EURUSD Auto Trader is an innovative VertexFX client-side Auto Trader based on price deviation from the Simple Moving Average.
The concept behind the EURUSD Auto Trader is that price reverses within a band near the Simple Moving Average most of the time. It is specially designed for the EUR/USD currency symbol and has a high probability of success on the 15-minute chart.
In the first step, we calculate the Simple Moving Average (SMA) of the typical price over the MA_VALUE period on a 15-minute chart. The typical price is represented as the mean of High, Low and Close prices.
In the second step, we calculate the Average True Range (ATR) over the recent 200 candles on the 1-hour chart. The ATR band provides the range of price deviation and when the price deviation is far away from the SMA the probability of price reversal is very high.
When the price is above the SMA but below the buffer band from the SMA and the Average True Range is within the specified threshold of 40 points, a SHORT order is placed. The stop-loss and take-profit are set according to the STOP_LOSS and TAKE_PROFIT parameters respectively. The Auto Trader employs position averaging (Martingale) techniques to increase profitability. But at the same time in order to avoid the risk of ruin, the lot-size of subsequent trades is reduced to conserve margin. Once a SHORT order is placed, the next SHORT order is placed only when the SHORT signal condition is met and the current price is at least FILTER points above the previous order entry price.
The rule for placing BUY orders is exactly the opposite. A BUY order is placed when the current price is below the SMA but above the buffer from the SMA and the ATR is within 40 points. Subsequent BUY orders are placed when the BUY signal condition is met and the price is at least SIGNAL points below the previous BUY order.
BUY and SHORT orders can co-exist at the same time. Additionally, the stop-loss and take-profit of each order is tracked separately. This ensures that profitable trades are closed and the margin is released for subsequent use. The objective of the strategy is to trade price reversals. If a price reversal does not happen after opening the trade, further orders in the same direction are opened when the conditions are met. As a result, when a reversal occurs the profitable positions get closed first. One of the advantages of the EURUSD Auto Trader is that since both LONG and SHORT positions co-exist, if price moves in one direction, say upwards the LONG positions become profitable even though the SHORT positions are in loss. The LONG positions are closed at profit, and new SHORT positions are added. When the price eventually reverses downwards, the SHORT positions become profitable and are closed.
The EURUSD Auto Trader employs conservative risk management using a fixed percentage risk of the account balance. This ensures that under adverse market conditions the drawdowns are limited and the account does not blow up.
Configurable Inputs
1.BUFFER– The minimum distance in points between the price and the Simple Moving Average for entry trigger.
2.STOP_LOSS– The stop loss of each trade in points.
3.TAKE_PROFIT– The profit target of each in points.
4.FILTER– The threshold value in points used to eliminate the noise signals and enter additional position.
5.MA_VALUE– The period used to calculate the Simple Moving Average.
6.Z– The percentage risk per trade of the total account balance. It is used to calculate the lot-size of the trade.
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The concept behind the EURUSD Auto Trader is that price reverses within a band near the Simple Moving Average most of the time. It is specially designed for the EUR/USD currency symbol and has a high probability of success on the 15-minute chart.
In the first step, we calculate the Simple Moving Average (SMA) of the typical price over the MA_VALUE period on a 15-minute chart. The typical price is represented as the mean of High, Low and Close prices.
In the second step, we calculate the Average True Range (ATR) over the recent 200 candles on the 1-hour chart. The ATR band provides the range of price deviation and when the price deviation is far away from the SMA the probability of price reversal is very high.
When the price is above the SMA but below the buffer band from the SMA and the Average True Range is within the specified threshold of 40 points, a SHORT order is placed. The stop-loss and take-profit are set according to the STOP_LOSS and TAKE_PROFIT parameters respectively. The Auto Trader employs position averaging (Martingale) techniques to increase profitability. But at the same time in order to avoid the risk of ruin, the lot-size of subsequent trades is reduced to conserve margin. Once a SHORT order is placed, the next SHORT order is placed only when the SHORT signal condition is met and the current price is at least FILTER points above the previous order entry price.
The rule for placing BUY orders is exactly the opposite. A BUY order is placed when the current price is below the SMA but above the buffer from the SMA and the ATR is within 40 points. Subsequent BUY orders are placed when the BUY signal condition is met and the price is at least SIGNAL points below the previous BUY order.
BUY and SHORT orders can co-exist at the same time. Additionally, the stop-loss and take-profit of each order is tracked separately. This ensures that profitable trades are closed and the margin is released for subsequent use. The objective of the strategy is to trade price reversals. If a price reversal does not happen after opening the trade, further orders in the same direction are opened when the conditions are met. As a result, when a reversal occurs the profitable positions get closed first. One of the advantages of the EURUSD Auto Trader is that since both LONG and SHORT positions co-exist, if price moves in one direction, say upwards the LONG positions become profitable even though the SHORT positions are in loss. The LONG positions are closed at profit, and new SHORT positions are added. When the price eventually reverses downwards, the SHORT positions become profitable and are closed.
The EURUSD Auto Trader employs conservative risk management using a fixed percentage risk of the account balance. This ensures that under adverse market conditions the drawdowns are limited and the account does not blow up.
Configurable Inputs
1.BUFFER– The minimum distance in points between the price and the Simple Moving Average for entry trigger.
2.STOP_LOSS– The stop loss of each trade in points.
3.TAKE_PROFIT– The profit target of each in points.
4.FILTER– The threshold value in points used to eliminate the noise signals and enter additional position.
5.MA_VALUE– The period used to calculate the Simple Moving Average.
6.Z– The percentage risk per trade of the total account balance. It is used to calculate the lot-size of the trade.
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