Compass Line Expert Advisor For MT4
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!
The Compass Line Expert Advisor For MT4 is a complex algorithmic trading system developed specifically for the MT4 trading platform. As the name suggests, it uses a custom indicator called Compass Line to generate buy and sell trade signals. In addition, another custom indicator called Follow Line is used to work in tandem with the Compass Line. To use this robot in demo, back test, or live trading, the user must import the two custom indicators to the main indicators folder under the MQL4 directory.
By design, this robot is intended for scalping, and it can trade any of the foreign exchange currency pairs in the client terminal, but the 28 major pairs are preferable. The robot enters and exits the market quite quickly. This is due to the small take profit target when compared to the stop loss distance set in place by default. It is expected that this robot generates more wins than losses to become profitable. It needs to win five times and lose one time to come to breakeven as the risk-reward ratio is five in favor of risk.
The user must be aware that the trading system is not yet suitable for live trading as the robot does not perform well in the strategy tester. Though the test run was relatively short in duration, it is enough to conclude that if the trading system is implemented with the default settings, losses might happen or worse the account might be lost completely if the user is not guided. The program developer must refine the trade entry algorithm and the manner of trade management to revamp the performance of this trading robot.
The Compass Line Expert Advisor For MT4 – Entry Criteria
Once the Compass Line Expert Advisor for MT4 is run on the chart, it performs lengthy and involved computations in the background and displays some results as a comment on the main chart window for the user’s perusal. This information can help the user confirm if the settings selected in Inputs are correct. The comment also contains a lot of helpful information about open trades, such as trade type, number of orders, lot size, lot sizing method, and current open profit for all open orders. This information presented in one location allows the trader to monitor the performance of the trading system in real time.
The robot performs routine checks prior to looking for trade entry. First, it checks if there are more than 10 bars on the chart and if the market is open. If that is the case, the robot continues. By default, trade time filter is disabled, so the robot takes trades at any time of the day when opportunities are available. The spread is not being checked by default unless the user adjusts the maximum spread value in Inputs.
If there is no open trade on the current symbol or the number of open trades is less than the maximum set in Inputs, the robot will look for trades. Since the default maximum value is zero, the number of trades that the robot can take has no upper limit. While this might sound alarming to the user, observing the robot in action shows it does not take too many trades as the stop loss is just nearby.
Trade hunting is being done at the beginning of a new candle. The primary signal for trade entry is taken from the combination of two custom indicators. As already pointed out, before these indicators can be used in trading, they must be located in the correct folder. Besides, the robot would not run if these indicators are not found in the desired location. Then the robot obtains their values using the iCustom function.
The two custom indicators are applied to the previous candle on the current symbol and timeframe. Their settings and the method of application are explained below:
- Compass line – The compass line is a customized moving average that is applied on the main chart window and runs alongside price. As such, its primary purpose is to provide a signal for trend direction, which is based on the color of the line. If the color of the line is midnight blue, the trend is up. If the line color is dark violet, the trend is down. It appears this indicator changes color ahead of price action, so it can be put under the category of leading indicators. As such, it can be used to predict price reversals earlier than most technical indicators do.
- Follow line – This custom indicator is a combination of the Bollinger bands (period 21, deviation 1) and the average true range (period 5). Like a moving average, the Follow Line interacts with price action. It follows price very closely and shows scenarios where price breaks out in one direction or the other. It also plots up and down arrows to depict the specific points at which price changes direction (up or down). In this trading system, only the color of the line for the previous bar is used for generating a trade signal. If the line color is deep sky blue, the trend is bullish. If the line color is crimson, it is taken as a bearish signal.
The robot requires the two custom indicators to move in the same direction for a valid signal. If the two indicators give a bullish signal, a buy order will be sent immediately to the trade server for processing. If they give a bearish signal, the robot will send a request for sell order to enter a trade on the current market price.
The Compass Line Expert Advisor For MT4 – Exit Criteria
The Compass Line Expert Advisor for MT4 takes trades with stop loss and take profit orders. The default stop loss is 50 pips, and the default take profit is 10 pips, unless the user adjusts the default values. Breakeven and trailing stop functions are available, but they are not enabled by default. As a result, the stop loss is not adjusted as trades become profitable. The robot takes a carefree-approach in closing trades. Trades are only closed by the stop loss or take profit order. There are other options provided in Inputs that the user can use, but the user must explore how those other options work and affect the performance of the trading system. This can only be done by trial and error in a demo account or in testing mode.
The Compass Line Expert Advisor For MT4 – Room for Improvement
The result in the strategy tester suggests that the Compass Line Expert Advisor for MT4 should not be used for live trading with the default settings. At the beginning of testing, the robot performed excellently. The account balance grows fast as the robot brings in a string of winners. Later, the wins generated in the beginning were eaten up by the few loses that come along the way, and the trading account did not recover the loses toward the end.
The testing ended with a negative profit for the trading system but with a relatively small drawdown (a little more than two percent). This shows that this trading system is not too bad. It might show a good trading performance at other times when the market condition is different, if the financial instrument being traded is changed, or if the timeframe used is altered. The only way to know this fast is through back testing using optimization. Anyone interested to know the true potential of this trading system must consider running the robot in different trading instruments and timeframes for a longer period of time.