175# 10 pips Forex Trading System

Submit by Joker (Writen by Free Trade Ideas) 16/01/2012

Introduction

The Hedge10 is designed to capture 10 pips from any currency pair. I basically trade

the GBPUSD and the EURUSD with it.

Logic and Idea behind Hedge10

If you trade Forex, you will be familiar with the various important price levels. They

include Weekly highs and lows; Monthly highs and lows; Pivots Points Daily highs

and lows etc...

What happens when price meets these levels? Well, you can be sure there will be

much activities going on... Because Traders from all over the world are watching

these levels. There will be lots of price action around these important levels. They will

either Break through or bounced off... right? Take a look at recent Monthly and

Weekly High Lows levels

1

So how are these levels being traded? Traders will place set & forget pending limit or

stop orders while the more experienced traders will confirm these breakouts or

bounce offs by usng their own methods like Price actions or indicators.

If you look at the chart below, it describes a typical Fake breakout of the Daily High.

If you had traded this Breakout, you may have just lost some money but if you had

placed a Sell limit order at the High, you will be laughing all the way to the bank with

this trade...

In the picture 10 pips forex trading system in action.

10pips Trading System

10pips.pdf

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The logic behind Hedge10 is to place a Sell Limit order and a Buy Stop order at the

High and a Buy Limit Order and Sell Stop Order at the Low (with a fixed Stop Loss

and Take Profit) at these important levels.

So that when your Buy Stop Order is hit, your Sell for Limit order gets hit too and so

you are hedged. Place a Take Profit of 10 pips more than the Stop Loss.

With the positions hedged at these important levels, it doesn't matter which side of

the market is going. As long as one side hits your Take profit, you get 10 pips... Are

you seeing the picture here? Are you even excited about it yet?

I personally trade Hedge10 using the previous Day high and Low levels because I

want action everday, unless that trading day happens to be in a tight range (Inside

Bar).

Now lets see Hedge10 in action with the Daily High Low. We will use the above chart

to illustrate.

Previous Day's High: 1.38925

Previous Day's Low: 1.37228

Buy Stop order was place at 1.38925. At the same time, place a Sell limit at 1.38925.

(Assuming no spread for easy calculations. You can add in spread to the Profit target

so you can nett 10 pips). Both orders' Stop Loss and Take profit were set at 30 & 40

respectively.

Do so for the Previous day's low as well with a Sell Stop and Buy Limit Order.

After you set the above orders, you may turn off the computer and check back at the

end of the day. 90% of the time, you win...This was what happened...

The above scenario gave us 150 pips from our Sell Limit but thats not what Hedge10

is about...

Hedge10 gives you a 90% win rate getting 10 pips a day for just a single currency pair.

You may use more pairs for more profits.

Now before you start thinking about your million dollars, there are some risks using

Hedge10

There will be times when you will experience a whip-saw, meaning you get stopped

out at both levels for a -60 pips but very rarely...really. Manually back testing the last

6 months Hedge10 was whip-sawed 4 times but as you can see, the rewards

surpassed the risks.

Another risk is Brokers' risk. Once your Broker discovers what you are doing

especially if you are making 30 pips (assuming you trade 3 pairs) everday for the past

100 days, they may try to be funny. One way to get around this is simple. Just open 2

Forex accounts with 2 different Brokers but withe the same spread. One account is to

place all the Limit Orders and the other for Stop Orders.

Well, that’s all there is to Hedge10. I am confident that you will like this Method and

profit from it. Stay persistent, review the rules and do manual back-testing to gain

more confidence.

Share your opinion, can help everyone to understand the forex strategy.

Write a comment

Comments: 3

#1
Justin (Tuesday, 06 October 2015 22:12)

sounds very interesting indeed. Look forward to trying it on demo. Thank you very much for sharing.
#2
trader (Wednesday, 03 February 2016 16:17)

What do you say aboutthe broker? Can they cheat you?
#3
xTrade (Monday, 28 November 2016 20:47)

In theory this sounds good, but practically there's a different view.
Even if we take your (utopic) winrate of 90% and your suggested SL, then
you win 9 out of 10 trades.... that means you will win 9x10 = 90 Pips but are loosing
60 if things go wrong just once.
If we just take one currency pair then it would EVEN with your winrate only be 30Pips/10days = 3 Pips
a day, and not 10... and this only assuming you make your 90%... if we calculate with more realistic ~70%
things begin to look really different.