Geometric progression and relative strength index applied to FX hedging

Abstract

This research aims at profit maximization and loss minimization in any FX market trading. A geometric progression (geometric sequence), is said to be a non-zero number progression or sequence in which each term following the first is obtained via multiplying the prior by the common ratio, which is a predetermined non-zero value. This method seeks to open an opposite position to an existing initial position in order to hedge that initial position in the event that the market moves against our trade. There are a number of mathematical models to develop new hedging strategies for Forex trading. Due to the apparent high level of unpredictability in price movement, forecasting the future of a stock price is a challenging endeavor. The research would like to study one with geometric progression in particular. In other words, every number can be entered as multiple integer of a different number. Thus, 1, 2, 4, 8,..., 2n is a step forward. Smart traders never take more risks than their capital, however, the otherwise is viewed and considered here.