Two strategies for discussion. - WhooDoo22
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Strategy 1. Strategy is based on current price.
The strategy is as follows...
If price is "pushed" up/down enough, the price MUST reverse. The trick is to get into the market at the right moment... This can be done using pending orders below/above price.
Example:
While price is shooting up, a sell pending order will be set 3-5 pips below the price that is shooting up (as it is shooting up), so that if the price reverses to fall back down, the strategy is ready AND waiting for the reverse movement.
The strategy will use a tight variable/fixed trailing stop that follows price as is falls back down (this is assuming that the market just shot up).
The take profit I suppose, should be infinite, so that profits are maximized.
You have probably seen "spikes" of price shooting up/down (because financial institutions are trying to hit trader stop losses). This provides an opportunity for traders to profit from this aggression (when the spike reverses). This action seems to be consistently visible on USD/JPY.
"For every action, there is an equal and opposite reaction." - Issac Newton (physicist).
Strategy 2. Strategy is based on history.
As much as I have enjoyed creating the strategy "MMA_Breakout_strategy_Volume I - coded by RunnerUp", I do realize that there are serious flaws.
These flaws include the following...
1. Strategy uses "fixed periods" moving averages.
Fixed periods work only during specific market conditions. Even if I used the icustom indicator "MAonMA", this icustom is still considered a "lagging" indicator because it simply shifts the drawing of the lines based on another moving average that is considered a lagging indicator.
2. During consolidated market conditions, when moving averages cross "vigorously", this causes many small losses. During this time, price should be scrutinized by EA in explicit detail, checking previous crossings of moving averages.
3. Order closings should be cut quicker than allowing the moving averages to start crossing each other. ( it can be a bit complex, but if you are familiar with this slight good. If not, good.)
4. If a coder does decide to go all nine yards with the strategy, I strongly recommend you to write a moving average custom indicator that uses actual price of the Bars in history for drawing. This means that you will be writing-
lets say something like this... Last 30-60 bars check the price formation. Next, write code the icustom MA indicator to draw the moving averages on a probable future range AND trend. It is essential that 4 moving averages are used. Not three. This is because you have your range trigger, then your range backup trigger, your trend trigger, then your trend backup trigger.
With all that said, I am considering writing a strategy like "Strategy 2" EXCEPT, I will also be incorporating LINES ;) This is to establish support and resistance levels. This is very important and should be the foundation of this whole en devour. So it is basically like this... Establish support and resistance levels and use actual price of 30-60 or so Bars of actual price data to draw the 4 moving averages according to the assumed probable direction of the market.
Before I finish...
It is VERY important to understand this...
When placing trades remember to maximize profits. You/I can do this by opening a single order of 0.20 lots. Ok, now let the profits run until the range resistance is hit (assuming this is a buy order). Ok, now there is only 0.10 lots left open. DO NOT CLOSE. Wait to see if the trend continues up and if it does allow the profits to run until a DEFINITE break of support is breached. Then close 0.10 lots. Perfect ;)
Obviously if the order hits your designated stop loss your order 0.20 or 0.10 will close as expected.
Also, I wanted to inform the MQL4 community that uploaded "MMA_Breakout_strategy_Volume I - coded by RunnerUp" to the MQL4 "Code Base" to show less/more experienced traders/coders the importance of support and resistance. The reason why the equity curve is going up is because of the following...
I believe that the market trends 50% of the time and consolidates 50% of the time. The goal is to maximize the profits of ranges contained within the trends to increase account balance. The trends win 50% of the time and lose 50% of the time. So, to give the strategy the "edge" that it requires to increase profits is to use the ranges inside the trends.
Thank you.