RSI Bollinger Bands 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 RSI Bollinger Bands Expert Advisor For MT4 uses the relative strength index to find a trade entry and the Bollinger bands to confirm this trade entry. The RSI gives a bullish signal if it dips below 30 (i.e., oversold) or a bearish signal if it climbs above 70 (i.e., overbought). Then the expert advisor will check if the distance between the bands of the Bollinger bands is greater than a specific number of pips. If so, the RSI signal is confirmed for entry. This indicator combination attempts to enter the market when it is undervalued or overvalued.
When run over a period of five months using historical price data, the trading system executed very few trades and generated a minimal amount of profit. The drawdown was low (i.e., less than two percent), and the win rate was just 37 percent. Although the win rate was low, the robot managed to make money because of the high risk-reward ratio. Since the stop loss is 35 pips and the take profit is 140 pips, the risk-reward ratio is four. Regardless of the positive result, the number of trades taken was too few for anyone to opine on the effectiveness of this trading system.
The RSI Bollinger Bands Expert Advisor For MT4 – Entry Criteria
The RSI Bollinger Bands Expert Advisor is not an easy program to use considering the number of variables presented to the user at the time of implementation. The same impression is produced when one looks at the code. The algorithm looks complex for intermediate coders to understand during initial inspection.
The expert advisor uses a wide array of external variables in the code related to the settings of indicators used in trade signal generation. The same number of variables is presented to the user when he drops the robot on any symbol. To shorten the time needed to be able to run the expert advisor in testing or demo trading, the most important parameters are selected and presented below:
- TriggerOne = false – Only one entry method can be used at one time. By default, this trade entry trigger is not used.
- TriggerTwo = true – Only one entry method can be used at one time. By default, this trade entry trigger is used. If the user prefers to use the other trigger, he must set this trigger to false.
- RSIPer_2 = 20 – This is the period of RSI for trigger two.
- BBSpreadH4Min_2 = 65 – This is the required minimum distance between the upper and lower bands when the Bollinger bands (BB) is applied on H4 timeframe. This variable is used for trigger two.
- BBSpreadM15Max_2 = 75 – This is the required maximum distance between the upper and lower bands when BB is applied on M15. This variable is used for trigger two.
- StocLoM15_2 = 24 – This is the lower stochastic level below which price is considered oversold. The stochastic indicator is applied on M15. This variable is used for trigger two.
- StocHiM15_2 = 68 – This is the higher stochastic level above which price is considered overbought. The stochastic indicator is applied on M15. This variable is used for trigger two.
- Lots = 0.1 – All trades taken by this expert advisor have a position size of 0.10.
- TakeProfit_Buy_2 = 140 – This is the take profit in pips for buy trades when trigger two is used.
- StopLoss_Buy_2 = 35 – This is the stop loss in pips for buy trades when trigger two is used.
- TakeProfit_Sell_2 = 60 – This is the take profit in pips for sell trades when trigger two is used.
- StopLoss_Sell_2 = 30 – This is the stop loss in pips for sell trades when trigger two is used.
- ATRPer = 60 – This is the period of the ATR used in this expert advisor.
- BBPeriod = 20 – The Bollinger bands indicator has a period of 20.
- ATRLim = 90 – This is the maximum required value of the ATR in pips.
- entryhour = 0 – With this setting, the robot will find trades starting from the market open.
- openhours = 14 – This variable means that the robot will trade for a duration of 14 hours.
- NumOpenOrders = 1 – This means that the robot will take one trade at a time.
In this expert advisor, two indicators are used to define a trade entry while another two indicators are utilized to qualify the trade signal. The trading system uses the RSI and stochastic for trade entry generation and employs the Bollinger bands and ATR for qualification of the trade entry. These four indicators are explained in detail below:
- Relative strength index (period 20, price close) – If the RSI value is less than 30 on the active timeframe, a bullish signal is generated; whereas, if the RSI is greater than 70, a bearish signal is indicated.
- Stochastic (12, 5, 5, simple mode) – The value of the stochastic indicator needed for calculation is obtained from the previous candle on the current timeframe of the active symbol. If the value is less than 24 (meaning oversold), a buy signal is provided. If the value is greater than 68 (meaning overbought), a sell signal is indicated.
- Bollinger bands (period 20, 2.0 deviation, price close) – This is the standard Bollinger bands setting for the indicator that comes with MT4 platform. The values of the Bollinger bands are obtained from the previous candle on H4 chart of the current symbol. To generate a trade signal, the values of the upper and lower bands are determined and then subtracted. If the difference is greater than 65 pips regardless of sign, a trade signal is confirmed for entry.
- Average true range (period 60) – The value of the ATR is obtained from the previous candle on H4 timeframe of the current symbol. If the ATR value is less than 90 pips, then a trade signal is validated.
The expert advisor opens a trade on a new candle and executes one trade at a time as defined in Inputs. The lot size of this trade is 0.10. During trade execution, the stop loss and take profit are specified. While the stop loss is 35 pips, the take profit is 140 pips, putting the odds significantly in favor of the trader.
The RSI Bollinger Bands Expert Advisor For MT4 – Exit Criteria
The RSI Bollinger Bands Expert Advisor, as complex as it looks in the code, does not use trailing and breaking even when managing open trades. It allows the market to do such function. Once it opens a trade after a long process of computation, the robot assumes a waiting mode and lets the market call the shots whether the trade wins or losses. The advantage of this strategy is that the balance between risk and reward is not disturbed.
The RSI Bollinger Bands Expert Advisor For MT4 – Room for Improvement
The RSI Bollinger Bands Expert Advisor might need some changes to become more profitable. It opened only 19 trades in testing when run using five months of test data on a 15-minute chart. With this very small number of trades, the robot has limited chances of making money for the trader. Not many traders would be interested to use this kind of trading system in live trading as they might downgrade it as a waste of time and money.
One thing that users might find annoying in this expert advisor is the sheer number of variables in Inputs. Making most arguments used for each technical indicator as external variables would frustrate someone who comes across this expert advisor the first time around. Not all variables shown in Inputs need the user’s intervention.