Samuel Leach is a 26 year old UK-based trader. He started trading Forex at the age of 18 during university and now runs a large trading business comprising of trading floors in UK, South Africa, and soon Canada.
During his university studies, he managed to turn a 2k account into 170k, using hedging as the main strategy. To this day, hedging is a big part of his trading systems.
Despite being so young Samuel worked for a private fund for a while, then started his own company and now teaches people to trade and is actively trading his own accounts. He’s a strong believer that the right mindset to trading is the key to success.
In the show Samuel shares:
- His approach to risk
- A trading system that can be used for traders who have a day job
- What traders should focus on when starting to trade
- What it eventually took for him to trade successfully
- Why a proper mindset is key to trading
Very impressive trader ! With verified myfxbook record that is nice to see!
The hedge part was not so clear:
so if a trade goes wrong, lets say a buy then a sell is open to hedge it.
Is it just one sell?/hedge or several since “a basket” is mentioned? what is the size of the hedge? same size as the buy/ “main” order or double the the size or other size?
when is the hedge closed? with a fixed price target? or some setup ? or some other condition?
what if the hedge goes into loss?
yeah i struggled with that too…
I suspect he enters a counter trade and adds to it if the market keeps going against the original trade (ie add more trades)… In theory this would mean that if the market moves far enough, the profit of the hedge trades makes up for the losses of the original trade…
At some point there would need to be a trigger to close out the original trade if the market keeps going in the opposite direction..
yes I think you are correct, I am not sure if these hedges/”counter trades” will have larger sizes than the 1st/main order? I suspect they will have.
Also once there is a main order and a hedge and if the market goes in to a range, so it goes against the hedge/”counter trend”, what does it do?
…worse case it can go into a loop and create multiple main & hedges on each extremity of the range…and I think that is why it is only using GBPUSD and doing well last couple of years , since this pair hasn’t gone into range scenarios
I’ve been playing with some pseudo code for this – see below…
The below assumes initial long trade… Leaving lot size alone for now… the good thing about this is that if the market reverses and keeps going, you’d make 175 pips…
If the market then rebounds again (ie price goes up anywhere along the way, the below closes out the hedging trades as they each hit break even…
Plan is to code it up and back test…
Only outstanding questions I have are:
1) what are the triggers for hedge trades (below have assumed 50 pips, but may test with another metric – eg a percentage of daily ATR)
2) if there is a reversal of a reversal (eg if market returns to long), what is the trigger to start removing the hedging trades…
keen to see what people think??
1. GO LONG PAIR, 1 LOT – SET TP @ 75 pips
2. If Price declines
– if price declines 50 pips
– GO SHORT PAIR, 1 LOT
– if price declines another 50 pips
– GO SHORT PAIR, 1 LOT
– if price declines another 50 pips
– GO SHORT PAIR, 1 LOT
– Exit original LONG Trade (150pip loss) //at this point trade is break even
– if price declines another 75 pips
– Exit all SHORT TRADES //Net profit of 225 pips (Gross TP pips: 375pips less Gross SL pips: 150pips)
3. If reversal (i.e. market turns back to long) at any point in step 2:
– if price goes up 50 pips
– Exit last SHORT, 1 LOT
– if price goes up another 50 pips
– Exit last SHORT (if any left), 1 LOT
– if price goes up another 50 pips
– Exit last SHORT (if any left)
I would take into consideration how often does the market go into trends and the price action when that happens, as a way to set the frequency for opening hedges and the entry criteria for an hedge:
lets say the market only trends 30-40% of the time (that is the win rate for trend fol systems) so I would only open hedges 30% of the time that means I would have a PT to 30 and “SL” of 70 for the main trade so only opening hedges when the main has lost more than 70 pips
then if it is a trend in this case against, I would expect some price action to confirm it, like RSI over-extended for a some time or a breakout candle against, a close outside the BBs, so those type of signals would be my choice
but there are many ways to skin a cat