Price Time Correlation Trading Model 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!
The Price Time Correlation Trading Model Expert Advisor For MT4 uses the concept of price-time correlation to execute buy and sell trades. While the expert advisor does not come with the price-time correlation custom indicator, the code for this indicator is embedded in an include file, which is in turn written into the program code at the time of compilation.
The price time correlation strategy attempts to measure price volatility by correlating price and time. When such an indicator is added to a chart, it will be shown on a sub-window and will be displayed as an oscillator that fluctuates between positive one and negative one. Normally, a buy entry signal is produced when the oscillator crosses above 0.2 from below, and a sell entry signal is obtained when the oscillator crosses below -0.2 from above.
In addition to the price time correlation method, the trading system also makes use of more familiar technical indicators such as the average directional movement index and Bollinger bands (see above visual). The signals provided by these three technical tools must agree to be able to generate a clear trade signal for entry. To get the best results, it is advised to implement this trading system in an hourly chart of EURUSD pair.
The Price Time Correlation Trading Model Expert Advisor For MT4 – Entry Criteria
The Price Time Correlation Trading Model Expert Advisor offers four methods in calculating the correlation value. These include Spearman, Pearson, Fechner and Kendall methods. By default, the expert advisor uses the Fechner method (value 4). To use another method, the user can modify the value of the external variable cType to 1, 2 or 3 (refer to the accompanying include file for guidance).
The expert advisor comes with a range of parameters that the user can adjust in Inputs. Putting all these parameters in the list below could overwhelm the reader. Thus, the following list contains the easiest parameters for the user to comprehend and use.
- MagicNumber = 123459 – This number is assigned to each trade so that the expert advisor can identify its own trades from those of other expert advisors.
- CloseTrade = false – With this setting, an open trade will not be closed if an opposite signal is come by.
- entryhour = 10 – This is the hour after the market has opened that the expert advisor starts looking for trade entries and executes trades when available. If the time zone of the broker is GMT+3, this hour corresponds to the opening of the London session.
- openhours = 9 – This is the number of hours from the entry hour when the expert advisor is running to find and manage trades. If the broker’s time zone is GMT+3, this means the robot stops trading when the London session has closed.
- BBSpreadMin = 45 – This is the required minimum distance between the upper and lower Bollinger bands.
- BBSpreadMax = 120 – This is the required maximum distance between the upper and lower Bollinger bands.
- ADX_Per = 14 – This is the period of the ADX indicator.
- ADX_Level = 22 – This is the ADX level beyond which point a market is considered in breakout mode and the indicator signal is used for trade entry.
- Strategy_Type = 2 – The trading system offers the trader three types of entry strategies. Strategy one is in line with the trend, strategy two is reversal, and strategy three is both trend and reversal. The default strategy is reversal.
- cType = 4 – This variable refers to the four methods of computing the correlation value. The user can use only one method at a time. The default value (4) refers to Fechner method.
- Lots = 0.01 – The lot size of all trades is fixed and equal to 0.01.
- TakeProfit = 150 – Each trade has a take profit of 150 pips.
- StopLoss = 85 – Each trade has a stop loss of 85 pips.
- TrailingStop = 45 – The trailing stop function is triggered when a trade has gained 45 pips.
- NumOpenOrders = 1 – The number of maximum open orders on the current symbol is one.
- TotOpenOrders = 8 – If other instances of this expert advisor are applied to other symbols, the maximum number of orders for the traded symbols is eight. This means that the robot should be applied to not more than eight different symbols in a trading account.
Apart from the price time correlation strategy, the trading system uses the Bollinger bands and ADX to filter and qualify a trade entry. How these indicators are used is explained in detail below:
- Bollinger bands (period 20, deviation 2.0) – This is the standard setting for the Bollinger bands indicator that comes with MT4. The values of the Bollinger bands needed for computation are generated from the previous candle of the current timeframe and symbol and for the upper and lower bands. Then the values are subtracted to get the distance between the upper and lower bands. If the distance is less than 45 pips or greater than 120 pips, any trade signal becomes null and void. On the other hand, if the distance falls within the range of 45 and 120 pips, any trade signal is confirmed for entry or further qualification.
- Average directional movement index (period 14, price close) – The ADX is used to gauge market volatility, so the expert advisor will determine the value of the main line for the previous candle of the current timeframe and period. If the ADX value is greater than 22, any trade signal previously generated is confirmed or calculation moves forward. Otherwise, the expert advisor will wait for another trading opportunity.
Apart from the trade signal provided by the technical indicators, several other conditions must be satisfied before a trade entry is taken. First, the number of orders on the current symbol should be less than the allowed maximum. By default, the maximum number is one. This means that if there is already an open trade on the active symbol, no additional trade will be opened.
If there is no open trade yet, the expert advisor will look at the hour of the current time. If the current hour is within the range of hours specified in Inputs, a trade can be taken. The expert advisor will also look at the free margin to find out if the account can handle one more trade. If so, it will send a trade request with a lot size of 0.01, stop loss of 85 pips and take profit of 150 pips.
The Price Time Correlation Trading Model Expert Advisor For MT4 – Exit Criteria
The Price Time Correlation Trading Model Expert Advisor uses both passive and active approaches in trade management. The passive approach is through the use of take profit and stop loss on each trade. The active approach is done with the use of the trailing function. As defined in the list above, the trailing function comes into being when a trade has gained at least 45 pips.
The Price Time Correlation Trading Model Expert Advisor For MT4 – Room for Improvement
In testing, the Price Time Correlation Trading Model Expert Advisor executed only four trades when run on five months of test data and generated a meager profit. While the drawdown was very low (less than one percent) and the profitability was 75 percent, it is not prudent to conclude that the trading system is profitable. The test result only shows that the trading algorithm works as designed. Further testing must be done by individual users to make such conclusion. Perhaps the best way to do testing is via a demo account.