The "Pattern-123" Expert Advisor for MT4: Description and Settings

Good day, dear traders!

I want to introduce you my new Expert Advisor that implements a trading system based on the “Pattern-123” graphic price model.

• Introduction
• Description of the Pattern-123 and how the EA works
• Stop'n'Reverse pending orders to compensate for losses
• Additional features
• How I trade with the Pattern-123 Expert Advisor (+ real trading example)
• Full description of the Advisor parameters

The "Pattern-123" model has long been known and popular with traders - this is a reversal pattern that signals a possible end and reversal of a trend.

Back in 2016, I wrote an indicator that recognizes Patterns-123 on the chart. The development turned out to be very successful. Convenient visual display of patterns, the absence of lag (the main drawback of most indicators) and redrawings made the indicator quite popular among traders.

And immediately after the publication of the indicator, a mass of requests rained down with a request to automate the trading according to Pattern-123.

Although I am an opponent of fully automatic advisers (I believe that a robot cannot trade better than humans), however, I myself needed a robot assistant who could track the signal and open trades in my absence.

Advisor development was not easy and dragged on for a couple of years - a test demo account with a robot was launched only in January 2019

Nine months of testing the adviser showed that Forex tools are not the best choice:

As you can see, from all the tested instruments, the EA shows good results on the gold only. Although in the future I plan to conduct testing on indexes, CFDs and crypts.

At the moment, the robot is trading on a live account, under control, in a semi-automatic mode.

Description of the Pattern-123 and how the EA works

The price model "Pattern-123" is one of the simplest and most reliable patterns of graphical analysis, which indicates a market reversal. Perhaps this is the most important information for traders - to know where one trend ends and the opposite begins.

The Pattern-123 is based on three points (consider the example of the UP Pattern-123) :

1. The first point (point #1) is the low of the downtrend;
2. The second point (point #2) is formed at the time of a rollback from a downtrend. At this moment, we still don't know what will happen, a turn up or a rollback;
3. The third point (point #3) appears at the moment when the price turns up again, without breaking through the level of point #1.

When Pattern-123 is formed, the EA sets a pending stop-order for the breakdown of point #2.

If the price breaks the level of point #2 - the pattern execution- a pending order turns into a market transaction.
If the price does not reach point #2, but goes beyond point #1 - this is pattern cancellation- the EA will delete the order.

StopLoss can be set beyond the level of point # 1 or # 3 or set with a fixed value (parameter “ Method of calculating the Stop Loss (from point 1/3 or fixed) ”)

TakeProfit is set at the Fibo level or set with a fixed value (“ Take Profit for 1st order (Fixed, Fibo enum or Fibo manually) ” parameter) - this is TakeProfit of the 1st order (there may be other, so-called reversal orders - they have their own TP , but about them later).

To determine points #1,2,3, the Indicator and the Advisor use a Zigzag of my own development, which is as close as possible to the standard zigzag, but, unlike it, is not redrawn.

Stop'n'Reverse pending orders to compensate for losses

To increase profitability, the EA provides the ability to set opposite pending orders at the level of triggering the stop loss of the current transaction (Stop'n'Reverse orders).
Moreover, the EA can increase the lot of SnR-orders by the martingale coefficient (parameter “ Coeff. Of Martingale ”). When a market transaction is opened, a counter pending SnR-order with an increased lot is set at the StopLoss level of the market transaction.

The StopLoss of the SnR-orders placed at the opening level of the previous transaction.

The TakeProfit level of the SnR-orders is placed a certain number of points higher than the breakeven level (set by the parameter “ TP for next SnR-orders - distance from BreakEven level ”).

When the stop loss of the market Buy-transaction (for example) is triggered, the reverse Sell SnR-order is opened (turns into a market Sell-transaction), and a new Buy SnR-order with an increased lot is placed at the place of the closed losing Buy-transaction.

When the transaction is closed in profit, then coefficient of increase is reset to 1.

The number of possible reversal SnR-orders is set by the parameter “Number of allowed SnR-orders in the set (including 1st order)”. If this parameter is less than or equal to 1, SnR-orders are not used.

All orders: the 1st order (at the signal of the indicator) and subsequent reversal SnR-orders - make up one set.

The Advisor distinguishes between the Buy-set (1st order is BuyStop in the set) and the Sell-set (1st order is SellStop) by Magic numbers and processes Buy- and Sell-sets separately.

At launch, the Advisor searches for its orders by symbol and by two Magic-numbers and includes them in the work. The EA reports all his actions on the Experts tab.

Additional features

• The Advisor gives you the opportunity to set the allowed period of time for trading. However, signals outside the trading time are taken into account by the EA anyway. And if at the beginning of the trading period these signals were not executed or canceled, then the adviser will place a pending order for the breakdown of point #2, formed before the start of trading.
  
  This feature of the Advisor allows you to use it even for the breakdown of the morning flat. Set the start time of the trading period at the beginning of the European session, and the Advisor will set pending Buy/Sell-orders at this time, of course, if Pattern-123 is formed during the morning flat period.
  
  
• The EA provides the ability to trail a profitable position. Trailing only works for the 1st order (parameter "Trailing Stop - coeff.of TakeProfit").
  
  
• The EA will automatically recognize 5 and 4 digit quotes. It is necessary to set the parameters in a 4-digit format, and the adviser will recount itself.
  
  

How I trade with the Pattern-123 Expert Advisor (+ real trading example):

Although the EA can work as an automatic robot, but I don't use it in a fully automatic mode - only as an Advisor-assistant, to place orders on signals at a given time.

I start my every trading day with the markup of significant support-resistance levels on the H1-H4 timeframes, from which the price was pushed away on in the past. If at the current moment the price is approaching one of the levels, then I start the Pattern-123 advisor to search for signals.
Trading time - European and American sessions (configured in the Advisor).

I try to always accompany transactions. If I see that the trend is reversed, then I can reduce losses by reducing the stop loss manually.

Here is an example of today's transaction:

Seeing such a rebound from the level of 1500, I launched the EA to search for Pattern-123 upwards with the goal of reaching the next resistance level at H1, which coincided with the Fibo level 262%.

You can see the result in the following picture:

If the transaction made a profit today, then I no longer trade on this day (configured in the Advisor)

At the end of the post you will find two sets:

- The “EA_123_Pattern_v1.0_XAUUSD_M5_manual_GMT3_0.01.set” I use for my manual trading.
Please do not put this set on automatic trading - it will be unprofitable.

- If you do not have the opportunity to trade manually, then I can offer you the “EA_123_Pattern_v1.0_XAUUSD_M5_auto_GMT3_0.01.set” for fully automatic trading.
This is a very conservative set - without the use of reversal orders.

Testing was carried out for 2 years 9 months on the M5 timeframe
Optimization: 2017 + Forward test: from 2018.01.01 to 2019.09.18

Advantages:

• Average annual profit - more than 100%
• A very small deposit can be used - from $ 100 per 0.01 lot. At the same time, the maximum drawdown is less than $ 50 during the entire testing time.
• Does not require your presence at the computer (but I’m sure that your manual support will increase your profit)

Disadvantages: lack of profitability for 9 months (from 2017.05 to 2018.02)

Setting trading time for GMT+3 in both sets

Full description of the Advisor parameters: