Three Pairs Hedging -Forex Trading Hedging
Example using EUR/USD, USD/CHF , EUR/CHF.
http://forexbuffalo.com/showthread.php/96-Three-Pairs-Hedging
These 3 pairs would make an impeccable (perfect) hedge "IF" mt4 or mt4 broker would allow decimal lots size like 0.21025451. but they don’t, therefore we can use a fix equal lot for all 3 pairs, say 0.30 and here is were we use the renko chart to compensate for the UN-impeccable hedge and take advantage of the fact that EUR/USD and USD/CHF are negative correlated (not always) and that EUR/USD*USD/CHF=EUR/CHF (always, but between a small inefficiency factor) To set the EA we “assume” that EUR/USD and USD/CHF are perfect negative correlated. Example: say the current prices are EUR/USD= 1.2985 and USD/CHF=0.9385 … then EUR/CHF=1.2186 (1.2985*0.9385) If we are assuming perfect correlation, this means if EUR/USD moves 20 pips up, then USD/CHF would move 20 pips down and we would have 1.3005, 0.9365 and (1.3005*0.9365)1.2179. In other words EUR/CHF moved only 7 pips down. Therefore I would set the EA for EUR/USD and USD/CHF in a 20 pips renko charts and EUR/CHF in a 7 pips renko chart. EUR/USD buy only, USD/CHF buy only and EUR/CHF sell only. ..no TP, no SL but set to CloseALL when in X profits. To get a better picture, the EA would buy EUR/USD at close of the 20 pips renko bar (if the bar is up bar). If the closed bar is a down bar, EA does nothing. For USD/UCH would do the same and for EUR/CHF would do the opposite (sells only in the 7 pips renko chart) i ended up setting a grid of pending orders open buy eurusd 1.3020 pending buy 1.3040 pending buy 1.3060 pending buy 1.3080 e cosi via open sell eurchf 1.2120 pending sell 1.2113 pending sell 1.2106 pending sell 1.2099 open buy usdchf 0.9230 pending buy 0.9250 pending buy 0.9270 pending buy 0.9290 you don't need a renko chart, i believe this system is very powerful, great idea.....