Trading strategies | EA Forex Academy

how to generate bitcoin trading strategies in EA Studio

How Do I Create Bitcoin Trading Strategies with Software?

Posted on March 22, 2021 | by Petko Aleksandrov | Leave a Comment

Generating 100s of trading strategies for Bitcoin

Hello everyone, in this lecture, I will show you how to generate hundreds of trading strategies for Bitcoin. To achieve this, I will use EA Studio, which is a strategy builder software that we use most in the Academy.

As I’ve said many times in other lectures, EA Studio has a tool called Generator. The Generator can use the historical data that you import from your broker or the Premium historical data that is bundled with EA Studio. In this case, I will use the Premium Data that comes directly from the Forex Historical Data app. And I made it work for the Hot Forex broker which I am using at a moment for Bitcoin trading.

In the Historical data section, I have also the Symbol, which is the currency pair that we’re trading with. Since I want to generate trading strategies for Bitcoin, I will use the BTCUSD symbol. Finally, I have the Period, from where I can select on what timeframe the strategy will trade.

So if I just click on the Start button, you will notice the high speed. This is the fastest Generator for strategies. In just a few seconds, I have over 60 trading strategies. And these strategies all go to the Collection tab automatically.

EA Studio Generator interface — Generating Bitcoin trading strategies in EA Studio

If I click on the Collection, you will see that the Bitcoin trading strategies are listed there. And I have many pages, each containing 10 strategies.

Collection of Bitcoin trading strategies — Collection with trading strategies for BTCUSD

Now, obviously, I don’t want to have some random and simple Bitcoin trading strategies. So I will stop the Generator and I will delete all of these trading strategies. But before actually deleting them, I will click on one of the strategies and I will show you what tools we have in the Strategy section.

How to optimize Bitcoin trading strategies

We have Optimizer and Normalizer. The Optimizer is very similar to the Optimizer that we have in MetaTrader. So if I just click on the Start button in the Optimizer, it will look for better parameters. It didn’t find any in this case, but it will look for better parameters with the trading strategies.

Using EA Studio Optimizer for a Bitcoin trading strategy — Optimizer in EA Studio

Now, optimizing a trading strategy sometimes is very risky because you can over-optimize it. In other words, you will find the best parameters but just for the tested period.

Usually what happens with such strategies is after you start trading, they start losing. Just because you have found the best parameters exactly for the period you are testing. And these are not robust strategies.

Normalize the Bitcoin trading strategies

The next tool we’re going to use when generating our Bitcoin trading strategies is the Normalizer, which is a unique feature of Expert Advisor Studio. It normalizes the strategies, reduces the Stop Loss, the Take Profit if you’re using. In other words, it pushes the parameters to the default parameters.

Using Walk Forward and Monte Carlo

Then we have the Walk Forward, which is a little bit more advanced tool.

If I click on Start, this tool optimizes the trading strategy for a certain period of time. Then it tests the strategy on the next period, includes that period, and optimizes again, and tests the strategy again.

You can see that it found a much better result, which means that it found a better strategy.

Walk Forward finding a better trading strategy — The Walk Forward

We have the Monte Carlo, which is my favorite instrument among the robust instruments. So, Monte Carlo, Multi Market, and Out of Sample Monitor are robust tools. They don’t change the strategy like the Optimizer, Normalizer, and Walk Forward, but they test the strategy if it is robust or not.

With the Monte Carlo tool, I can test with random historical data, random spread, random slippage, random position entry and exit, and randomly closed position.

We have Strategy variations, which is the option I use the most. This will simply test the strategy with different indicator parameters. And I like to use “Randomize backtest starting bar”, which will backtest the strategy from different bars or from the different starting points. In addition, it is not a bad idea to check “Randomize spread” because as we saw with Hot Forex and with most of the brokers, the spread is floating.

So sometimes your position will open on a $24 spread, sometimes $25. And if there is volatility, it might be even more. So if I click on “Start”, it will perform 20 tests and I see that just 13 out of the 20 were validated. Which is not enough for me. I like to have at least 18 or a minimum of 16 out of the 20, which is 80% of the tests to be validated. That is something I always use.

Testing different markets with Multi Market

Then we have Multi Market where we can add different markets.

For example, I can add Bitcoin, Ethereum, Ripple, or any other cryptocurrency that I have as historical data and I can check if this trading strategy works well on the other markets.

And as well, I have the Out of Sample, which I will explain just in a minute.

