Smart Candle

Introduction

This EA is designed to survive the one-year testing period with a low drawdown and a high Sharpe ratio. The calculation concepts are new, but they are easily understood. Here are the best results.

Note that the 22% drawdown mentioned above is the result from the strategy tester, which seems to use peak equity as a reference. Compared to the drawdown 13% result from this EA, which uses starting equity as a base. From this point of view, we will see the great performance of the EA and the Sharpe ratio over 3.0 is categorized as an excellent investment. Please see the attached video for the testing record.  ( when you run this EA on tester please set delays to zero latency )

Upcoming  Next Version (in June 2025)

4 Keys Concept of Program

The algorithm is composed of 4 main functions as follows:

1. Market Analyzing   -  The used method is extremely new but very simple, called "Smart Candle," that I developed by myself. It's like a normal candlestick, but the start and end of the bar are specified by the dump event (not by the time interval). By this way we will see the clarity of the movement of the price and also the support and resistance level.   

2. Trading Strategy  - There are two main category. the first is about the direction of trading and the second is about the lot size. 

     2.1 Trading Direction Identification. - There are 4 type of events that used to identify the trading direction.

          2.1.1  The first  is use the direction of dump event as as trading direction.

          2.1.2  The second  is the higher-high and lower-low method. The trading direction is buy when current price break up the high price of previous bar. and the trading direction is sell when the price break down the low price of previous bar.

          2.1.3  The third is  use the middle price of previous bar as a decision price. when the previous bar is bearish bar and the price travel up pass the middle price then the trading direction is set to buy. and in the other way when the previous 

                    bar is bullish bar and the price travel down pass the middle price then the trading direction is set to sell. 

          2.1.4 The forth is use the demand and supply zone to determine the counter trend. when the price is over the supply zone and the price change is positive with size more than the limited dump size then the trading direction is set to sell.

                    and in the other way when the price below the demand zone and the price change is negative with size more than the limited dump size then the trading direction is set to buy.

     2.2 Lot scaling. - The lot of trading will auto scale to match the situation. The scale factor is based on current price movement and the current accumulated lot on each side, user can adjust the overall scale factor by the parameter called

"Overall lot scaling factor.".  And in the last updated version V1.4 user can adjust internal scaling parameter which composed of two parameter as follow

  2.2.1 Parameter Named " Opposite Level Ratio limit " - the parameter is the ratio of position range  of current direction divide by  position range of the opposite direction.  use to control the base of lot calculation. when the current position                     range divide by the opposite position range is less than the limit then the accumulate lot on opposite side is used as base of current trading volume calculation. otherwise the current accumulate lot is used as base of current trading                         volume calculation.     

          2.2.2 Parameter Named "Lot Ratio limit". - the ratio of accumulate lot.

3.Close Positive Position   -   There are two type of events that  activate the positions closing command.

• 3.1 When the potential of price movement is switched. This is one of the most important things. We will close the positive position when the potential of price movement is switching (buy to sell, sell to buy). The concept to indicate the switching point is the curvature of the price movement, which is calculated by the ratio of the price area divided by the idealized triangle area. Imaginary of the uptrend line. The first thing we have is a price difference in the y-axis and a time difference in the x-axis. Multiply these two values and divide by 2; the result is an idealized triangle area. Then we consider the area above the trend line that is a sell area. Integrate the sell area over the time domain of the trend line. and then we can calculate the area ratio. After this, we need to trial the value of the area ratio to get the best actual closing price. (See the attached image for the concept of area ratio.)
• 3.2 When the new dump event is occur.

4.Close Trading Round—the trading round starts at the first time of placing an order. Then all trading activity has a record. The trading round will close when all these three criteria are satisfactory. The first criterion is that the profit must reach the target profit. The second criterion is the risk-reward ratio must reach the target risk-reward ratio. and the last criteria is the lot amount after the close positive is switching from higher to lesser.  When closing the trading round, that means all positions and orders will be cleared, and the profit round record will be reset. 

Parameters 

1.General Parameter

• Magic Number             

2.Auto Trade option

• Auto open order                      - select auto open order option. there is 4 choice ( Both ,Buy ,Sell and Manual ).
• Auto close positive position      - select auto close position option. there is 4 choice ( Both ,Buy ,Sell and Manual ).
• Auto close trading round          - select auto close trading round option. there is 2 choice - ( true or false ).

3.Trade option Control

• multiplier to identify the lot base                                         - The number will multiply with minimum lot to get the lot base.   The recommended value is 1.
• multiplier to identify the limited accumulated lot                 -  The number will multiply with minimum lot to get the maximum accumulated lot.  The recommended value is 500.*
• Minimum Price Gap between previous position (Point)           - Control the spacing of each order. The recommended value is 300.
• Potential switching point defined by ratio of area                 -  Determine the potential switching. The recommended value is 0.2-0.3.
• Pullback Ratio of Price Range                                               -  use to count the wave and tip switching not effect to algorithm trading but intent to guide the manual trading. the recommended value is 0.2-0.3.
• Overall lot scaling factor                                                      - use to adjust the trading lot.

4.Price Movement Identification

• Size of Dump event in point                                                                -  specify dump event. the recommended value is 1000.*
• Rate of Dump event in point/minute                                                   -  specify dump event.  the recommended value is 100.*

5.Trading Round Control

• target profit dollar per lot base                               -  targeting  profit  per lot base. 
• target risk-reward ratio                                           -  targeting risk-reward ratio. The recommended value is 1.5-2.0.

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