Trend vs. Reversal trading
- EURUSD - Trends, Forecasts and Implications (Part 1)
- GOLD, Gold and XAUUSD
- Envelope 2.11
Which is the better system, trend or reversal trading? Many indicators and EAs seem to be for reversal trading but is it really the best way to trade? Anybody know of any good EA that specifically utilizes trend analysis without resorting to a grid strategy or any form of Martingale?
Reversal is not a trading it's just an illusion for any trader and over 70% traders gets trapped in this.
Trend trading is the only basic trading style in Forex and in Stock, all trends can be seen in weekly charts, trend tells the country's financial position or decisions if any currency facing high uncertainty it can not be suitable for trading i,e GBP, TUR etc.
Martingale can be effective only if your with trend otherwise trying to recover wrong decisions only.
Entry Time:
Any trend can take reversal for some time like 7 to 15 days and sometime 30 days and best way wait and check best point for entry. 90% everyday calendar news can not turn the trend.
I'm not a guru but tried to explain a simple way and a sample way works in trade, more intelligence makes simple things complex.
Reversal is not a trading it's just an illusion for any trader and over 70% traders gets trapped in this.
Trend trading is the only basic trading style in Forex and in Stock, all trends can be seen in weekly charts, trend tells the country's financial position or decisions if any currency facing high uncertainty it can not be suitable for trading i,e GBP, TUR etc.
Martingale can be effective only if your with trend otherwise trying to recover wrong decisions only.
Entry Time:
Any trend can take reversal for some time like 7 to 15 days and sometime 30 days and best way wait and check best point for entry. 90% everyday calendar news can not turn the trend.
I'm not a guru but tried to explain a simple way and a sample way works in trade, more intelligence makes simple things complex.
Found a good answer.
H4 is far better then H1
Which is the better system, trend or reversal trading? Many indicators and EAs seem to be for reversal trading but is it really the best way to trade? Anybody know of any good EA that specifically utilizes trend analysis without resorting to a grid strategy or any form of Martingale?
Reversal EAs
I have tested hundreds of EAs, I have found that the reversal EAs fail 90% of the time and they usually resort to even riskier methods like martingale to try and recover the wrong prediction. I have not seen even one that consistently gets it right. And its very tricky to find the correct reversal signals, even candle patterns (hammers, engulfing etc) still don't get the reversal right 80% of the time. I have tried an EA that uses 6 different indicators to confirm entries and it still gets it wrong 80% of the time causing huge drawdown by using grid order after that.
Trend Trading EAs
I have also struggled to find one that correctly detects where the trend is heading. It seems these kinds also depend largely on oscillators to "guess" the trend. High failure rate overall. In my daily manual trading I use 2 or 3MAs to determine trend and I enter on EMAs crossing, and apply trailing stop based on 2 x ATR with early break even, My winning trade ratio is far higher than any so called trend EAs. I have searched all of MQL5 and I still cant find a single EA that can execute this method reliably even the customizable strategy ones fail at doing this simple action.
Impulse detecting EAs
A few of the impulse detecting EAs do actual work well. Especially the ones that only rely on price movement in a given time frame, e.g. 10pips in 3 secs, Once detected a trade is placed in the direction of the impulse. The only way they work well is when you have low spreads, low ping, and brokers that allow 2 pips or less SLs. The setup should be based on very early breakeven and trailing SL. This gives a highest win ratio in an EA in my experience. it can even work when there is no news. I have observed trading streaks with a max of 2 consecutive losses and 1 or less breakeven sop-outs and up to 6 profit trades using this type of setup.
News EAs
A lot of these work on some flavour of OCO (one closes the other), a lot of them work well, they basically try not to guess the direction they wait to see if the price hits one of the orders and then when its in profit cancel the opposite order, the have a reasonable amount of success when they have good trailing and breakeven built in to them.
General problem with MQL5 EAs
Another issue with EAs is that they are built by developers who have no clue of what consumer products are about, they build robots, test them
on
Strategy Tester, show us very impressive results, but they fail to deliver a "consumer
product" to the user. They are extremely arrogant in their failure in just documenting a product well and enabling a non-developer user to
fully understand the product and know how to use it. The basics for me would be, if you show us results from Strategy Tester, and results from
your live account, the EA should come with those exact settings as a default. And just think about a consumer electronics manual, Describe
how to use your robot and keep in mind that you are building it for consumers not other developers. describe trading scenarios that you built
it for clearly. Maybe if this was the approach most of these EAs would actually work better and have less negative reviews. MQL5 admins should
also consider making this compulsory for all EAs in that enter the markets, set a standard for User Guides that that capture some level of
basic information intended for users who are not developers.
Next to the above problem is the urge to make hundreds of EAs with fragmented functionality that individually don't produce great results. for me every basic EA should have trading time filter, Spread Filter, SL, TP and trailing SL options as well as risk based lot selection. before we even talk about actual trading algorithms. but I find that in the market a lot of EAs still come without any of these, some that sell for $5k+. Almost every car sold today has a steering wheel, brakes, a hand-break, a headlights, even ABS and Traction control is now found even the cheapest you can find. These are basics same with features mentioned earlier for EAs.
Consumers prefer a product that can be used as a stand alone product. If these basics were available the developers can differentiate EAS using actually trading strategies e.g. oscillator based, impulse or trendline etc. So any flavour of strategy would be up to the users' needs, but the basic features need to be there in an EA to make it safe and easy to use.
That's my Non developers take on trading with robots.
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