Hedging – Buying and Selling of same currency pair as a defensive way to cut losses, reduce the uncertainty, and get back to cash.
Martingale Hedge Strategy. After making first entry double size of next entry and adjust stop to entry before double. Than move target price to same on both, when the scale goes to the 7th entry on same pair the system can reduce the loss to only 2.7% from 7% per $10,000 equity if you set your parameters to Long and Short. When the market Triggers both positions it will get you back to cash to start initial scale all over and reduce loss. This is a risk management tool built into software for capital preservation. It will cause more losses because your narrowing the trading range but it keeps you at the market and always in a position to make it back.
Example: Per Pair
Scale 1: Sell .01
Scale 2: Sell .02
Scale 3: Sell .04
Scale 4: Sell .08
Scale 5: Sell .16
Scale 6: Sell .32
Scale7: Sell .64 Hedge: 1.28 lots
Hedge – Long and Short will trigger Buy Stop 1.28 lots (doubles last lot size automatically)
You can manually set Break Even Hedge and adjust target and stop if you chose to take the additional risk to these target and stop prices.
Buy Stop: 1.27 lots Target: 56 pips above entry – Stop: 100 below – Loss: $0 or break even when your buy stop target is hit or triggered. Ideally you want stop to trigger shorts and hit long target and the long target will only be 36 pips above stop but for every pip you surpass short stop you will be reducing your loss. If you watch your price or long position you can cut anytime and system will automatically set new trade plan.
This must be done manually and if you check your charts it may or may not be good to do. For beginner always hedge but for the more seasoned traders you make the call knowing your risk using mental stop and checking your charts.