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Let me say off the bat that stops are a great way to teach yourself discipline and should be used by anyone trying a system or making their first steps in the market. Hedging is an advanced technique.
That being said, do you think Warren Buffet makes a billion dollar position in Coca-Cola and puts stops in? I don t think so.
He does a lot of work and researches his investment and then commits to it.
To invest in Futures or Currency Pairs you need firstly to determine the trend. Put up a daily and a weekly chart and LOOK.
Do you see a series of new highs and lower lows? The trend is up.
Do you see a series of new lows and lower highs. The trend is down.
It is as simple as that
The market never goes up or down in a straight line. You will easily be able to identify pauses and temporary changes in the market. So hedge against your position at inflection points found by using fractals on renko charts.
So, simply use Weekly and Daily charts to determine the main trend and take a view.
Then use 1h and lower time frames to determine hedge points to enhance your profit and guard from down drafts if you are long or updraughts if you are short
There is an easier way. I designed software to specifically do this ( I am lazy) . The software will catch main movements when applied to longer time-frames and " surf" the lower time frames. Thus your trading can be broken into a series of trend and counter trend trades automatically. I have not re-invented the wheel ...but it works.
On average if you stick to this method will make gains quarter after quarter (past performance is not a guarantee of future performance. There could be an Atomic explosion and that would undoubtedly warp future performance) This is what my software makes on EURUSD and US30
Just click on my name above . See my profile, see my experience try my software!
