Discussing the article: "Markets Positioning Codex in MQL5 (Part 1): Bitwise Learning for Nvidia"
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Check out the new article: Markets Positioning Codex in MQL5 (Part 1): Bitwise Learning for Nvidia.
We commence a new article series that builds upon our earlier efforts laid out in the MQL5 Wizard series, by taking them further as we step up our approach to systematic trading and strategy testing. Within these new series, we’ll concentrate our focus on Expert Advisors that are coded to hold only a single type of position - primarily longs. Focusing on just one market trend can simplify analysis, lessen strategy complexity and expose some key insights, especially when dealing in assets beyond forex. Our series, therefore, will investigate if this is effective in equities and other non-forex assets, where long only systems usually correlate well with smart money or institution strategies.
Today, this article serves as the pilot-edition in a new series that we’ll prefix with ‘Markets Positioning Codex in MQL5’. These articles will maintain a focused exploration into automated algorithmic trading for strategies that will mostly be tailored for Equities with predominantly a long only bias. Our adaptation of the ‘Codex’ concept stems from not just ‘bitwise-learning’, a structured approach at decomposing indicator signals into discrete patterns; but also incorporating the ever important ‘machine-learning’. The use of discrete patterns, as we have covered in the previous series, can later be combined for supervised training and testing. Recovering reliable market positioning signals, serves as the aim of this strategic approach, since we are isolating and rigorously evaluating uniquely set signal patterns.
For this article, we are focusing on Nvidia Corporation (NVDA), a well established, very liquid, highly dynamic company that to a large extent is driven by technological innovation-cycles, and corporate merger-acquisition activity. We want to leverage this market complexity and showcase, potentially, its robustness of merging the Relative Strength Index (RSI) and the DeMarker oscillator in a disciplined, tactical long only approach. The intended test window is from 2021 August to 2024 June, as a workaround MetaTrader 5’s Strategy-Tester constraints given that company stock splits cannot be imputed when testing. In live trading, this gets handled/addressed by most brokers, but Strategy Tester is yet to get a handle on this. For NVDA, the world’s most valuable company, its two most recent stock splits were very close to our start and stop test dates.
One of our key premises with this series is that in the last articles, the MQL5-Wizard-Articles, the bitwise patterns we had appeared to only work independently and failed to provide any traction when combined with each other when using the bitmap input integer parameter ‘patterns-used’. We therefore want to test, extensively, if this phenomenon of requiring strict/independent pattern use, subject to a trader’s own knowledge/experience, is something that continues to be a requirement even when we are maintaining a specific position, such as going long only when testing. When we didn’t have a specific position requirement, the argument against combining multiple patterns was that they would prematurely cancel each other out and thus provide ‘curve-fit’ results when training, that did not carry forward to live environments.
Author: Stephen Njuki