Most Forex traders have a strategy or two that helps them win trades. Many traders use Expert Advisors, software or robots to assist them in making trading decisions. Others watch the markets regularly and make trades based on a fundamental knowledge of candlesticks, line graphs, and other indicators. One extremely simple strategy that any trader can use is the Hedge and Hold Strategy.

1. New Forex Strategy:
Hedge & Hold
Martin Gila
Most Forex traders have a strategy or two that helps them
win trades. Many traders use Expert Advisors, software or
robots to assist them in making trading decisions. Others
watch the markets regularly and make trades based on a
fundamental knowledge of candlesticks, line graphs, and
other indicators. One extremely simple strategy that any
trader can use is the Hedge and Hold Strategy.
GilaForex.com

2. Disclaimer
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It
is not suitable for all investors and you should make sure you understand the risks involved,
seeking independent advice if necessary.
Forex Strategy – Hedge and Hold
Most Forex traders have a strategy or two that helps them win trades. Many traders use Expert
Advisors, software or robots to assist them in making trading decisions. Others watch the
markets regularly and make trades based on a fundamental knowledge of candlesticks, line
graphs, and other indicators. One extremely simple strategy that any trader can use is the
Hedge and Hold Strategy.
The Hedge and Hold Strategy is very simple. Wherever the chart is currently sitting, the trader
places a simultaneous buy and sell trade. A take profit is placed at an interval that the trader is
comfortable with, but no stop loss is placed. On an average day, the market will fluctuate up
and down and make the trader a few successful trades…but not always.
As a trader progresses using the Hedge and Hold Strategy, some trades will not execute. The
trades which are left open may execute in the next few days, weeks or months. One of the key
aspects to using the Hedge and Hold successfully is patience. Eventually the market will reverse
and trades will close “in the money.”
The risky side of using this strategy is, ensuring the trades are small enough that the trader’s
account isn’t wiped out with a sudden upswing or downturn in the market. Martin Gila, from
GilaForex recommends trading microlots with this strategy. Conservatively, trading .01 of a lot
for every $500 in your trading account, will minimize the risk of market volatility.
If traders adopt an investment mindset, reaching their monthly goals becomes very attainable.
This strategy was first tested using a $400 account with a goal of 25% Return on Investment
(ROI) per month. The 25% ROI, or $100 per month goal was tested over a four month period
and showed the following results:
Month 1: $122.71 (30% ROI)
Month 2: $117.54 (29% ROI)
Month 3: $94.76 (23% ROI)
Month 4: $224.33 (56% ROI)

3. The original $400 account has grown to $959 in four months. This certainly is not a massive
amount of money, but the test looks positive. The important point to remember is, the account
is very small. If a trader used this strategy on an account that started at $4,000 or $40,000, the
results are proportionately larger.
This strategy is excellent for part-time traders as you can set trades in the morning and evening
and allow them to execute during the day. As some trades don’t execute immediately, it leaves
you in a position to take advantage of volatile markets. For example, if you have five open buy
trades and the market suddenly surges upward, it can trigger the buys and you have a good
trading day.
The downside of this strategy is, there are always open trades. If traders place too large a trade,
market movements can wipe out their account.
If you’re trading the EUR/USD pair with a .02 lot size, setting your take profit at approximately
100 pips, you’ll average approximately $2 per trade. In a typical month, you may average 100
trades for a profit of $200. But it depends on your perspective of what your monthly profit is.
Because you also have open trades, your account increase will be less than your profit. For
example, your account balance could be $1,000, but you have $150 in open trades, so the
actual equity in your account will be $850 ($1000 - $150 = $850).
The advantage of the Hedge and Hold Strategy is you don’t lose money with stop losses. The
disadvantage is, you’ll be holding open trades all the time. You may have an open trade with a
current loss of $50, that won’t execute for several months. It’s expected that the trade will
eventually be profitable, but the trader has to make the personal decision whether their risk
tolerance allows a $2 trade to hold out at -$50.
Overall, the Hedge and Hold strategy is profitable, if traders use an investment mindset and are
satisfied with conservative results. Aggressive traders may find this strategy is too long-term.
The important question that traders have to ask themselves is, does this strategy make sense
for them.