Heikin Ashi Trader 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 Heikin Ashi Trader Expert Advisor For MT4 is a simple algorithmic trading system for MT4 platform. While it is named after one type of charting method, the robot does not use its concept in actual trading, nor it displays the heikin ashi candles on the chart in place of candlesticks, bars or lines. It uses the concept of heikin ashi in a different way.
This trading system can be used on trading accounts whose exchange rates are expressed in five or four digits for the dollars pairs and in three or two decimals for yen pairs. It can be applied to any chart symbol and period, but it will take trades only in the active symbol and timeframe.
The Heikin Ashi Trader Expert Advisor For MT4 – Entry Criteria
Prior to taking trades, the Heikin Ashi Trader Expert Advisor for MT4 performs one round of inspection at the start of a new candle. It looks at the trading account first if it has open trades, and then it determines the current drawdown if it is within the tolerable range. If the drawdown is more than one percent of the account balance, all open trades will be closed immediately. This is done to preserve the capital and give the trading system more survival or winning chances. If drawdown is not a problem, the robot counts the number of bars on the chart if it is greater than 100 and checks the take profit if it is more than 10 pips. Once these checks turn out well, the robot will look to the technical indicators for trade direction and entry.
The trading system looks for trade entries at the open of a new candle, and it may open and manage up to 10 trades at a time. Each trade taken has a stop loss of 20 pips and a take profit of 50 pips. However, the robot takes the spread amount of the current symbol at the time of trade execution into consideration. It adds the spread amount to the stop loss and subtracts the same amount from the take profit. In spite of this, the risk-reward ratio is still adequately high (i.e., greater than two). Over the long term the trading system might play out well even if the account experiences temporary setbacks.
The indicators used in this system, their settings and manner of use are outlined below:
- Linear weighted moving averages (fast period 6, slow period 85, typical price) – The two moving averages are applied to the next lower timeframe. If the fast LWMA is above the slow LWMA, this is a buy signal. If the fast LWMA is below the slow LWMA, it is taken as a sell signal. This signal is one factor for trade entry.
- Momentum (14) – This indicator is applied to the next higher timeframe. While it does not help determine the trend direction, the momentum indicator confirms if a trade signal is valid. The desired value for momentum indicator is 0.3 or less to confirm a trade entry. This value gives the idea that the current market under consideration might have enough momentum to carry a trade forward. If the value of one or more of the three previous candles on the next higher timeframe is less than 0.3, this is taken as one factor for entry.
- Stochastic (13, 5, 5) – This setting is not standard for stochastic. Unlike the LWMAs and momentum, the stochastic is applied to the current timeframe. If the stochastic value of any of the three previous candles is greater than 70, that is a buy signal. If the stochastic value is less than 30, it is taken as a sell signal.
The concept of heikin ashi charting is not used in this system the way it is used elsewhere online. The robot does not even attempt to replace the candlestick chart or any other type of chart with heikin ashi candles. In this system heikin ashi is being used as a normal candle. If the current candle opens lower and closes higher (though it is still open), that is a bullish signal. If the current candle opens higher and moves below the open price, this is a bearish signal. This signal factors into the trade entry criteria.
The Heikin Ashi Trader Expert Advisor For MT4 – Exit Criteria
Trades taken by the Heikin Ashi Trader Expert Advisor for MT4 will be closed at the stop loss or take profit. If a trade is taken against the recent trend, its fate is decided quickly as the stop loss order is just around the corner. Profitable trades might be closed at the take profit or at a stop loss price different from the original stop loss set by the robot. This is because of the breakeven and trailing stop functions.
If a trade gains at least 30 pips, the robot moves the stop loss to the entry price for a risk-free trade. If the trade gains more pips, the trailing stop function comes into play. Trailing stop monitors the distance between market price and the new stop loss and attempts to maintain this distance by constantly adjusting the stop loss whenever possible.
The Heikin Ashi Trader Expert Advisor For MT4 – Room for Improvement
During testing, the Heikin Ashi Trader Expert Advisor for MT4 started out poorly but made a comeback after a while. It attempted to recover the losses encountered in the past but fell short eventually. In the end the trading system managed to come very close to breakeven. This means that the robot is not yet suitable for live trading. Longer testing time is necessary to get a sense of its true performance, and it may need to be run across multiple pairs to be able to judge its value.
Another reason that could have contributed to the poor performance of this trading system in the strategy tester is the possible misuse of the stochastic signal. Most traders agree that an overbought reading is a bearish signal and that an oversold reading is a bullish signal. In the program code, it appears the use of the stochastic has been reversed. The robot’s trading performance in back test might paint an entirely different picture if the stochastic signal is used in the normal way.