Adx Expert Advisor For MT4
WE IMPROVED THIS EXPERT ADVISOR FOR YOU!!!
PLEASE NOTE: This expert advisor was publicly available for free usage on other websites and is not programmed by us. We explain the functionality and possible improvements of the EA. Furthermore, we are convinced that fully automatic Expert Advisors will fail in the long run. On the other hand, our semi-automatic approach with detecting the best setups and then activating our Expert Advisors (e.g. V-Power EA, EdgeZone EA) produced many successful traders and some of them even got prop traders at prop trading firms. Therefore, we added a similar semi-automatic trading feature (to allow only buy or only sell trades) to the free Expert Advisors. You can download the modified version here and enjoy!
Table Of Contents:
- Adx Expert Advisor For MT4
- The Adx Expert Advisor For MT4 – Entry Criteria
- The Adx Expert Advisor For MT4 – Exit Criteria
- The Adx Expert Advisor For MT4 – Room for Improvement
The Adx Expert Advisor For MT4 utilizes the average directional movement index (ADX) as the main indicator for trade entry. With the use of two other technical indicators, the signal provided by the ADX is qualified, resulting in high-probability trade entries. Coupled with an effective money management strategy, the trading system produced profits in testing.
The Adx Expert Advisor For MT4 – Entry Criteria
The Adx Expert Advisor waits for a new candle to form on the current period to execute the main trading functions. When a new candle has formed, it will check the account drawdown first if it is within tolerable range. Then it loops through the trade pool to find orders whose stop loss can be moved to breakeven or beyond to secure more gains. Next, it will determine if there are more than 100 candles on the chart and if the take profit set by the user is greater than 10 pips before it looks for a trade entry.
To make full use of all the functionalities offered by the trading system, the user must understand the various parameters provided in Inputs and then make adjustments as necessary. The most important parameters along with their default values are presented and explained below:
- Breakout_Strategies = true – Setting this parameter to true instructs the expert advisor to consider the signal provided by the ADX indicator.
- Entry_Level = 10 – This is the breakout level for the ADX indicator at which trading commences.
- Trend_Filter = true – Setting the variable to true will instruct the expert advisor to consider the relative placement of +DI and -DI as an entry filter.
- Min_Price_Difference = 10 – This amount is the required minimum distance between +DI and -DI.
- Min_Level_Of_Main_Line = 10 – This is the required minimum value for ADX beyond which point trade hunting begins.
- Main_Line_Sloping_Upwards = true – This setting will prompt the robot to check if the main ADX line is sloping upward.
- Lots = 0.01 – This is the initial lot size for trades.
- TrailingStop = 40 – The expert advisor trails the stop loss of a winning trade if it has gained at 40 pips.
- Stop_Loss = 20 – The stop loss for each trade is 20 pips and is set upon trade execution.
- MagicNumber = 1234 – This magic number is assigned to each trade for use later in trade management and performance monitoring.
- Take_Profit = 50 – The take profit of each trade is 50 pips and is set upon trade execution.
- FastMA = 6 – A fast-moving average with a period of 6 is used for identifying a trade entry.
- SlowMA = 85 – A slow-moving average with a period of 85 is used for identifying a trade entry.
- Mom_Sell = 0.3 – This momentum value is the required maximum so that a sell signal is considered valid.
- Mom_Buy = 0.3 – This momentum value is the required maximum for a buy signal to be considered valid.
- UseEquityStop = true – Since this variable is true, the robot will monitor the drawdown and will take action if it goes beyond a certain limit.
- TotalEquityRisk = 1.0 – If the current drawdown for all open trades goes beyond this limit (i.e., one percent of account balance), these trades will be closed forcibly.
- Max_Trades = 10 – The robot can open up to 10 trades on the active symbol if the user does not adjust this value.
The expert advisor uses three technical indicators to get a signal for entry. All three indicators must provide the same signal so that the expert advisor will open a trade. These indicators and their settings are discussed below:
- Average directional movement index (period 14, price high) – The ADX value needed for trade identification is obtained from the current candle of the current period and symbol. If the ADX line or plus DI is greater than 10, plus DI is above minus DI, and the distance between plus DI and minus DI is greater than 10, a buy signal will be generated. On the other hand, if the ADX line is above 10 or minus DI is less than 10, plus DI is less than minus DI, and the distance between minus DI and plus DI is greater than 10, a sell signal will be produced.
- Moving averages (period 6 and 85, price typical, linear weighted) – The moving average values are derived from the current bar of the active chart. If the 6-period LWMA is above the 85-period LWMA, a bullish signal is generated. If the 6-period LWMA is below the 85-period LWMA, a bearish signal is produced.
- Momentum (period 14, price close) – In this trading system, the actual value of the momentum indicator is not used. Only the current direction of the indicator is needed. If the indicator is inclined upward based on the values of the previous two candles, the trend is up. If the indicator is sloping down based on the values of the previous two bars, the trend is down.
Once the technical indicators give a clear signal, the expert advisor will execute a trade with a lot size of 0.01 as the user specifies in Inputs. Each trade has a stop loss of 20 pips and a take profit of 50 pips. However, these are only nominal values. During trade execution, the spread is added to the stop loss and deducted from the take profit. Adding the spread to the stop loss is a common strategy, but deducting the spread from the take profit is not that beneficial.
The Adx Expert Advisor For MT4 – Exit Criteria
As observed in testing, the Adx Expert Advisor employs a passive trade management approach. It allows the market to decide which direction it wants a trade to go, profitability or loss. While breaking even and trailing functions are enabled by default, order modification did not happen even once. A trade wins when price hits the take profit target, or it loses when price touches the stop loss.
Because of the favorable risk-reward ratio, the trading system is primed for success at least in theory. However, this is only one part of the success formula. The other part is the win rate. A good balance between risk-reward ratio and win rate is necessary to bring in profits.
The expert advisor does not execute one trade at a time. As the situation permits, it can open up to 10 trades in one trading cycle. When multiple trades are open, each trade is managed individually by the robot. No single take profit price is assigned to the set of trades, and the stop loss is not adjusted collectively.
The Adx Expert Advisor For MT4 – Room for Improvement
The Adx Expert Advisor can generate profits when the market is trending. When price makes a pullback or a reversal, the robot produces losses on the other hand. Because of this, to improve the trade results, it is best to use a top-down approach in trade entry. With this approach, at least two timeframes can be used as reference when deciding for the trade direction. In this method, the robot can refer to a higher timeframe for trend direction and then enter the trade on the lower timeframe. For example, if the trend on the hourly chart is bullish, the robot will take only buy trades on the 15-minute chart.
The initial result of testing this expert advisor using five months of test data is satisfactory. Although the win rate was low (35 percent), the robot managed to generate some amount of profit. The end result is a profit factor of 1.2 and a minimal drawdown of one percent. This is the beauty of having a good risk-reward ratio. The trading system can tolerate a lower winning percentage and still make money.