Hedge trading with currency pair

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Sai Pratap
  • updated
  • Under review

Is it possible to have hedge trading with multiple currency pairs?

Say for example, I observed that EUR USD & USD CHF move exactly in opposite directions.

So if we have buy/sell signal in EURUSD, we will trade in 0.03 lot in EURUSD & 0.02 lot in USDCHF, our loss can be restricted to 0.01 lot.

We can exit the other currency pair i.e USDCHF on breakeven or opposite signal after profit booking in EUR USD.

Iam not sure of this possibility. Just giving away my idea.

PROs:

Risk and money management.

Can trade more number of lots, hence useful as few brokers offer bonus based on number of lots.

Works best with zero commission accounts

Cons:

May not work if commission is high.

Replies 6
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Andrey Khatimlianskyi
  • Under review

Loss will be hedged (if pairs are really correlated), but profit will be lower too.

I think we need make some investigation before voting for this idea.

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Sai Pratap
Quote from Andrey Khatimlianskyi

Loss will be hedged (if pairs are really correlated), but profit will be lower too.

I think we need make some investigation before voting for this idea.

Yes Sir, loss will be hedged. But I don't think we are compromising on profit as net lot is again 0.01 lot as we are doing now. Iam also note sure whether we can backtest this strategy for checking the results.

Thanks for the review.

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Andrey Khatimlianskyi

We can test it in MT5. But it is not simple to implement.

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Kishan Bhatt

Hi, 

Don't want to poke my nose in as a newbie, but I saw this implementation that may be a good example?Multicurrency hedge example EA (overlay hedge).mq4

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Vitkor

It really works and there are ready-made experts. The correlation coefficient of two pairs is analyzed. At the moment of a larger discrepancy, transactions are made and a return to a positive correlation is expected to close. Great idea. I suppose for a separate expert

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3
Forex Trader

any news about this hedge feature?