THREE MOVING AVERAGE X3MA 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 THREE MOVING AVERAGE X3MA Expert Advisor For MT4 is a trend-following system that uses three moving averages to open and close trades. In theory, the trading system may work well in trending markets and fail in ranging markets. However, since markets are said to trend only 25 percent of the time and range about 75 percent of the time, the odds are already against the trading system.
True enough, when the expert advisor was run in testing using five months of test data for one symbol and timeframe, it failed miserably that the capital was razed to the ground. While it started out well, the robot started to collapse in the middle of testing. This continued until the trading account became empty. This testing shows that using the expert advisor with the default settings in real trading is not a good idea.
The THREE MOVING AVERAGE X3MA Expert Advisor For MT4 – Entry Criteria
The THREE MOVING AVERAGE X3MA Expert Advisor uses an advanced algorithm in finding and managing trades. This is obvious when one looks at the code. Even if this is not done by the user, he can figure this out the moment he sees the array of external variables in Inputs. To use this expert advisor securely in trading, the user must familiarize himself with the available options and use them to his advantage. The variables provided in Inputs are outlined below:
- order_lot = 0.1 – This lot amount will be the static lot size of each trade if the parameter below is false.
- money_management = false – If this parameter is set to true, the expert advisor will compute the lot size as a percentage of the account balance.
- risk_percent = 10 – This value, in percent, is multiplied to the account balance and leverage and divided by the point value to get the trade volume. This applies only when the above parameter is true.
- take_profit = 0 – The value of this parameter is expressed in pips. If the value is zero, the take profit of a trade will not be set.
- stop_loss = 0 – The stop loss is given in pips. If the value is zero, the stop loss of a trade will not be set.
- equity_stop_loss_percent = 20 – When the account drawdown reaches 20 percent of the account balance, all trades will be closed to protect the capital.
- equity_take_profit_percent = 20 – When the running profit of all open trades reaches 20 percent, these trades will be closed to finalize the gain.
- fast_ma_period = 2 – The fast-moving average in use in the trading system has a period of 2.
- fast_ma_shift = 0 – The fast-moving average has zero shift.
- fast_ma_method = 0 – This value means that the moving average method is simple.
- fast_ma_apply_price = 0 – A value of zero for this parameter means that the moving average calculation is applied to the closing price.
- medium_ma_period = 8 – The medium-moving average in use in the trading system has a period of 8.
- medium_ma_shift = 0 – The medium-moving average has zero shift.
- medium_ma_method = 0 – This value means that the medium-moving average method is simple.
- medium_ma_apply_price = 0 – A value of zero for this parameter means that the moving average calculation is applied to the closing price.
- slow_ma_period = 16 – The slow-moving average has a period of 16.
- slow_ma_shift = 0 – The slow-moving average has zero shift.
- slow_ma_method = 0 – This value means that the slow-moving average method is simple.
- slow_ma_apply_price = 0 – A value of zero means that the moving average computation is based on the closing price.
- start_trading_hour = 0 – With this value, the expert advisor can start trading at the open of the trading day.
- start_trading_minute = 0 – This is the minute of the open hour for trading.
- end_trading_hour = 24 – With this value, the trading system will stop trading at the close of the trading day.
- end_trading_minute = 0 – This is the minute of the closing hour for trading.
- max_trades = 2 – This parameter instructs the expert advisor to open up to two trades only.
- magic_number = 112413 – This number identifies the trades opened by this robot.
- slippage = 5 – This amount is in pips. It means that the user accepts a maximum slippage of five pips when the terminal or server executes a trade.
This trading system uses one type of technical indicator to generate a signal that can be used for both trade entry and exit. This indicator is the moving average, and it is discussed in the following:
- Moving averages (period 2, 8 and 16; simple method; price close) – Three moving averages are used in this trading system to determine trade direction and entry. The values of the moving averages needed in the computation are derived from the previous two candles on the current period and symbol. These values are used to determine if the moving averages are aligned in a certain direction. If the 2 SMA is greater than the 8 SMA and the 8 SMA is greater than the 16 SMA, the momentum is bullish so the entry is long. If the 2 SMA is less than the 8 SMA and the 8 SMA is less than the 16 SMA, the momentum is bearish so the entry is short.
This expert advisor closely follows the action of the moving averages on the active timeframe to find trade entries. When an entry signal is generated, the robot opens a trade with a lot size of 0.10. If the entry criteria are satisfied on the subsequent candles, the expert advisor will add another trade in the same direction with the same lot size. The robot opens two trades only and no more.
The THREE MOVING AVERAGE X3MA Expert Advisor For MT4 – Exit Criteria
Trades opened by the THREE MOVING AVERAGE X3MA Expert Advisor have no set take profit and stop loss values. They will remain open regardless of the amount of profit until the indicators give an opposite signal. In case the two trades are long, they will be closed when the indicators give a sell signal. This would mean that the moving averages have crossed to the downside. The expert advisor does not use trailing and breakeven functions.
The THREE MOVING AVERAGE X3MA Expert Advisor For MT4 – Room for Improvement
The THREE MOVING AVERAGE X3MA Expert Advisor needs a lot of improvement to become a safe and profitable trading system, which is not the case at the moment. Running the expert advisor in a trading account with real money is extremely dangerous as presented in the beginning of the article. In the testing done, the trading account was subjected to a maximal drawdown of more than 99 percent. This means that the trading capital was wiped out.
One possible reason why this trading system failed in testing is because the signal for trade entry and exit came very late. This was noticeable in testing. On some occasions, huge profits were not realized because the trades were not closed in time until price turned around completely. The winning trades became losers in the end. This is the main problem with moving averages, which are called lagging indicators. One way to resolve this problem is to use multiple timeframe analysis even with the use of the same type of technical indicators.
The user must be aware that enabling the money management option in Inputs can wreak havoc to the trading account, especially if the default risk value of 10 percent is not lowered. With this setting, the lot size is calculated as a percentage of the account balance. This will easily erode the trading capital if a string of losses is encountered.