Example of MACD Automated 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 Example of MACD Automated Expert Advisor For MT4 is a simple automated trading system for the MT4 trading platform. Anyone without trading experience can use it readily by attaching it on any chart in the MT4 client terminal. The MACD robot is a complete trading solution as it handles both trade entry and trade exit.
As trading involves risk and more so with automated trading, the MACD trading system must be run for some time in a demo account prior to implementing it in a real account. This is necessary so that the user is aware of the robot’s pitfalls and strengths. Shortly after, if the result looks good, the trader may consider opening a small live trading account, such as a cent or micro account, to test the MACD system in live market environment.
The Example of MACD Automated Expert Advisor For MT4 – Entry Criteria
The Example of MACD Automated Expert Advisor for MT4 takes a trade at the open of a new candle. Upon execution, the trade comes with a stop loss of 50 pips and a take profit of 30 pips. With this stop-loss and take-profit relationship, the trading system must have a high win rate in order to succeed.
After running for some time, the outcome of any trade will be decided. Price will touch either the stop loss for a loss or take profit for a gain. Immediately after the previous trade is closed in profit, a new trade is taken right away by the tick, and the robot does not wait for a new candle to form. If the previous trade hits the take profit objective of a sell trade, for example, the next trade is a sell. On the contrary, when the previous trade hits the stop loss, the robot stops trading and waits for another trading opportunity to come.
As mentioned in the foregoing, the expert advisor runs on every tick. If the trading account does not have any open trade in the current symbol, the robot looks to the MACD for trade entry and direction. The MACD indicator settings and the way this indicator is used in this trading system are explained below:
- Moving average convergence divergence (12, 26, 9) – The standard MACD comes with this setting. Being a versatile technical trading tool, the MACD can give various types of entry signals, including the crossover of main line and signal line, zero-line cross and divergence. In addition, the MACD is a powerful trend following tool, being a derivative of the moving average. This is how MACD is used in this trading system. The robot obtains two values of MACD from two different timeframes. The first value is the MACD value on the current candle on the daily chart, and the second is the MACD value corresponding to the current candle on the 15-minute chart. For a buy signal, both values should be greater than zero. For a sell signal, both values should be less than zero.
The lot size of a trade is normally the value set by the user in Inputs, but this is not always the case. Sometimes a bigger lot size is being used. The robot utilizes an advanced calculation method to determine the trade volume. First, it cycles through the history pool to count the number of trades taken and closed by the robot. This is largely based on magic number. If the number of closed trades is less than two, the value indicated in Inputs is the lot size used by the robot. If the previously closed trade was a loss, the lot size will be increased depending on the number of consecutive losses encountered.
The Example of MACD Automated Expert Advisor For MT4 – Exit Criteria
The Example of MACD Automated Expert Advisor for MT4 takes one trade at a time, and it is not actively involved in managing open trades. As trades have stop loss and take profit orders, the robot lets price decide the fate of every trade. Breakeven and trailing stop functions are not available as options to the trader.
The Example of MACD Automated Expert Advisor For MT4 – Room for Improvement
The Example of MACD Automated Expert Advisor for MT4 is best used in trending markets as it adds a new trade in the direction of the previous trade if the previous trade was profitable. When the trend reverses, the new trade is bound to lose. Thus, the user must choose the symbol or symbols on which the robot is applied. In recent history, some markets tend to trend more than they range. Examples include NZDUSD, EURAUD, USDCAD, EURNZD and others. Eyeballing the daily or weekly chart is all it takes to get this information.
The robot’s performance in testing is favorable but not acceptable for live trading. The result is just close to breakeven. At the beginning of testing, the equity curve ebbs and flows with no clear direction. At some point later the equity curve plummeted but not too much to be a cause of concern. Toward the end of testing, the trading system rebounded. This is mostly due to the use of bigger lot sizes for winning trades that recouped the string of losses.
While the lot size increase comes as a saving grace for the MACD trader, the sudden increase in trade volume might be seen by traders and investors as a red flag. The volume increase is just too erratic to be understood. It might have otherwise hurt the trading account very badly had the streak of losses persisted.
Still relying on this testing result is not a good idea. The trading system might just be lucky. Otherwise, the trading account balance had been erased in no time. Therefore, the formula being used in computing the lot size needs a revamp. The trade volume can be increased in the same way as a martingale system does, but the increase should happen gradually.
Heavy reliance on the MACD indicator might not be a good thing. This is only one indicator and it tends to give delayed signals, so it is considered a lagging indicator. Therefore, another technical indicator or methodology should be used as confirmation of the signal given by MACD. This will lead to fewer trades, but the trades thus taken will have more chances of winning than before.