Discussing the article: "Automating Trading Strategies in MQL5 (Part 18): Envelopes Trend Bounce Scalping - Core Infrastructure and Signal Generation (Part I)"
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Check out the new article: Automating Trading Strategies in MQL5 (Part 18): Envelopes Trend Bounce Scalping - Core Infrastructure and Signal Generation (Part I).
In this article, we build the core infrastructure for the Envelopes Trend Bounce Scalping Expert Advisor in MQL5. We initialize envelopes and other indicators for signal generation. We set up backtesting to prepare for trade execution in the next part.
The Envelopes Trend Bounce Scalping Strategy uses the Envelopes indicator, which creates upper and lower bands around a moving average with a set deviation (e.g., 0.1% to 1.4%), to identify price reversals for scalping small profits. It generates buy signals when the price touches the lower band in an uptrend and sell signals when it hits the upper band in a downtrend, confirmed by trend filters like a 200-period Exponential Moving Average (EMA) or 8-period Relative Strength Index (RSI). This strategy works well in trending markets but requires strict risk management to avoid false signals in ranging conditions, and we will take care of that.
Our implementation plan involves building a program to automate this strategy by initializing Envelopes and trend indicators, detecting bounce signals, and setting up robust signal validation. We will use modular functions to calculate band interactions and filter trades, ensuring precision in high-frequency scalping. Risk controls, such as maximum trade frequency and signal confirmation, will maintain reliability across market conditions. In a nutshell, here is a visualization of what we aim to achieve.
Author: Allan Munene Mutiiria