The Reversion Expert
- Experten
- Clive Scanlan
- Version: 1.1
- Aktualisiert: 24 November 2023
- Aktivierungen: 10
Introduction:
Are you prepared to turn market fluctuations into profitable trading opportunities? Welcome to "The Reversion Pro" Expert Advisor. I'm Clive, holding a BSc (Hons) in Computer Science with over 15 years of Forex trading experience. Today, I introduce my meticulously crafted trading strategy, generating "real trading" signals based on Market Liquidity and Smart Money Concepts.
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Identify the Opportunity:
In today's fast-paced financial markets, major players actively seek liquidity, creating a unique window for astute traders. This strategy thrives on insights from large market participants.
The Mean Reversion Advantage:
At its core lies the well-established concept of mean reversion. Capitalizing on short-term price anomalies after market prices deviate significantly from their trading ranges.
Market Dynamics:
Prominent institutions strategically accumulate and distribute orders, injecting liquidity into the markets leading to notable price breakouts. Corrections often follow, reverting prices back to the breakout point.
Smart Money Concepts:
This strategy aligns with recognized Smart Money strategies, capitalizing on actions by significant institutions, including the mitigation of Order blocks, Breaker blocks, and Fair Value Gaps.
Retracement Opportunities:
After extended price movements, profitable traders secure or lock in profits, triggering price retracements. This strategy seizes these opportunities, anticipating prices will revert toward their mean level after significant deviations.
Unique Selling Points:
What sets this strategy apart is its unique combination of robust mean reversion principles with finely tuned timing synchronized with market dynamics. This approach adapts swiftly to market shifts and executes trades that seize the moment during brief market anomalies.
Ideal for Ranging Market Conditions:
Thriving in markets marked by natural price fluctuations outside their typical trading range but ultimately reverting.
Safe in Trending Market Conditions:
This strategy helps avoid trouble during trending phases. 'Trend Safe Mode' ensures adaptability to trending conditions, tightening stops, moving profit targets closer, and making it harder to enter trades.
Trade Boost:
Introducing 'Trade Boost' – a great option during normal trading conditions. It only closes trades when the user-defined 'profit' is reached for the opened batch of trades, providing traders with more control over their profit targets.
Reduced Market Timing Sensitivity:
Minimizing the need to trade with a bias, this approach harnesses the power of reversion to the mean, making it less reliant on overarching market trends.
Risk Management:
Risk management is a top priority. Advanced algorithms continuously monitor market volatility, proactively closing positions during extreme market volatility or black swan events. Trading resumes when conditions stabilize. Users can set a maximum limit on open trades, avoiding risky tactics.
Proven Results:
Meticulously back tested over the past three years and comprising over 10,000 trades, the algorithm consistently achieves a remarkable success rate, maintains a minimal drawdown under 10% on average, and boasts a stellar profit factor of over 2 for every currency pair.
Getting Started:
These are the main components of the strategy's functionality and how it works. Getting these values right will determine how profitable the strategy is.
Average Mean and Deviation Options:
Allows customization of the Mean Average Price and how far from the mean should the strategy start to enter trades.
Entry and Exit Sensitivity Options:
Encourages fine-tuning entry and exit mechanisms based on market fluctuations.
Lot Sizing Options:
Offers choices based on account balance or fixed lot sizes.
Risk Management Controls:
Includes parameters for bars since the last entry, maximum open orders, stop loss, profit, and breakeven levels.
Advanced Trade Management Settings:
Allows customization of features like trailing stops, break even levels, entry sensitivity, and timer settings for precise trade management.
Trade Boost:
A great option to have turned on during normal trading conditions (Non-hard treading). When used, it only closes trades when the user-defined profit is reached for the opened batch of trades.
Safe Trend Mode:
Mitigates risks associated with prolonged trends by dynamically adjusting stop losses, preventing significant losses in situations where the market continues to move against mean-reverting expectations. When activated, it adjusts strategy parameters in real-time, tightening stop losses, moving profit targets closer, and making entries more selective. This ensures the strategy's adaptability to trending conditions, mitigates risks, and enhances overall performance in both ranging and trending market scenarios.
Recommendations:
Time Frames: 1 Hour
A 1-hour time frame is recommended for balanced analysis, reduced noise, and suitability for swing trading. It offers flexibility and smoother trend identification.
Fixed Lot Size:
Users can choose a specific lot size for their trades. Suggested values are 0.001 for balances under $1000 and 0.1 for balances $1000 and above.
