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## WHIPSAW, TREND, or COMBINED?

 75 EuroTrader 2010.05.01 08:48   By using Differential Calculus I can easily locate the bars for the LOCAL MINIMAs and LOCAL MAXIMAs on a 30 min EURUSD chart. They are basically the LOCAL TURNING POINTS. The only problem is how far the turns will go. It could WHIPSAW or just keep on going as a long TREND after the turns. So I've developed one WHIPSAW EA and one TREND EA. The signals are totally opposite depending on whether the next few bars are a WHIPSAW or a TREND. For WHIPSAW the EA sells at next bar after the LOCAL MINIMA but for TREND the EA buys at the LOCAL MINIMA, and the signals are reversed for the LOCAL MAXIMAs. Now one can easily imagine my dilemma of which EA to use. If I used WHIPSAW EA I made money if the market had no trends but lost massive when the market suddenly went on a long trend. When I used TREND EA I made good money if the market trended but lost all when the market suddenly whipsawed for a long time. (A long TREND is equal to a few WHIPSAWs and they eventually cancel out each other as if the bloody market has no gain or loss money-wise.) So I've combined the two EAs. I've been running a few days the COMBINED EA and my account balance is basically stuck at almost where I started. The bloody EA is behaving as if a perfect hedge. Any thoughts on this topic and please help me out of this doldrums? I can give away my simple and robust EAs free to anyone who can give me a profitable idea out of the HEDGE I am in now! similar
 708 1005phillip 2010.05.01 16:39 #   The only problem is how far the turns will go. It could WHIPSAW or just keep on going as a long TREND after the turns. Your dilemma is fundamental of all financial instruments that have non-zero second derivatives. Namely the question "is this current change in price direction the harbinger of a reversal or merely a retracement?" Answer that question with a concoction of mathematically expressible analytical equations and you'll be the master of every investment market in existence, not just forex. The bloody EA is behaving as if a perfect hedge Since a perfect hedge is basically tantamount to not being in the market at all (aside from the equity loss thru spread plus that of the 2*rollover fee accruals) this should result not be surprising. Your strategy is basically saying it has a 50/50 chance of correctly predicting reversal vs. retracement and when the odds are 50/50 you either sit out (no trading) or dive in with a hedge (and lose money to broker). Hedge do not generate profits. If you have a strategy that generates profits from hedging then your strategy will be all the more profitable (by an amount equal to that of the rollover rate on the instrument) by just closing and reversing. Hedge merely keeps you "in" the market, not creating profits. It is great for account managers and brokers, i.e. anyone who profits by your lot-turnover rates thru spreads and commissions, but thats about it. similar
 2029 gordon 2010.05.01 17:49 #   EuroTrader: ...idea out of the HEDGE I am in now! My own opinion about hedging (and my most valuable contribution to this forum to date) -> https://forum.mql4.com/22859/page5#269081 :) similar