Trading System Principles
The Expert Advisor combines the advantages of a trend trading strategy (crossing of two averages) and an oscillator (RSI indicator) eliminating the drawbacks of these strategies.
The main advantages of the trend trading strategy are opening positions only in the direction of a trend and ability for the long-term retention of profitable positions allowing users to achieve good combinations of profit/loss distributions. The main drawback of the trading strategy using the crossing of two Moving Averages is delay of signals for opening/closing a position.
The advantage of a strategy involving an oscillator signals is a fast response to the market price changes. The drawbacks of such strategies are considerable amount of false signals due to an oscillator's excessive sensitivity and an oscillator going off-scale when the market changes to a long-term trend.
We should "let the oscillator know" the current market status (ascending or descending) to exclude false signals and not to trade against the trend.
In other words, we need a filter that either permits the market entry or forbids it when an oscillator signal is received.
False market entry signals are also used by our system to close positions.
A distinctive feature of the strategy is that RSI signal is considered to be triggered when level 50 is crossed by the indicator line. Thus, we will filter out false signals generated due to the excessive sensitivity of RSI oscillator.
A long position is to be opened when RSI crosses level 50 upwards and the filter signal is "up" - fast Moving Average (blue line) is above the slow one (red line). A short position is to be opened when RSI crosses level 50 downwards and the filter signal is "down" - slow Moving Average (blue line) is below the slow one (red line).
Trading decisions taken by the system are obvious. Due to leading RSI signals, the system opens positions without delays typical for trend systems. Trends opened during flats are closed with minimal losses when the price movement changes thanks to RSI leading signals. In case of a steady trend, the system allows holding a position for quite a long time and prevent delay when closing it due to RSI oscillator signals.
Additional Features of the Trading Robot
- Placing Stop Loss and Take Profit orders.
When opening a position, the system places Take Profit and Stop Loss orders. This serves as an additional security measure, as the orders placed by the system are managed by these orders in case of connection failure or other technical problems.
- Moving Stop Loss to break-even point.
This function allows you to move Stop Loss order to break-even point. That can dramatically decrease the number of losing trades in case of flat market movements.
- Trailing Stop.
This function allows you to move Stop Loss order stepwise defending the already received profit in case there is an open position.
- Angle filter.
The filter used when opening positions using directions of the fast Moving Average. If the direction of the Moving Average does not match the direction of a market entry, the trade is not performed.
- Audio alert.
An audio alert when opening and closing positions by the trading robot.
Description of Expert Advisor Parameters
- Lot - lot to be traded by the Expert Advisor.
- Stop_Loss - Stop Loss value in points for a position.
- Take_Profit - Take Profit value in points for a position.
- Fast_MA - fast Moving Average calculation period.
- Slow_MA - slow Moving Average calculation period. Fast_MA parameter value should be less than Slow_MA one.
- МА_Type - Moving Average calculation method (0-Simple, 1-Exponential, 2-Smoothed, 3-Linear Weighted).
- RSI_Period – RSI indicator calculation period.
- RSI_Up_Level - when RSI crosses this level upwards, the buy signal is formed.
- RSI_Down_Level - when RSI crosses this level downwards, the sell signal is formed.
- Close_Position_Via_RSI – enable (true)/disable (false) the Expert Advisor function - closing positions when RSI_Up_Level and RSI_Down_Level are crossed by RSI indicator line.
- Stop_To_Zero_Function - enable (true)/disable (false) the Expert Advisor function - moving Stop Loss to the break-even level.
- Stop_To_Zero_Level - value in points when the trading robot moves Stop Loss to break-even level. If the parameter's value is less than the Stop Loss level permitted by the system, the Expert Advisor automatically sets the value of the specified parameter.
- Tral_Function – enable (true)/disable (false) the Expert Advisor function - Trailing Stop.
- Tral_Step – the value in points, upon reaching which the Expert Advisor performs Stop Loss trailing. If the parameter's value is less than 100 points for symbols with the accuracy of 5 decimal places, as well as 10 points for other symbols, the Expert Advisor sets the parameter value of 100 or 10 points respectively.
- Voice_signal - enable (true)/disable (false) the Expert Advisor function - the audio alert when opening and closing positions by the Expert Advisor.
- Margin_Control - enable (true)/disable (false) the Expert Advisor function - managing the percentage value of the funds used in trading.
- Angle_Filtr - enable (true)/disable (false) the Expert Advisor function – filter in the direction of the fast Moving Average.
- Max_Persent_Depo - the percentage value of the funds used in trading. The recommended value is at the level of 5-10% (and less than 100%).
- iMagicNumber - unique number of the Expert Advisor. The system sets the number considering the time interval.
Market Entry Rules
The Expert Advisor enters the market when the next candlestick after the signal one opens. A signal candlestick is a candlestick, at which the market entry signal has been detected.
Market entry signals:
- BUY: RSI crosses RSI_Up_Level upwards and fast МА is above the slow one.
- SELL: RSI crosses RSI_Down_Level downwards and fast МА is below the slow one.
Take Profit or Stop Loss values can be specified when opening a deal. If these values are less than the ones allowed by a broker, the Expert Advisor installs them automatically.
Market Exit Rules
If Close_Position_Via_RSI function is enabled, the Expert Advisor exits the market at the moment the next candlestick after the signal one is opened. A signal candlestick is a candlestick, at which the market exit signal has been detected.
Market exit signals:
- CLOSE BUY: RSI crosses RSI_Down_Level downwards.
- CLOSE SELL: RSI crosses RSI_Up_Level upwards.
The operation can also be closed manually or according to the predetermined Take Profit or Stop Loss.