Currency Pairs:
Certain currency pairs, including AUD, NZD, CAD, GBP, and USD, are optimal for mean reversion due to their cyclical behaviour. Avoid pairs with prolonged trends, such as JPY-based ones.
AUD/CAD:
Behavior: Excellent mean reversion after significant price movements.
GBP/USD:
Behavior: Exhibits range-bound movement, making it suitable for mean reversion.
AUD/USD:
Behavior: Experiences significant fluctuations, retracing to the mean.
EUR/USD:
Behavior: Historically demonstrates mean reversion within distinct price ranges.
USD/CAD:
Behavior: Displays ranging behavior, providing mean reversion opportunities.
EUR/GBP:
Behavior: Shows mean reversion characteristics.
GBPNZD:
Behavior: Notable mean reversion behavior.
NZDCAD:
Behavior: Responsive to mean reversion, with distinct price ranges.
Additional Pairs:
NZD/USD:
Behavior: Significant fluctuations followed by retracements.
EURAUD:
Behavior: Volatility and potential for mean reversion.
Indicators:
Moving Average (MA):
Acts as the mean price, helping identify overextended moves.
Envelope and Standard Deviation:
Detects extended market conditions, providing visual clues for potential reversals.
Standard Deviation:
Measures volatility, aiding risk assessment.
ADX:
Measures Trend Strength.
Strategy Setup: Recommendations
Optimal Usage:
Familiarize yourself with the software before live trading.
User Inputs:
Understand the impact of each input on risk, financial objectives, and trading plans.
Adaptation:
Tailor lot sizes based on account balances for balanced trade sizing.
Diversified Handling:
Determine the number of open orders based on risk profile to diversify while managing risk.
Strategy Adjustment:
Continuously monitor trades, market conditions, and adjust inputs strategically.
Risk Management:
Use emergency stops and break-even features for prudent risk management.
Tips for Optimal Use:
Trade Small and Allow Multiple Orders:
Initiate small trades as the strategy may open multiple orders during market expansion.
Be Patient:
Allow trades to play out, as some might take time to revert to the mean.
Keep Stop Losses Out of the Way:
Designed to close positions before a stop loss is hit during extreme market volatility.
Let the Strategy Take Your Profits:
Allow the strategy to manage profit-taking efficiently.
Use Near Mean Trail:
Utilize trailing stops to lock in profits, especially when prices get close to the mean.
Accept Drawdowns:
Drawdowns are common; refer to back test results as a reference point.
Key Features and User Inputs:
These are the main components of the strategies functionality and how the strategy works.
Getting these vallues right will determine how profitable the strategy is.
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Average Mean and Deviation Options: : Allows customization of the Mean Average Price and how far from the mean should the strategy start to enter trades.
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Entry and Exit Sensitivity Options: Encourages fine-tuning entry and exit mechanisms based on market fluctuations.
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Lot Sizing Options: Offers choices based on account balance or fixed lot sizes.
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Risk Management Controls: Includes parameters for bars since the last entry, maximum open orders, stop loss, and profit levels.
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Advanced Trade Management Settings: Allows customization of features like trailing stops, break even levels, entry sensitivity, and timer settings for precise trade management.
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Trade Boost: A great option to have turned on when in normal trading conditions (Non hard treading). When used is onlt closed trades when the user defined profit it reach for the opened batch of trades.
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Safe Trend Mode: Mitigates risks associated with prolonged trends by dynamically adjusting stop losses, preventing significant losses in situations where the market continues to move against mean-reverting expectations. When activated, it adjusts strategy parameters in real-time, tightening stop losses, moving profit targets closer, and making entries more selective. This ensures the strategy's adaptability to trending conditions, mitigates risks, and enhances overall performance in both ranging and trending market scenarios.
Summary of User Inputs:
=================| Lots Size Parameters |================
1. Trade Magic Number: A unique identifier used by the Expert Advisor (EA) to distinguish trades executed under this specific trading strategy.
2. Lot Size by Percent: This parameter allows the control of trade sizes based on a percentage of the account balance, enabling automatic adjustments as the account balance changes.
3. Percent: Determines the specific percentage of the account balance to be used for trade sizes, typically recommended to be set between 0.1% and 0.25%.
4. Fixed Lot Size: Users can choose a specific lot size for their trades. Suggested values are 0.001 for balances under $1000 and 0.1 for balances $1000 and above.
