A Way To Make Expert Advisors FAR More Profitable...

[noziggity81]

Hi Everyone --

 

I have noticed that one problem (perhaps the biggest problem) with trading using expert advisors is that sometimes the various EA's, and even the more profitable ones (Shocker, FAPTurbo, Megadroid, etc.) will open trades against the prevailing trend.

 

We see this happening, in the most stark example, when the EA's ignore the downtrends of EUR/USD and EUR/GBP and myopically open long (buy) trades during their asian session pip seeking.

 

It has been shown that only opening trades in the direction of the prevailing trend improves profitable trade probability by up to 70-85%. This means that adding a method or technique or automated EA that can control this factor optimally will reduce the drawdowns and losers caused by myopic false trend following on volatile pairs like EUR/GBP and EUR/USD of late by the likes of FAPTurbo et. al.

 

I mean, do this little test to prove my point: go to fx360.com or fxstreet.com 1 hour before the 20-24 GMT core asian session starts (19 GMT) and determing the prevailing trend. Set the EA to trade "only long" or "only short" depending on that trend.

 

What you will notice is that doing this keeps you out of the, for example, "buy EUR/GBP" trades which these days are tending to cause the biggest losses and draw downs because sells are more prevalent in the micro trends as reflected in the sell-centric larger trends for this pair.

 

Any thoughts on this -- and any thoughts on programming an EA that can have a pair-by-pair switch to "only long" and "only short" based on some "best indicator" of the prevailing trend 1 hour prior to session start?

 

This is meant to open thoughts along the same lines as Theozaki's news filtering strategy -- you notice he suggests shutting trading off during periods around strong news releases. I am trying to take this a step further and suggest long only or short only may be a more fine-tuned approach to the prevailing trend so that the EA is optimized.

 

Final thought: it is still not 100% clear what the best "prevailing trend" would be to go by -- hourly, 4-hourly, daily, weekly... although I am thinking (in the case of, for example, EUR/USD and EUR/GBP) based on some of my aggregate stats, that daily and higher are more effective for predicting a safe prevailing trend to use this methodology.

 

Please kudo if this is helpful, and more importantly -- please share your thoughts, tweaks, indicators/ea's, etc!

 

:shand:

[larryvon]

Re: A Way To Make Expert Advisors FAR More Profitable...

 

if you insert timeseries forecast upon any chart, a length of 20, and note its position relative to

market, it will become a good filter.