New article Separate optimization of a strategy on trend and flat conditions has been published:
The article considers applying the separate optimization method during various market conditions. Separate optimization means defining trading system's optimal parameters by optimizing for an uptrend and downtrend separately. To reduce the effect of false signals and improve profitability, the systems are made flexible, meaning they have some specific set of settings or input data, which is justified because the market behavior is constantly changing.
When developing trading strategies, the first task is setting market
entry conditions, position tracking method and exit point. Various
mathematical, statistical and other analytical methods are applied for
that. They are often reinforced with ready-made autonomous systems used
to assess market characteristics in the form of indicators. One of the
main issues when developing any trading strategy is the lack of
versatility. A trading system is not able to work in all possible market
conditions with equal efficiency. Therefore, traders usually select
conditions for detecting certain (potentially profitable) market
conditions when developing Expert Advisors.
Besides, each trading system has its drawbacks. Trend-following
strategies fail during prolonged flat movements, while flat-based ones
provide false entries during strong directional movements. To reduce the
effect of false signals and improve profitability, the systems are made
flexible, meaning they have some specific set of settings or input
data, which is justified because the market behavior is constantly
Over time, any trading system becomes less efficient and
therefore, there is a need to adapt its parameters to new conditions.
The built-in MetaTrader 5 Strategy Tester
is meant to tackle this issue. This tool helps analyzing the
performance of any trading EA on history and define optimal settings for
their further use as a basis in real trading.
In this article, we will consider applying the Strategy Tester in
a broader sense. Obviously, the majority of trading systems trade in
two directions (buying and selling under certain conditions). The Fig. 1
shows a simple example of a trading strategy in action. Its idea is
simple — buy at a low price and sell at a high one.
Author: Alexander Fedosov