Hi Samer, I'm no expert but I have tried many forex trading strategies in the last 15 years. I've learnt a few things about what does not work. And I'm reasonably handy as far as writing EAs. Haven't gotten into writing indicators, I've left that to ...

Three Pairs Hedging

Exactly. It couldn't be any simpler and a couple of my posts explained it clearly.

Three Pairs Hedging

Remember, we would not open all pairs at once. We open buys when the ask falls below the snapshotted anchor bid for that pair. We open sells when the bid rises above the snapshotted anchor ask for that pair. This is not arbitrage. It's simply ...

Three Pairs Hedging

Below is a list of the triangles of which each currency pair is a member. Every currency pair is a member of 3 different hedge triangles. There are 5 individual currencies, 10 currency pairs and 10 unique hedge triangles. Each triangle appears below ...

Three Pairs Hedging

Let's take one pair and unpack what needs to happen if a trade gets opened on the pair. Let's say a buy trade for EURUSD gets opened because its ask fell below its anchor bid. There are four ways for a EURUSD buy to get profitably hedged as long as ...

Three Pairs Hedging

OK, now that we have the illustrations in place, what does it mean?

Three Pairs Hedging

Here are the obvious bigger triangles. We shouldn't count CHFJPY|GBPCHF|GBPJPY twice. The illustration is only for helping us visualize the triangles. image image image

Three Pairs Hedging

It's easy to miss this one: image

Three Pairs Hedging

As one absorbs the number of triangles in this arrangement, an important thing to realize is the number of ways it is possible to become profitably hedged for any single trade that can be opened. I found it worthwhile to analyze exactly what those ...

Three Pairs Hedging

The anchor is a snapshot of the bids/asks at any point in time of all the currency pairs. There are indeed three unique larger triangles. Just don't count CHFJPY|GBPJY|GBPCHF twice even though the illustration contains it twice.

Three Pairs Hedging

There are three unique hidden triangles. I'm not talking bout the black triangles. Those are not hedge triangles; disregard them.

Three Pairs Hedging

image The obvious triangles are colored blue.

Three Pairs Hedging

image Look at this. What do you see? Don't worry about the fact that CHFJPY and GBPCHF are shown twice. There are hidden things.

Three Pairs Hedging

It's much simpler of course to do this with one single triangle. Remember, you only enter the buys when below the anchor bids and the sells when above the anchor asks. This arrangement provides a means of becoming profitably hedged within each ...

Three Pairs Hedging

Another element that makes sense to me is to pick pairs that, together, make up several interconnected triangles. Trade each pair in one direction in one account, and in the opposite directions in another account. EAs would be just about a must for ...

Three Pairs Hedging

Speaking from a software developer's perspective, arbitrage must be very easy to defeat. I gather that brokers use software solutions to detect and defeat arbitrage trading in live accounts. Maybe some very special non-retail traders are allowed to ...

Have your ever heard about latency arbitrage?

Consider not entering all three trades at the same time. Establish a mathematically balanced snaphot, available on any given tick since the brokers need to show undistorted, mathematically balanced quotes to keep arbitrageurs and distortion seekers ...

Three Pairs Hedging

Profit is made by luck when the lot sizes are equal. Equal lot sizes means it's a low quality hedge that can go positive or negative as the market moves. When the market moves in favor of one of the pairs that is sized proportionally larger than it ...

Three Pairs Hedging

I think where most of the triangle hedge trading is falling down is in entering all three trades at the same time, often paying no attention to lots -- just using equal lot sizes for each pair -- and hoping profit will happen by luck. At any point ...

Three Pairs Hedging

A person unknown to me who assumes they are qualified to give me advice and feels qualified to tell me what I should and should not do with my time goes straight to my ignore list.

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