Monday, October 13, 2008

Handy hedge free forex strategy

It’s a simple mechanical forex hedge trade of GBP/USD that I enter with a 5 pip take profit on the long and the same on the short ---- both trades are entered as closely to each others price as possible and the whole concept is based on the intraday reversals that EVERY forex currency goes through and the intraday reversals they make WITHIN the reversal! My spread is one pip!

I enter a minimum of 45 minutes before the forex market reversals in the US which can be considered as MAJOR at NOON, EST and MIDNITE, EST.

I use the minor reversals at 10:30 AM, 1:30 PM, 5PM, 8PM, 10:30 PM

NONE of these times are written in stone unfortunately, but on a very VERY high average hold true - sometimes the NOON reversal happens at 11:30 AM if the banks feel its time to reverse, but invariably the trade will come in if you get stuck there --- simply takes a few hours then.

I had been forex trading this without entering a weekend trade, but last week I did as an experiment and it cleared nicely came Sunday night --- I wouldn’t run right out and do that if I were you, but its something to consider.

if you observe the forex market, you will notice reversals every 1.5 hours ( WHICH USUALLY DO NOT ALTER THE LONGER TREND, such as on the H1), as the longs get out and the shorts come in (or the forex brokers now short the run-up to make THEIR profit against your long, or to simply hit your stop-loss, take your shares, and then run the price up again -- that way they make twice as much while you sit there wondering what happened to your nice profit on the long forex trade !

IF THE REVERSALS COME IN EARLY, count one and a half hours to expect the next -- somewhere on down the line the banks will get back on schedule, but its good to be ready for them a little early -- rather than late!

Essentially, that’s it --- cause there really isn’t much to it except leaving the basket under your floppy drive to catch the money dropping!

TEST IT --- it works for me, even when I enter late and suffer a days drawdown, but DONT enter LATE and don’t suffer, which is kind of simple to remember and is the ONLY rule I can think of.

The whole thing with the trade is the range of GU --- even if you get stuck in a trend change, the "noise" of the forex market with up and down movements at that point, will invariably take out your 5 pips!

But 5 pips here, and 5 pips there and do it enough times in a day, and then a week, and it begins to look like real money after a while.

It’s forex mechanical and has no rules except DONT ENTER LATE and while some probably think there is not much to be made, try throwing 5 or 10 lots on each side, 5X a day, and tell me then!

BTW - YOU don’t do that for a long long time - greed is what kills graveyard dead!

Another reversal time

the next hedge will be at 9:15 pm, est for the 10:30 pm reversal -- after that will be the 12 midnite reversal, and you place the hedge at 11:15 pm, est.

try it a few hundred times and i think youll like it


I LOVE the intelligence of this thread, even when they nail me --- like a welfare child, your post fell thru the cracks and i apologize.

and as far as i remember, the times DO NOT change with standard or daylight savings time.


Summarized Times

EST GMT - 45 minutes - 1 hour

1030 1530 1445 1430
1200 1700 1615 1600
1330 1830 1745 1730
1700 2200 2115 2100
2000 0100 0015 2400
2230 0330 0245 0230
2400 0500 0415 0400


This trade is NOT affected in any way by the DAILY trend, but rather the absolutely NECESSARY intraday reversal trend and the point that the market makers reverse a trade so THEY can make money and grab more shares !

There are a few purposes behind these reversals, but mostly by stopping and reversing price the mm's get MORE shares at a lesser price to continue a bullish runup AND/OR they make money against your long by now shorting, where most people will now sell and they buy more shares at a lower price to short on the way down as people bail their long positions. Of course, reverse this for a forex market thats moving down!

Now at the bottom, because of averaging down, they own MANY shares at a lower price and now they run the price back up, taking profit on the long side with their cheaper shares !

Lets say they run a currency up to 1.9000, at which point they reverse down to 1.8000 - almost everyone except long term holders will bail their positions (its SO human nature) to take forex profit, as they sell at a steadily decreasing price OR THEIR STOP LOSSES ARE HIT !


Now the price is down to 1.8000, the mm's now cover by buying all these shares but at a 1000 pip advantage to where the currency was 15 mins ago, and UP THEY GO AGAIN, with lots more shares to sell the retail trade, but they got em CHEAP !!

Its often called a "headfake" because they fake you into thinking the price will now go down forever, scaring you into selling or forcing your stop losses --- Its HOW the rookies loose money and the mm's do it with glee !

PRO traders are the BEST forex day traders in the business and are well rewarded for being so - their job is to MAKE money for the company they work for and not care much about how they do it !

FOREX Trading, at least to this person, is KNOWING what theyre doing more than simply knowing when to enter and when to exit ! Theres a lot of pros out there, and they dont give a rats rump about any of us - rather they really dont like us at all, but will quickly grab our money !

of course, when forex trading with no sl, one better know the trend and NOT trade against it !

love and kisses

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