Manual Hedging 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:
- Manual Hedging Expert Advisor For MT4
- The Manual Hedging Expert Advisor for MT4 – Entry Criteria
- The Manual Hedging Expert Advisor for MT4 – Exit Criteria
- The Manual Hedging Expert Advisor for MT4 – Room for Improvement
The Manual Hedging Expert Advisor For MT4 is more of a martingale trading system than a hedging strategy. While hedging is utilized to protect the capital during times of market uncertainty such as during high-impact news events, martingale is employed to ensure profits when the market has chosen a trend direction.
The robot is called manual hedging because it is the user who manually places the first trade based on his market analysis. If the direction of the manually placed trade happens to be wrong, the trade is salvaged by another trade of bigger volume placed in the other direction.
This type of trade management is intended to avoid a loss when the trader has made the wrong call. This strategy is effective when the market is volatile or trending regardless of direction. However, in ranging markets, the robot can open too many trades with increasing volumes that the trading account might not be able to handle. If the market ranges for a while, account wipeout is possible unless protection is in place.
Before anyone uses this expert advisor in trading, he must do his due diligence first to find out if the robot works as intended. The user must also determine the optimal take profit value and the hedge zone in pips for the buy and sell orders that will yield the most profit and safe for the account. The only way to do this is to run the expert advisor in a demo account for some time. As designed, it is not possible to use the strategy tester to determine the profitability of this expert advisor. The robot would not open trades in testing.
The Manual Hedging Expert Advisor for MT4 – Entry Criteria
The Manual Hedging Expert Advisor for MT4 creates three buttons when the program is initialized. These buttons are the buy, sell and close buttons, and they appear as big square boxes on the upper-left portion of the main window in gold background. Clicking the buy button would trigger the robot to open a buy trade, while pressing the sell button would trigger the opening of a sell trade. If there is one or more trades on the current symbol, clicking the close button would prompt the robot to close all open trades, win or loss.
There are very few parameters that the user can tweak in Inputs. In a demo account, the user can play around with several combinations of settings that will yield the best results. These parameters are listed and explained below:
- TakeProfit = 200 – Each trade opened by this robot has a take profit of 200 points (or 20 pips).
- Zone_Recovery_Area = 10 – By default, the hedge zone is 10 pips in range.
- Slippage = 3 – This value is in points, not pips. It is the maximum deviation between price requested by the expert advisor and price returned by the server. If this deviation is equal to or less than 3 points, the trade under consideration can be executed.
- Lots = 0.01 – This is the lot size of the first trade.
- MaxTrade = 100 – This means that the robot can open up to 100 trades in the current symbol.
- Multiply = 2 – The lot size of the last trade is multiplied by this factor to get the next lot size.
- EAMagicNumber = 8095 – This is the magic number assigned to each trade.
No technical indicator is being used in this trading system for entry or exit. As a semi-automated trading system, the robot waits for instruction from the user to initiate the hedging algorithm. This happens when the trader clicks on either the buy or sell button. If the first trade happens to be correct and reaches the take profit target, the next cycle begins. In that case, only one trade was taken.
If the underlying market is trending, there is another scenario that can happen after the first trade is taken. This is easier explained with an example. If the first trade is a buy, price might move down and go beyond the hedge zone.
The default range of the hedge zone is 10 pips. If price has gone down 10 pips below the buy entry price, a sell trade will be opened with twice the lot size as the first trade. If the downward trend is strong, price might hit the stop loss of the buy trade and the take profit of the sell trade. As a result, the trade cycle ends in profit for the trader because the second trade reaching take profit has bigger volume.
As defined in Inputs, the first trade initiated by the trader has a lot size of 0.01. If the market goes the other way for at least 10 pips, the second trade is opened by the robot at a lot size of 0.02. If the second trade did not hit the take profit goal and instead reversed and reached the price of the first trade, a third trade is opened with a lot size of 0.04. The addition of trades and multiplication of lot size continue until the market gets out of consolidation. All buy trades will be opened at the same price, while all sell trades will be taken at the same price 10 pips below the buy entry price.
The Manual Hedging Expert Advisor for MT4 – Exit Criteria
The Manual Hedging Expert Advisor for MT4 sets the same values for the stop loss and take profit of buy and sell trades. By default, the stop loss is 20 pips and the take profit is 20 pips, although only the take profit parameter is provided in Inputs. In theory, the stop loss of buy trades should be the same as the take profit of sell trades and vice versa. However, this is not the case in this trading system. Even if this theory is realized, there is no guarantee that all buy and sell trades will be closed all at once. This is partly because the spread varies all the time, but the main reason is that buy trades are closed by the bid price and sell trades are closed by the ask price.
The Manual Hedging Expert Advisor for MT4 – Room for Improvement
The effectiveness of the Manual Hedging Expert Advisor for MT4 cannot be easily judged as it does not lend itself to testing in the strategy tester. Therefore, the user must invest a lot of watch time to learn how the algorithm works. In demo trading, it is found out that if the sell button is pressed, the buy button cannot be activated. Only one of the buy or sell button can be active at any time unless the user clicks the close button and starts testing again. This behavior of the robot is understandable as the user can initiate only the first trade.
When the user clicks either the buy or sell button, that button is active in every trade cycle. For example, if the user selects the buy button, thinking that the market is bullish, he cannot select the sell button afterward without clicking the close button first and wrap up the current cycle. In this case, the first trade in every cycle will be a buy trade. It seems not possible to de-press a button once it is pressed. This matter can be resolved with a code review and update.
It would have been better if the user is given the ability to use the expert advisor in the strategy tester. This would make the testing phase easier so that the user can check if the program works as designed and determine which markets are suitable for use.