The first Hedging EA that really works!


  • No, this is not an another 'get rich quick' Forex robot!
  • No, it will not make you a millionaire overnight!
  • This is an advanced trading tool for advanced traders!
  • Designed and developed by traders, for traders!




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Coensio's HedgingRecoveryEA is the first semi-automated EA for MetaTrader4 that is showing positive results in a real forward test. This trading idea is originally posted by "coensio" on "forex-tsd" forum and developed by the coensio team.

When everybody was saying: "it can't be done" - we kept coding. When everybody was saying: "it is too risky and will not work" - we kept coding. When everybody was saying: "it works only on paper" - we kept testing. And guess what? All that hard work paid off! So, how it works? This advanced system is (in most cases) able to recover form a losing position, no matter what direction the market price will go. It's not a hoax and also not magic, but just a simple rule of mathematics! Try out the free demo version on your demo account. Watch Marlon's review video below:

Main Features

  • Automatic hedging recovery mechanism (optional)
  • Trade using predefined chart lines (easy pending limit and stop orders setup)
  • Trade using simple buy/sell/close buttons
  • Advanced trailing stoploss mechanism
  • Built in broker test
  • Breakeven mechanism
  • Detailed trade monitor display
  • Comes with FreeMargin and DrawDown indicator tool (DDFMcalc)
  • Comes with Coensio's fundamental indicator for MT4 (cFDBI)
  • (NEW) News trading option!

Theory of operation

This trading system uses a smart back-and-forth hedging mechanism, that is continuously opening new positions according to the recent market movements. Each time a new position is opened, system tries to estimate a new Lot size, which is required to breakeven or to profit at the original TakeProfit, but ALSO at the original StopLoss level. This results in a group of open positions that eventually will always turn into a profit, when the market will go in either direction up or down. All trades are automatically closed when the overall profit reaches  the pre-defined ForceTakeProfit level or pre-defined TakeProfit or StopLoss level. PipProfitOffset setting ensures that all new recovery trades are targeting slightly lower TakeProfit levels (w.r.t. the first open position). This results in slightly larger Lot sizes, than Lot sizes required to reach a breakeven condition. This additional offset allows to compensate for small losses, that are caused by spreads, slippages, swaps and commissions. The system is profitable as long there is sufficient level of FreeMargin to be able to open new trade positions. The overview below shows a theoretical recovery flow with corresponding Lot sizes and risk levels. Note that system will only loose money in case it is not more able to open new positions (at low FreeMargin levels).

Hedging Ea Example Trade

The most important thing to understand is, how the account equity behaves during the recovery cycles. Normally, the DrawDown (DD) level is most critical parameter which determines the overall performance-score of a trading system. In this special case the truth is slightly different. Since every single trade is hedged against the total pool of open trades, the DD is only present in the middle of the trading zone. When the recovery cycle is finished and the price reaches one of the recovery target lines (upper or lower line) the equity becomes positive! So under normal conditions, if the account equity is large enough to "cover" this temporary DD in the middle of the trading zone, there is no reason to be afraid of this temporary equity drop. This is the least understood characteristic of this trading system.

Conclusion: So what we are doing here? Are we crazy to trade a system like this? There is no simple answer to that question, but let me summarize our primary goals:

  • From our 7 years backtest analysis we know that under some well chosen conditions and with proper EA settings, we are very unlikely to get more than 12 open positions during a recovery cycle.
  • Taking this into account, we know that under some well chosen broker conditions (high leverage and low swap/commission rates), our DrawDown in the middle of the trading zone, should never exceed our equity and our FreeMargin drop should never lead to a "margin call".
  • Knowing those two facts, gives us some level of confidence that we will have a significant chance for doubling our account.
  • This tactic gives as a large probability (which is >> 50%), that we will succeed in doubling our equity many more times, than we will end up losing our equity.
  • Since FOREX trading is a probability game, the mathematics shows us that sticking to a trading methodology, with a winning ratio >>50% will always lead to some significant profits.

That being said:  we really know what we are doing and we are not totally crazy 😉 Below our message to all skeptics:

"Everybody knows that some things are simply impossible until somebody, who doesn’t know that, makes them possible.” - A. Einstein

How to trade this system?

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.

User comments

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