Poplular Hedge

Originally Posted by forexea

waiting for your instrustions. Thanks.

This Expert Advisor is designed to run under the MetaTrader-4 Platform.

It is a mathematical system which pits one currency pair against another inversely-correlative pair. It uses a very complex mathematical formula to determine the optimal ratios based on your account balance, margin percentage, size of the lots and the leverage you are using.

The system emphasizes three things: Overnight interest, buy low, sell high and profit grabs.

O/N INTEREST:

The short-term, overnight interest rates (or swap rates) are extremely high in Forex. When you leave your positions overnight you will accrue interest. If the currency pairs were perfectly correlated, the net gain/loss would be zero and you would accrue the high interest rates with no risk to your principle.

BL/SH:

The paradigm of buying low and selling high is a staple for all investing. This system sets Buy and Sell limits for each currency bought. Using a complex mathematical formula, the buy and sell limits, as well as the amount to purchase, are optimally set around each currency pair purchased. When the currency pair drops past the Buy Limit, the order is executed, that number of lots is bought and new limits are calculated and set around that price. Similarly, when the currency pair rises past the Sell Limit, an amount determined by the formula is sold short and new limits are calculated and set round the price. The EA monitors the progress of the limit orders once they have been executed into Buy or Sell orders. Just like the profit grabs and drawdown max, the limit orders wait for a particular profit or max loss to be realized. In addition, the program logic also monitors the average variations of the past few hours and calculates the best time to close the order for maximal gain or minimal loss. This algorithm also protects against wild swings in the currency and consequently avoids large losses in favor of modest gains.

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The idea of ?profit grabs,? is simple: since no two currency groups are perfectly correlated, one pair will always lag behind or race ahead of the other. These fluctuations will show up as a net gain or net loss on the pair-group. Sometimes the group will ?draw down,? such that the net loss dips down into your equity. Sometimes the group will swing positive and the net gain will add to your equity. A constant state of flux will always exist. The idea is to take the profit when it swings high enough to trigger a grab. Once grabbed, the pair-group is reallocated and the process starts again. Since hedging does not care at what value either of the currency pairs start at, there is no penalty for taking a profit grab and reallocating.

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In summary, the system is designed to hedge two, inversely correlative currency pairs against one another. If this group maintains a reasonable correlation, the position is left overnight to accrue interest. If this group fluctuates in the positive direction past a pre-determined cutoff, profits are taken and the group is reallocated. The whole while, buy limits are waiting for a currency pair to swing low, in order to buy lots or high in order to sell them.