EA can be set to hedge all trades of any currency pair when running only on one chart. MT4 does not allow to attach more than one EA on the same chart, but you can attach them to separate charts running the same currency pair. Jarratt Davis is teaching basics of hedge trading in his online video training course as well.
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The minimum variance hedge ratio is important when cross hedging , which aims to minimize the variance of the position's value. The minimum variance hedge ratio, or optimal hedge ratio, is an important factor in determining the optimal number of futures contracts to purchase to hedge a position.
It is calculated as the product of the correlation coefficient between the changes in the spot and futures prices and the ratio of the standard deviation of the changes in the spot price to the standard deviation of the futures price. After calculating the optimal hedge ratio, the optimal number of contracts needed to hedge a position is calculated by dividing the product of the optimal hedge ratio and the units of the position being hedged by the size of one futures contract.
For example, assume that an airline company fears that the price of jet fuel will rise after the crude oil market has been trading at depressed levels. The airline company expects to purchase 15 million gallons of jet fuel over the next year, and wishes to hedge its purchase price.
Assume that the correlation between crude oil futures and the spot price of jet fuel is 0. Therefore, the minimum variance hedge ratio is 0. The optimal number of contracts is calculated to be contracts, or 0.
What is the 'Hedge Ratio' The hedge ratio compares the value of a position protected through the use of a hedge with the size of the entire position itself. A cross hedge is used to manage risk by investing in two positively A short hedge is an investment strategy utilized to protect against A Chinese hedge is a position that looks to capitalize on mispriced Hedging is a widely misunderstood strategy, but it's not as complicated as you might think.
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Please note that the Hedge EA is a trading tool and it does not open trades without human intervention. Personally, I do not use this trading tool as it is physically impossible for me to be everywhere, but I have many clients using this product every day. So there is no trading history to show. Trading record with these apps will depend on the trader who is using them. If you already use hedge trading system and want to make your trading easier, the Hedge EA will cover you.
With Hedge EA you do not need to place hedge orders manually, calculate the right stop loss and take profit price values, or be glued to your computer screen forever. EA will take care of your hedge orders automatically. When you understand how your strategy works and can see that this EA can help, you may want to ease your hedge trading and buy this software. When you have a hedge trading strategy to use, test various combinations of EA settings to find the best ones for your currency pair and your trading style.
EA can open hedge orders for an existing hedge order too and even one with a higher lot size, so in the end, your trade group will hit the take-profit level anyway. I call this HedgeHedge trading HH. MT4 does not allow to attach more than one EA on the same chart, but you can attach them to separate charts running the same currency pair.
Stealth EA can apply hidden stop loss or take profit for your hedge and initial orders, and can also open an initial order that will make Hedge EA start its trading session. Trader On Chart can be used to open the initial trade manually and then the Hedge EA will take it from there.
The user can set the level in pips that they want to activate a hedge trade keeping the same stop loss and profit levels as the original trade or different levels can be preset.
If the hedging trade is never triggered and the original trade is closed; the hedging trade will automatically be deleted from the system. The red line below the BUY trade at the distance of 25 pips will act as a hidden hedge trade. Once the market price will touch that line the SELL market order will be opened immediately. In the example above we see how the Hedge EA continued to open hedge trade for each position originated from the initial BUY order.
Each additional position hedge had a bigger lot size so when the initial trade hit a take profit of 80 pips the whole bucket of trades was closed for profit. It means you may install the software on your desktop and notebook computers, but use it only on one computer at the same time. EA is not permanently locked to a computer or MT4 account.
The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
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