RSI 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:
- RSI Expert Advisor For MT4
- The RSI Expert Advisor For MT4 – Entry Criteria
- The RSI Expert Advisor For MT4 – Exit Criteria
- The RSI Expert Advisor For MT4 – Rooms for Improvement
The RSI Expert Advisor For MT4 is a simple algorithmic trading system for MT4 platform. It uses one technical indicator in determining the trade bias and the time of entry. As shown above, the indicator being used is the relative strength index (RSI) oscillator created by J. Welles Wilder Jr. and is popular to many traders using technical analysis. This trading system is built around the concept of overbought and oversold market conditions.
Traders believe that when an oscillator gives an overbought or oversold reading, the market is bound to reverse sometime in the future. The exact time of reversal cannot be predicted with certainty, and a security can keep going in one direction even if overbought or oversold. However, sooner or later the market will reverse to change direction or make a correction, and this is a known fact. This expert advisor attempts to capitalize on this persistent market anomaly.
The RSI Expert Advisor For MT4 – Entry Criteria
Simple in its design, the RSI Expert Advisor for MT4 runs on every tick and performs limited routine checks prior to opening trades. The robot will check if the two parameters crucial for opening buy and sell trades are enabled (i.e., OpenSELL and OpenBUY). Otherwise, the robot would not take trades at all. These parameters are set to true by default though.
The lot size of trades will depend on the lot sizing method selected. The user is given two options to choose from, automatic and manual. If manual is chosen, the robot will take the default value of 0.1 indicated in Inputs. If automatic lot sizing is enabled, the robot will get the account balance and multiply it with the risk percent specified by the user (10% default) and then divide the result by 10000. This formula would result in a trade volume that is relatively higher than normal.
The last check being performed is to count the number of trades on the current symbol. If there is no open buy or sell trade, the robot will look for trade entry using the relative strength index. In the image above, the robot will check the RSI values of the previous and current candles of the active timeframe. For a buy trade, the RSI value of the previous candle should be greater than 30 and the RSI value of the current candle should be below 30. This means that the market being considered is oversold and may reverse to the upside soon.
On the other hand, if the RSI value of the previous candle is less than 70 and the RSI value of the current candle is greater than 70, that is a signal to get into a long trade. This suggests that the current symbol is overbought and may reverse anytime soon to the downside. Once the RSI has provided a trade bias and if there is no open trade on the chart, a buy or sell trade will be executed immediately.
The RSI expert advisor takes only one trade at a time and this is done in real time. It does not wait for a new candle to form on the current timeframe. The trade type taken alternates between buy and sell. If the previous trade is a buy, the next trade in line will be a sell and vice versa.
The RSI Expert Advisor For MT4 – Exit Criteria
The RSI Expert Advisor for MT4 does not attach stop loss and take profit orders to a trade. This is the default setting. If the user adjusts the stop loss and take profit values in Inputs, trades will come with stop loss and take profit. However, if the values selected are less than the stop level for the symbol to be traded, the stop loss and take profit would not be put in place and the terminal would return an error due to invalid stops.
Trailing stop is also disabled by default, although the robot comes with this functionality. If enabled, open trades may be closed in prices other than the stop loss or take profit. This function would be triggered if the distance between the market price and the open price is greater than the TrailingStop value and if the distance between the market price and the stop loss price is greater than the TrailingStop value. Once trailing stop is activated, the robot would maintain a distance equal to the TrailingStop value between market price and the adjusted stop loss. This functionality can be set in motion very easily. The user only needs to change the default TrailingStop value of zero to a higher value.
Since there is no stop loss and take profit, open trades are actively managed by the robot. If the RSI line goes above the 70 level at any point in time and there is an open buy trade, it will be closed immediately, win or lose. If the RSI line goes below the 30 level at any instant and there is an open sell trade, the trade would be automatically closed, again win or lose. The robot does not check whether the trade will be closed with a loss or profit. Once the condition for closure comes about, trade closure is effected at once.
The RSI Expert Advisor For MT4 – Rooms for Improvement
The RSI Expert Advisor for MT4 was not yet profitable in the strategy tester during testing, but it holds promise for interested people. Overall, the direction of the equity curve in the strategy tester is down, but there are moments of recovery. Further development is indeed necessary to bring this robot among the ranks of profitable trading systems.
One area to look into is the trade volume. Obviously, the formula used in calculating the lot size is wrong. It must be corrected to reduce the risk on every trade. The method of closing trades is too simplistic as well and might not be logical as it does not take the running profit of open trades into consideration.
If these two areas improved, the robot might show a different result in testing. If this is not the case, then other facets must be revisited, such as the trade entry requirements. It is important that changes are applied in an evolutionary way rather than revolutionary so that the basic logic of the expert advisor is preserved. The goal is to improve the robot, not change it.