How does hedging work?
First, this hedge system was introduced as a way of reducing DrawDown when Blessing got on the wrong side of a trade, and the price kept going against the basket. It was not meant to be a way of making additional profit, although this is possible, depending upon your settings. The first choice you need to make is whether to hedge on the same pair, or a correlated pair. Hedging on the same pair has been banned by the NFA in the US, so those with a US broker will need to use a correlated pair. There are several web site that give details of how closely other pairs are correlated to the one you are using, and you need to choose one that is over 90% Positively or Negatively correlated (> +0.90 or < -0.90). Alternatively, you can just enter any symbol in HedgeSymbol, and B3 will tell you if it is not correlated closely enough. The correlation coefficient calculation is based on the number of days entered in CorrPeriod. The symbol entered in HedgeSymbol must be EXACTLY as used by your broker
