Hedging EA. Custom Trading Strategies AutomationAugust 10, 0219 2022-12-26 14:02
Hedging EA. Custom Trading Strategies Automation
Hedging EA. Custom Trading Strategies Automation
Hedging EA is the ability to insure risks and minimise losses in trading. In the classic version, hedging entails compensation for losses on one asset at the expense of another. There are a large number of strategies that involve both, buying one financial instrument or several. The use of specialised expert advisors (EAs) allows both experienced and novice traders to automate this process.
How Hedging EA works
Most of these automated trading algorithms work on the principle of opening opposite positions for the same trading instrument.
This can be any trading instrument, including the GBP / USD currency pair, which is considered in the example. A trading EA opens a buying trade and, if the price moves in the direction of the forecast, closes it when the take profit is reached. If the price moves in the opposite direction, a hedging position is opened. This strategy is also known as Forex locking.
The hedge expert advisor will control two positions until the rule of the trading system, that is used in such an algorithm, is fulfilled (it can be anything, for example, triggering a take profit or a trailing stop).
Usually, a hedge EA is based on kind of basic strategy for opening positions based on indicators or chart instruments. For example, one of the simplest options is buying when the price overcomes the highs of the previous (or several) days.
In the screenshot, the price has been testing resistance for several days, and after its breakout, growth begins. At this point, the hedging EA can open a long position. Further development of the situation shows that the trade would have been held until the close with the take profit, since the market movement was strong enough. If the price went in the opposite direction below the high after the open, the hedging position would help minimise losses and translate them into profits over time.
This is one example of such a strategy. It can be based on any indicator, for example, on Bollinger Bands.
In this case, a signal to open a long position can be a rebound from the lower border of the Bollinger Bands indicator. The price reaching the upper border of this indicator can serve as a signal to close a position. In this case, a hedging sell trade can be opened when the lower boundary of the Bollinger Band indicator is broken.
All of the above mentioned can be done manually. Traders use strategies, including those described above. They can independently make a decision when and where to open locking positions without using a hedging EA. However, the latter has several advantages:
- Speed of decision making. Expert advisor will identifies the signal faster than the trader and send a request to open an order in the platform.
- Objectivity. Hedge EAs work exclusively within the framework of their algorithms. If a signal appears in accordance with the strategy used, the robot sends an order to open a position automatically. A trader may hesitate and end up missing out on a good entry opportunity.
- Ability to work on several trading instruments at once. Unlike a human, a hedge EA can open positions on different assets at the same time.
- Lack of fatigue and psychological pressure. The robot does not experience human emotions. He does not get tired and can work around the clock. This significantly expands trading opportunities, allowing you to open positions in different trading sessions.
- Proper use of EA will minimise the number and size of losses. This is due to the fact that the robot opens opposite trades every time the price moves in the direction opposite to the forecast. Thus, the loss is fixed at a certain level and when you exit the lock, they are either minimised or converted into profit.
- Hedging EA is an alternative to using a stop order. You don’t have to record losses. Instead, you get the opportunity to wait for the price to move in the direction of the original forecast.
Important points to keep in mind when using a Hedge Expert Advisor
Not all brokers can use this type of trading robot. Some companies prohibit traders from opening opposite (hedging) positions on the same asset. Having opened a buy deal with such a broker, a trader will not be able to open a sell deal at the same time. In this case, its purchase will be automatically closed.
Choosing the right settings is an integral part of success. The trader must independently calculate his risks by determining the level of the stop order and take profit. Too much risk in one trading position can lead to the loss of the entire deposit.
The definition of take profit targets should be consistent with the average number of points by which the price of a trading instrument changes over the selected period. If the average daily price movement for EUR / USD does not exceed 60-70 points on average, it makes no sense to set take profit above this value, provided that the position is closed within one trading day. Stop orders should be determined based on the acceptable risks for the trader’s trading system.
Difficulties in finding a Hedge EA
Despite the fact that there are a large number of hedging EAs on the market, it is very difficult to find a suitable one. Such a product must meet all the requirements of a trader. Many developers do not show or disclose the essence of their algorithms. In some cases, the proposed settings are not enough for flexible management of a hedge EA.
The problem of finding a forex hedging EA is aggravated by the presence of unscrupulous players in the market for developing trading robots. Some products do not meet the stated criteria, including in terms of quality. Sometimes you can find forex hedging EA that work exclusively on the Martingale principle without using trading strategies in them.
After purchasing such robots, you will have to spend a lot of time testing them. A positive result is not always guaranteed. You run the risk of spending money and not getting the expected robot or it will not meet all your criteria.
Another problem is customer support. Not every development company offers support for traders after they have bought an automated trading system.
Create Your Own Hedging EA
To get guarantees that you will have a truly high-quality product that fully meets all your requirements, it is recommended to order a hedging EA. The customer will be required to draw up a technical assignment indicating all the parameters of the algorithm. Based on the results of the work, the trader receives a completely ready-made instrument that will meet all his expectations.
The backbone of almost any hedging robot is a strategy. By ordering an expert advisor from our company, you can choose any strategy that you use. Moreover, we work with projects of any complexity. Our programmers will carefully study your proposed strategy and implement it in accordance with the terms of reference when writing a hedging robot.
If you have any doubts about your trading strategy, our developers offer free advice before getting started. This allows you to take into account all your requirements and wishes regarding a hedging EA as accurately as possible.
Choosing us as a developer for your trading robot, you trust a team of professionals who have been creating automated trading algorithms for traders and investors for over 10 years.
All our customers receive lifetime support for all products ordered from us. The developers are happy to answer any of your questions, provide recommendations or promptly solve any possible technical problems regarding the software products ordered from us.