white_tiger,

Nice idea. I've been working on a similiar idea for entries and I believe you're only missing a couple factors.

1. You have to be willing to neutralize orders and use up some capital trading this strategy. For instance, if you place a BUY and it INSTANTLY goes towards your SELL line without having the ability to close it out, you'll need to hedge against it with a SELL order AND open another SELL order.

2. Since you're neutralizing orders and using capital with each turn, you'll need to both set a minimum number of pips you're willing to accept once one side breaks out, and you'll need to increase lot size/pip value percisely to create balance.

For instance, if I want to start with $1 per pip, I have a 20 pip gap between my BUY and SELL lines, I have 3 pip spreads, I want 100 pips on a break out...

(position(s)), (pip gap + spread(s)) * ((increase) pip value) = (used capital), (outcome if breakout)
**margin usage not included**

s -23p ($1p/p = -$23)$100
b/b -26p ((+.23) $1.3p/p = -$33.8)$130-$23=$107
s/s -26p ((+.568) $1.6p/p = -$44.6)$160-$56.8=$103.2
b/b -26p ((+1.014) $2.1p/p = -$54.6)$210-$101.4=$108.6
s/s -26p ((+1.56) $2.6p/p = -$67.6)$260-$156=$104
b/b -26p ((+2.236) $3.3p/p = -$85.8)$330-$223.6=$106.4
etc....

I have to increase pip value accordingly to maintain that my breakout will not only cover my previous contained hedge orders, but will also generate the profit I originally seeked.

Regards,

Bob
hedgingsystem@gmail.com