Discussing the article: "Automating Classic Market Methods in MQL5 (Part 3): Stan Weinstein Stage Analysis"
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Check out the new article: Automating Classic Market Methods in MQL5 (Part 3): Stan Weinstein Stage Analysis.
This article presents a complete Expert Advisor built around Stan Weinstein's Stage Analysis method. The EA classifies the market into one of four stages using the 30-week moving average slope and position and volume behavior, then trades only Stage 2 breakouts long and Stage 4 breakdowns short. It explains each stage, how to detect it programmatically, and why the method's discipline—trading only in the correct stage—is what produces the edge.
In Part 1 and Part 2 of this series, we automated Richard Wyckoff's method: detecting accumulation and distribution structures, entering at the optimal moment, and projecting targets from the cause measured within the range. Both articles were concerned with a specific structural event—the Spring, the Sign of Strength—and the precise sequence those events must follow before a trade is valid.
Stan Weinstein's Stage Analysis takes a broader view. Rather than waiting for a specific event within a structure, it asks a prior question: what phase of its lifecycle is this market currently in? Weinstein identified four stages—Base, Advancing, Top, and Declining—and made one central observation: almost all the money in a sustained trend is made in Stage 2, the Advancing phase. Buying in at any other stage is, in his words, playing against the house.
The method was originally developed for stocks on weekly charts. After studying thousands of patterns, Weinstein concluded that the 30-week simple moving average is the most reliable single indicator for identifying a market's stage. When the 30-week MA is rising and the price is above it, the market is in Stage 2. The reverse, when the 30-week MA is falling and price is below it, the market is in Stage 4. When the 30-week MA is flattening after a decline, with price beginning to move sideways above it, Stage 1 is forming. Lastly, when it flattens after an advance with price beginning to oscillate beneath it, Stage 3 is forming.
The entry signal is the Stage 2 breakout: price closing above the Stage 1 resistance level on volume at least twice the recent average. The exit signal is the first sign of Stage 3—price breaking below the 30-week MA on heavy volume, or the MA itself beginning to flatten after a long advance. For shorts, the mirror: Stage 4 breakdowns entered at the Stage 3 support break and exited when Stage 1 began to form.
Author: Tola Moses Hector