Using the Reactor to generate Bitcoin trading strategies

Now the best thing with EA Studio that was improved during the years is that we don’t have to do all of that manually anymore. I just went over it to demonstrate what we were doing before. We were generating strategies, they were going to the collection after that, if I like any strategy, I was going through Optimizer, Monte Carlo, Multi Market one by one. Understand what I mean?

It was taking time because I had to do it manually for each trading strategy. Now, we don’t need to do this anymore because we have the Reactor. Right under the Generator is the Reactor.

Using the Reactor to generate Bitcoin trading strategies — The Reactor

If I go to Generator, we have historical data, strategy properties, and Generator settings. And if I click on the dropdown arrow after Generator and switch to Reactor, here we have the same things plus optimization and robustness testing.

So what the Reactor does is it passes all the strategies through this testing automatically and I don’t have to do it by myself manually.

So I will remove all the strategies in the Collection. I will switch to the Reactor and I will just set it very quickly so you know how I’m using it.

Now in the Reactor, I will go for Bitcoin on the H1 hourly chart. In the Strategy properties section, I will set Entry lots to 0.01 because this is the minimum quantity I can trade. And I would suggest you always start with 0.01, especially if you are generating Bitcoin trading strategies because this way you will just test the Expert Advisors.

You won’t risk a lot if you try them on your Live Account. And I don’t like to stimulate and motivate my students and traders to use huge volumes or big accounts. That’s a personal choice how much you want to trade. One more time, changing the lot doesn’t change the Bitcoin trading strategy or the Robot. It changes just the result.

Should you use Stop Loss and Take Profit

Then I have the option to select if I want to use Stop Loss or Take Profit. I will not use Stop Loss and Take Profit.

First of all, I have done many tests with EA Studio generating Bitcoin trading strategies with Stop Loss, without Stop Loss, with Take Profit, and without Take Profit. I don’t have 100% proof that one of the two works better.

So if I include Stop Loss, let’s say I will be using a Stop Loss somewhere between 1 000 and 10 000 pips. Now, if your broker has 2 digits (the broker I’m using for this lecture has 3 digits), if I set a Stop Loss, let’s say $100 or $200, then if you are using more or a few digits, the Stop Loss will change. It will become either a $1000 or it will become either a $10.

Setting the Bitcoin trading strategy properties in the Reactor

And that is another thing that I have improved from the previous version of the Bitcoin Algorithmic Trading course where I was including Expert Advisors with Stop Loss and with Take Profit. Some of the students were like, “why don’t the EAs work with my broker” or “why do I see very huge Stop Loss and very huge Take Profit“.

And others were just fine because they were matching the digits with their broker and my broker. That is why when we are talking about Bitcoin, I do not use Stop Loss and Take Profit.

And for the beginner traders, these are automated levels where the position will close on a loss or it will close on a Take Profit.

But if you don’t have a Stop Loss and Take Profit, the strategy will simply exit based on the exit condition. There will be an indicator inside. So no worries if you don’t have Stop Loss. The trade still closes when the exit condition is there. And many traders say that it is better to trade without Stop Loss and Take Profit. One more time for me, I don’t have a 100% statement to say, is it better without or is it better with.

That’s why in the course I include Bitcoin trading strategies that are created without Stop Loss and Take Profit. So we will depend on the entry rules and on the exit rules. But you can test, of course, generating Bitcoin trading strategies with Stop Loss and with Take Profit.

Setting the generation time period in Generator settings

In the Generator settings section, I have the working minutes, so I set it to 1 hour and you will see how many Bitcoin trading strategies it will generate in 60 minutes. Usually, I leave the Reactor working for 10 hours, which is 600 minutes, and this way I leave it overnight and actually right now I’m recording late in the evening, so I will leave it to 600 minutes because I want to get more and more Bitcoin trading strategies.

When we generate for a longer time, it doesn’t mean that we will get better strategies. We will just get a bigger number of strategies. And in the Collection, we will see always the top strategies. The longer you run it, the more chances you have for finding better and better strategies.

Then for Search best, I will leave it the way it is – Net balance – so, at top of the Collection, I will see the Bitcoin trading strategies that have the most profit.

Using Out of Sample (OOS)

I will select 10% Out of Sample and what that means?

If you remember, the Out of Sample Monitor divides the whole backtest period into different zones.

So if I have 30% Out of Sample, this means that the Generator will use 70% of the historical data to generate Bitcoin trading strategies and it will simulate trading on the last 30% of the data.

Now, if I switch to 10%, this means that the Generator will use 90% of the time. And for the last 10%, it will simulate trading. And in our case, with the historical data that I have, this will be from the 3rd of August until December.

