________ 2.) If Gain Barrier alert is triggered Take no actions: Await the first Trailing Sling Shot Peak seeking alert. _______________________________________________________ 3.) If a Seeking Trailing Sling Shot Peak alert is triggered A.) If order is NOT HEDGED and current alert is for the BUY order, set up the following alerts: +10 pips above highest Seeking Trailing Sling Shot Peak alert - 5 pips below current Trailing Sling Shot Peak alert (Sling Shot Reversal)

  • set up the following: - 5 pips below current Trailing Sling Shot Peak alert STOP ORDER on current BUY ORDER If the NEXT Seeking Trailing Sling Shot Peak alert sets off before a reversal, adjust Sling Shot Reversal and STOP ORDER rules to the most current Trailing Sling Shot Peak alert. B.) If order is NOT HEDGED and current alert is for the SELL order, set up the following alerts: - 10 pips below lowest Seeking Trailing Sling Shot Peak alert +5 pips above current Trailing Sling Shot Peak alert (Sling Shot Reversal) set up the following: +5 pips above current Trailing Sling Shot Peak alert STOP ORDER on current SELL ORDER If the NEXT Seeking Trailing Sling Shot Peak alert sets off before a reversal, adjust Sling Shot Reversal and STOP ORDER rules to the most current Trailing Sling Shot Peak alert. C.) If order is HEDGED and current alert is for the BUY order, set up the following alerts: +10 pips above highest Seeking Trailing Sling Shot Peak alert - 5 pips below current Trailing Sling Shot Peak alert (Sling Shot Reversal) Do not use stop orders while hedged. D.) If order is HEDGED and current alert is for the SELL order, set up the following alerts: - 10 pips below lowest Seeking Trailing Sling Shot Peak alert + 5 pips above current Trailing Sling Shot Peak alert (Sling Shot Reversal) Do not use stop orders while hedged. _______________________________________________________ 4.) If Loss Barrier alert is triggered A.) If order current alert is for the BUY order, set up the following alerts: - 10 pips below price at which counteracting SELL order security hedge was placed (SELL Gain Barrier) - 20 pips below price at which counteracting SELL order security hedge was placed (SELL Seeking Trailing Sling Shot Peak) BUY order alerts already in place from Rule 1-A.

  • B.) If order current alert is for the SELL order, set up the following alerts: + 10 pips above price at which counteracting BUY order security hedge was placed (BUY Gain Barrier) + 20 pips above price at which counteracting BUY order security hedge was placed (BUY Seeking Trailing Sling Shot Peak) SELL order alerts already in place from Rule 1-B.

    FOLDER COVER.docTABLE OF CONTENTS.docSECTION 0 - TABLE OF CONTENTS.docSECTION 1 - BEGINNING FOREX.docSECTION 2 - UNDERSTANDING THE TERMS.docSECTION 3 - STUDYING CHARTS.docSECTION 4 - INTERPRETING NEWS.docSECTION 5 - INTRODUCTION.docSECTION 6 - ACCOUNT CONFIGURATION.docSECTION 7 - IDENTIFYING MARKET TYPES.docSECTION 8 - ENTERING THE FIRST TRADE--2.docSECTION 9 - TRADING INTRADAY FLUCTUATIONS.docSECTION 10 - BACKTRACKING PROFIT-LOSS.docSECTION 11 - GETTING INTO AND OUT OF LIMBO.docSECTION 12 - OBTAINING SYSTEM SUPPORT.docFHS - SS2.docTime Savers Guide.doc