Alan Solarsh shows when to manually close a sell hedge using an 8-exponential moving average. Close it when the second green candle opens above the ATMA. If margin is under 1000%, skip it and take a small profit instead. Change your robot's hedge trigger first or it will re-hedge right away.
Questions this video answers
When the second candle opens above the 8-exponential moving average (ATMA).
Under 1000% margin percentage.
20% drawdown (example where a hedge was placed at 20%).
Increase to around 25%–30% (example recommendation).
A small take-profit of roughly $5 to $20 (speaker example).
Chapters
This video tutorial is going to explain to you when is the right time to remove your hedge, if you are going to remove your hedge manually. So what I'm finding is a lot of people seem to be messing up the hedge strategy because they seem to be removing the hedge at the wrong time. So I'm going to draw in a hedge here so that you guys can understand. So let's say your hedge, this is a sell hedge that was placed over here. I'm just going to write it in here, sell. And we're going to put it in, in red so that you guys can see exactly what's going on. Okay, so this is your sell hedge that we placed over here. Then what happens is the price goes north and your sell hedge is now red. So the robot carries on trading and you start making profits. And then what happens is that sometimes you remove the hedge at the wrong time. So when you actually remove the hedge. So I'm going to draw some candles for you now so that you can better understand what's going on here. Let me just fill in a red candle here and I'll draw it in here. So let's say we get a big red candle, it goes all the way down here. Then we get more red candles and more red candles, right? What's going to happen is, according to my trading methodology is that the atma follows the price, right? So this red and white line, let's just call it the red line, is the 8 exponential moving average. Now what happens is, is that let's say, for example, this is when I know that the trend has turned, I get some green candles. So we'll just draw in some green candles. This is candle one and this is candle two. So my trading methodology states that when the second candle opens above the atma, the trend has reversed north and you can then close out your hedge. But I think where the confusion comes in is that people are closing their hedge when their drawdown is very high and they haven't got that much room to maneuver because their margin percentage is so low. What I'm saying to you now is if you are in that position where you have low margin percentage under 1000% and or you don't have enough capital to be able to maneuver out of this hedge. What I would is, is that you leave the hedge in place. Do not make profit from the hedge, rather leave it and put a small little take profit line over here. So your small take profit is there. Let me just put in some words here. We say take profit, make that yellow so that you can see it. So that you make either no money. So it's a zero sum game, okay? You make no money. We make a little bit of money, like $20, okay? Zero money. Or let's say few bucks, okay. So that you don't make it totally useless. Between 5 and $20. And then you're out of the hedge. But only when the price comes all the way back here. Then your take profit line is hit. This is a far better strategy for you so that you can manage your drawdown and not re hedge and hedge and re hedge and hedge. And then close your hedge in profit, re hedge. Then hopefully the price comes to where you want it to get to take profit again and then re hedge, okay? Rather keep the hedge until it's a zero sum game. You can see that the trend is reversed. The trend is going in the right direction. We're going north again. We've got big green candles. You can see that the trend has changed and that you can get into a better position. Now. This is where the challenge comes with you guys with the robot. So if you are going to close this hedge out at a zero sum game and you're going to make tiny little bit of profit, what you need to remember is, is that your robot hedge functionality is still set up to hedge your account at X percentage drawdown. Let's say that this hedge was placed at a 20% drawdown, 20% drawdown. What will happen is, is that when this take profit is hit, your robot is automatically going to place a new hedge and you're going to be in the same position. So what you'll need to do is you'll need to go into your robot and change your hedge settings to a higher hedge percentage. Just make it like 25%. If your robot was set to hedge at 20% globally, then change your hedge setting to let's say 25 or 30%. If you've got four hedges and basically you've set your robot up to hedge on each chart, it means that you would have four hedges and let's say each of the hedges you set up to 5% per chart, make each hedge 7%, 8%, 10% per chart. That way, when the price is coming up, when you close out your hedge trade, the robot is not going to re hedge the account and you don't have to deal with these other hedges. Very important to note that before your trade closes out, you need to log into your account and change your hedge percentages either globally on the one chart or you need to change out your hedge percentage or on all your charts and increase the hit percentage so that when the robot when the price does get back to that hedge trade and closes out, you don't re hedge your account. This is a new concept. I think it's a fantastic concept where you don't have to worry about your account re hedging all the time and you don't have to worry about trading manually out of the hedge. You now know that the trend is reversed. You close the hedge after zero sum, the price carries on going north. And what's going to happen? What happens is that your drawdown because you've removed the hedge correctly and you've got big green candles. Even if you've got smaller candles and it's going up, let's say you've got small candles here, but they gradual. Then you've got sideways motion. All right, sideways motion. Let's just move this out of the way here. Get more. But there we go. But a sideways motion and then you get another green candle. Maybe you get a red candle that goes down. Let's change that to a red candle. But you understand the direction that I'm going. Then you get a nice green candle and stow the price starts going up. What happens is, is that your drawdown is contained and now your drawdown starts getting less and less. You get your account under control. This for me is a better risk management strategy. So I hope that you like this video. If you don't understand it, rewind it. If you need to ask questions, please ask on the ea hedged group so that we can understand where you're at, where you're confused and we can start answering some of your questions. So I really hope that you enjoyed this video and it helps you to get your hedges under control and remove the hedge at the right time. I'll see you in my next videos.