5. Bars Since Last Entry: Sets the number of bars to wait before initiating another trade, preventing the EA from making consecutive trades too frequently.
6. Max Open Orders: Defines the maximum number of trades the strategy can open simultaneously during active market conditions. Advised values range from 10 to 20, depending on account balance and lot sizes.
================| Trade Boost Parameters |================
7. Profit Boost: This option allows the use of a profit-boosting feature. This feature ensures the batch of open trades are closed only when “Dollar Amount” is reached. If a trend is detected, and “Trend Safe Mode” is activated, Boost mode is over ridden.
8. Dollar Amount: Specifies the dollar amount that needs to be reached for the profit boost to become active.
================| Mean Price Parameters |================
9. Mean Moving Average: Sets the moving average to be used as a representation of the mean price.
10. Mean Deviation: Determines the proximity to the mean price for initiating the trailing stop. Generally recommended in the range of 0.5 to 1.5. A 0.5 setting means trades will open closer to the mean, while a higher number means trades will open further away.
11. MA Method: Specifies the moving average method to be used.
================| Trade Entry Parameters |================
12. Entry Type: Offers different entry options such as Aggressive, Conservative, or a balance between both. 1 is Aggressive while 3 is Conservative.
13. Entry Sensitivity: Ranges from 1 to 6, allowing users to set the trade entry sensitivity. A lower value (1) makes it more sensitive, while a higher value (6) makes it less sensitive.
================| Standard Stop Loss and Profit |================
15. Stop in Points: A safety stop-loss measure used in extreme market situations. It is recommended to set a larger stop to allow for market movement.
16. Profit in Points: Closes trades at a specified dollar amount, particularly useful during extended market conditions.
================| Trailing Stop At or Close to Mean Price |================
17. Trail Close to Mean Price: Implements a trailing stop feature for trades near the mean price, aiming to secure profits close to the mean.
18. Deviation to Mean: Sets the proximity to the mean price for initiating the trailing stop, generally recommended in the range of 0.01 to 0.1.
19. Trail by in Points: Specifies the amount in points by which the trailing stop trails the price.
20. Close at Mean Price: Trails and Closes the trade at the actual Moving Average Mean Price.
================| Trend Safe Mode |================
21. Trend Safe Mode: Option to use Trend Safe Mode. This option initiates tighter stops, make entry harder, and takes profits sooner as original mean price probably wont be reached.
22. Trail By Points In Trend Mode: Specifies the points to start trailing if a Trend is detected.
23. Trending Entry Type: Entry option when in Trend Safe Mode. You can make it harder to Enter.
24. Trending Entry Sensitivity: Sensitivity option when in Trend Safe Mode.
25. Deviation From Mean When Trending: Specifies the deviation from the mean when a Trend is detected in Safe Mode that “Trail By Points in Trend Mode” starts to Trail.
26. Trail By Points in Trend Mode: Specifies the trailing points to trail when Trend Mean is activated.
27. Standard Deviation Level for Volatility: This is the Standard Deviation level that indicates a Trend developing.
28. ADX Trend Level for Trending: This is the ADX level that indicates a Trend developing in less volatile currencies such as the NZD. Standard setting is 55, but for NZD reduce it to 25+.
================| Standard Trailing Stop |================
29. Standard Trailing Stop: Includes features such as minimum profit.
30. Trail By Points: Specifies trailing by points.
31. Minimal Profit$: Specifies the minimum profit required before the trailing stop is activated.
32. Step: Specifies specific step adjustments for stop losses.
================| Breakeven Settings |================
33. Use Breakeven: Allows setting a breakeven point for trades to reduce potential losses and protect profits.
34. Minimal Profit $: Determines the minimal profit needed to activate the breakeven feature.
35. Lock Profit: Locks in profits when breakeven is activated to secure gains.
================| Emergency Stop Parameters |================
36. Standard Deviation period input: Input period for Standard Deviation.
37. Deviation STOP Threshold: Trending threshold Level to close all trades when Standard Deviation moves past this level.
38. ADX Input: Input for ADX (Average Directional Index) used in determining market trends.
39. ADX Input: Input for ADX used in determining market trends.
40. ADX STOP Threshold: ADX threshold to close all trades when the ADX moves past this level.
Conclusion:
In summary, this mean reversion trading strategy offers a comprehensive approach, combining the potential for consistent profits with effective risk management.
