Let's be honest, this system is not a "holly grail". It is also not a system for everyone and if it is used in the wrong way it can lead to a significant money loss. However, if you understand the system and most importantly if you understand the risk which is involved and know how to deal with it, you really can make good money with this tool. My biggest fear is to sell somebody my hedging system and then feel jointly responsible of somebody losing his hard earned money. It should not happen! And believe me I'm really not after your money and I do not want to loss my established reputation in the forex world! The only reason I have released this hedging tool is that I've received like gazillion email requests from people who could not wait to try this system after seeing my positive results. So that being said, in this section I'll try to describe my hedging EA from the practical point of view. So let's assume you are very enthusiastic and want to start right away.
The first step: You need to understand the relation between the account Equity, Lot sizes, Margin vs FreeMargin and account Leverage. If you do not know what this all mean, please use google to learn about all those concepts and return later to this page.
Second step: You need to select a good broker with the proper account characteristics. The most important account setting is the Leverage which is recommended to be equal or higher than 1:500. If you understand all items mentioned in the first step, then you will also understand that selecting a high leverage account will allow you to open many more positions than when trading on a low leverage account. This fact will increase your chances of successful hedge recovery. The second important item is fixed spread. Fixed spread will protect your positions during volatile market events, like e.g. news releases. Furthermore fixed spread will take out some uncertainties out of the equation, making EA behavior more predictable and more ease to tweak. Please, consider to select a broker with low swap rates. Large swap rates will have a negative influence on your profits, this because during recovery cycle some positions can stay open for several days.
Third step: Run a forward test on your demo account using the standard EA settings!!! I can not be more clear about this. I get many many questions regarding the EA settings from people who do not understand the system and try to use it in most ridiculous ways. Please start with standards settings and see how those settings are working for you on your account and tweak it carefully by changing one parameter in a time. Alternatively, use the MT4 integrated strategy tester to familiarize with EA behavior with different setting.
Fourth step: You need to select a proper account balance. Please, when trading a real account, trade only with money you can afford to lose! You need also to understand that trading on a small account with the recommended lot size of 0.1 will dramatically decrease your chances of success. For example when your account size is only $2000 this will allow you to open only 10 positions when trading on a 1:500 leverage account. 10 positions seems to be a lot, but when market conditions are bad and your trade is open in a ranging market, you will see that 10 positions are not enough to recover. That's why the recommended absolute minimum account size is equal to $3000 (for an account with 1:500 leverage). To learn more about proper account sizing download our FreeMargin and DrawDown MT4 indicator tool (DDFMcalc) from the EA's manual website.
Fifth step: When you are confidant and familiar with the hedging EA and the EA's settings on your demo account, you can start the real forward test. This EA is not a forex system, and it will not tell you when to enter. You can use it with your own system or any system giving good entry points. If you do not have a trading system, you can use the following guidance:
• Consider to trade only on the higher timeframes H4 and H1
• Enter only when your trade direction corresponds with the fundamental analysis (hint: use Coensio's cFDBI indicator)
• Place your entry in a strong trend or around SR levels and avoid Asian session. This will increase your chances to avoid ranging market conditions.
• Stay away from the high impact news releases
• Look for a high level of confluence between direction indicated by moving averages, SR lines and price action candle patterns.