Candle Trader Expert Advisor For MT4

Candle Trader 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:

  1. Candle Trader Expert Advisor For MT4
  2. The Candle Trader Expert Advisor For MT4 – Entry Criteria
  3. The Candle Trader Expert Advisor For MT4 – Exit Criteria
  4. The Candle Trader Expert Advisor For MT4 – Room for Improvement

 

The Candle Trader Expert Advisor For MT4 trades the financial market using a combination of price action and technical indicators. Price action is in the form of breakout of the previous candle. A break of the high of the previous candle is a signal for buy entry, while a break of the low of the previous candle is a signal for sell entry. This is possibly how the robot got its name. Technical indicators are being used to qualify a trade entry. These indicators are the moving average and momentum indicators. How they are used to confirm a trade signal is explained later in this article.

Testing this robot in the back tester showed that it is not ready to be used for live trading. The equity line was drifting downward from the start of testing to the end. Drawdown was relatively high (21 percent), and profitability was low (34 percent). As a result, testing ended in loss for the trading account. Testing was run for five months of historical data using one symbol and one period. Users might find different results if this robot is applied to another symbol and period, so further testing is needed.



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The Candle Trader Expert Advisor For MT4 – Entry Criteria




The Candle Trader Expert Advisor opens a trade at the start of a new candle. Prior to trade entry, the robot performs a series of checks first. It looks at the current drawdown if it is within tolerable limits, inspects if there are open trades and if the such trades can be protected by breaking even or stop trailing, and checks the free margin if additional trades can be taken. If the series of test is successful, the robot begins the trade hunting activity.

There are several variables in Inputs available to the user to tweak as necessary. This allows the trader to do trial and error until he finds the combination that yields the best result. The most essential variables are enumerated and explained below:


  • Lots = 0.1 – This is the position size for all trades opened by this expert advisor.

  • TrailingStop = 30 – The stop loss of a winning trade is trailed when the trade has earned at least 30 pips.

  • Stop_Loss = 20 – Every trade has stop loss of 20 pips.

  • MagicNumber = 2345 – Every trade executed by this robot has a magic number of 2345, which can be used in trade management or performance monitoring.

  • Take_Profit = 40 – Every trade has take profit of 40 pips.

  • FastMA = 8 – A fast-period moving average (period 8) is used in this trading program.

  • SlowMA = 75 – A slow-period moving average (period 75) is used in this trading program.

  • Mom_Sell = 0.35 – A sell signal will be qualified for entry when the momentum is less than 0.35.

  • Mom_Buy = 0.35 – A buy signal will be qualified for entry when the momentum is less than 0.35.

  • UseEquityStop = true – Since this parameter is true, the expert advisor will monitor the drawdown in real time to determine if it reaches a certain threshold, at which point all trades will be liquidated to preserve the trading account.

  • TotalEquityRisk = 2.0 – If the real-time drawdown of all open trades has reached two percent of the trading balance, the market orders will be liquidated right away for a loss.

  • Max_Trades = 10 – It is possible for the robot to initiate up to 10 trades in the current symbol as defined by this setting.


This expert advisor employs two methods when looking for a trade opportunity and utilizes one indicator to confirm the trade entry. These methods and indicators are explained below:


  • Candlestick – The expert advisor makes use of a simple price action method as a primary trigger for entry. This method employs a simple candle breakout strategy. For a buy signal, price should break above the high of the previous candle of the current timeframe and symbol. For a sell signal, price should break below the low of the previous candle of the current timeframe and symbol.

  • Moving averages (period 8 and 75, linear weighted averaging, price typical) – The robot determines the values of the moving averages for the current candle of the current timeframe and symbol. If the 8-period LWMA is above the 75-period LWMA, a buy signal is generated. If the 8-period LWMA is below the 75-period LWMA, a sell signal is indicated.

  • Momentum (period 15, price close) – The values of momentum indicator are obtained from the three previous candles of the next higher timeframe and symbol. Then these values are subtracted from 100, and the difference is compared with the variables in Inputs. If at least one of the three final values is less than 0.35, any trade signal is qualified for entry.


If a trade signal has been determined and if the number of open trades is less than the maximum value or zero, the expert advisor will initiate a trade with a lot size of 0.10. If the user thinks that this trade volume is high, he can set a lower value. As defined in Inputs, the trade comes with a stop loss of 20 pips and a take profit of 40 pips, putting the nominal risk-reward balance in favor of the trader. However, this balance is short-lived due to the use of breakeven and trailing functions.



The Candle Trader Expert Advisor For MT4 – Exit Criteria


The Candle Trader Expert Advisor can open several trades in a trade cycle if opportunities present themselves. Despite the presence of multiple trades, the robot manages each trade individually, not as a single basket of trades. If a trade is positioned on the wrong side of the market, it will be exited at the stop loss price at a loss.

However, if a trade is positioned on the correct side of the market, the trade will breakeven once when it has gained at least 20 pips. Later if it gains more pips, leading to a total of 30 pips of gain, the trade will be trailed continuously until it hits take profit or experiences a reality check. The reality check occurs when price touches the newly adjusted stop loss. The market often works this way to prevent trades from becoming too profitable.



The Candle Trader Expert Advisor For MT4 – Room for Improvement


In testing, the Candle Trader Expert Advisor started opening trades at the middle part of the test period. Once it does, trades are opened all over the chart. Often times trades pile up in a narrow price range. At other times, trades seem to overlap. There is no clear separation between trades. This could be the reason for the low win rate of the expert advisor.

To address the above concern, a minimum distance should be established between trades. It is not necessary that this distance is consistent as with the use of a grid system. What is important is that the trades are separated by a minimum distance. This plan will work perfectly with the current setup of opening trades at a new candle. When this course of action is put in place, it is normal to see trades separated by a distance higher than minimum.

Another thing to improve is the manner of managing open trades. At present, trades are handled individually by the robot in terms of breaking even and stop trailing. It is best for a set of trades to be handled as a unit so that no trade is left behind in case the market changes direction. However, this change would require alteration of the program code.


 

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