So for a little more than 4 months, it will be just a simulation of how these strategies would perform if I have placed them for trading on the 3rd of August.

The MACD Indicator

But actually, I won’t be testing them on a Demo Account or a Live Account, the strategy builder will do this simulation. And this is one of the methods to avoid over-optimization because I will just choose the strategies that are profiting in these last 4 months.

So going back to the Reactor, I will use Out of Sample 10%. For the Max entry indicators and Max exit indicators. I will leave it as it is.

The Generate strategies with preset indicators setting will be suitable if you have some favorite indicators. For example, let’s say you like the MACD Indicator and you want the MACD in every strategy, you can check that, when you click on it, you will go to Preset Indicators in Tools and then you can add MACD or any other indicator. Then this MACD indicator will be in all of your trading strategies.

But I don’t usually do that. I want the Generator to show me which are the best combinations between different indicators.

How to use the common Acceptance Criteria

Make sure to set a checkmark before the Use the common Acceptance Criteria.

We need to use it. This is where we set some criteria. For example, I will select that I want to have a minimum of 500 counts of trades for every strategy or for every Robot.

Setting a checkmark before the Acceptance Criteria — Generator settings

Now, with time I found out that the more count of trades we use the more robust strategies we have.

Because imagine you have a backtest just with 20-30 trades or you have the Bitcoin trading strategy executing just 20 or 30 trades for the last 3 years. I guess you wouldn’t be happy trading such a strategy.

But having 300, 400, or over 500 trades that happened for the last 3 years, and the strategy is profitable, you will know that this is a robust strategy and you can depend on that strategy for the future. Because if it executed 500 times the same rules and it kept being profitable, then there is a higher chance that the strategy will keep being profitable in the future.

The minimum profit factor of 1.2 is just fine.

The profit factor is the net profit divided by the net losses.

You can add any other criteria, but I will stick to the Minimum count of traders and the Minimum profit factor.

And as well, we have the option to set criteria, for In Sample part which in our case will be the 90% zone. And I will go to the profit factor again, but I will decrease it just to 1.1. I will remove the net profit, no net profit. Obviously, on the top, we will see the strategies that have the most net profit.

So Minimum profit factor is 1.1, and this is the Acceptance Criteria that I will be using while generating the Bitcoin trading strategies.

Setting the The common Acceptance Criteria in EA Studio — The common Acceptance Criteria

So what happens now?

The Generator will produce strategies on Bitcoin, on the hourly chart without Stop Loss and Take Profit. It will generate the strategies over 90% of the historical data. And for the last 10%, it will test them, it will simulate trading and it will pass only the Bitcoin trading strategies that fulfill the Acceptance Criteria. Only the strategies that have more than 500 trades and that have more than 1.2 as a profit factor and that have more than 1.1 in the In Sample and in the Out of Sample.

Avoid optimizing strategies

I’m not going to use Optimize strategies settings because it is risky to over-optimize the strategies.

With my experience, I know that the Generator finds good enough combinations between indicators and parameters, so no need to optimize them and to look for better parameters. That’s personal, in my opinion. So in this lecture, I’m just showing you how I use the Reactor by myself to generate 100s of Bitcoin trading strategies.

And below we have the robustness testing tools. I will leave the Monte Carlo test, meaning that at least 16 out of the 20 tests, or 80%, from the Monte Carlo, should be true.

And if the Bitcoin trading strategies from the Generator pass the Acceptance Criteria, they will go through the Monte Carlo. If they go through the Monte Carlo, we will see them in the Collection.

We will see the number of strategies that are generated. How many pass the validation and how many trading strategies pass the Monte Carlo? And if the strategy passes everything that I’ve said, it will go into the Collection.

Number of Bitcoin trading strategies generated

And one last thing I wanted to mention, if I click on tools and I go to settings, I set it usually to close the trades at Friday close or at Friday to close all trades by 9:00 PM.

Different brokers close at different times on Fridays. Some will close at 10:00 PM, others at 11:00 PM, others at midnight. I put it at 9:00 PM. So it doesn’t matter what your broker uses as a closing hour, I want to make sure that you will not have trades left behind for the weekend.

Setting the trading session time in EA Studio — Setting the trading session time

Now, I will return to the Reactor and I will click on Start.

Again the generation process is very fast but you can notice the difference. Not so many Bitcoin trading strategies are going into the Collection now. Only 1 has passed everything. And it went in the Collection. You see a very nice equity line and as well, the Out of Sample test is profitable.

The Bitcoin trading strategy in the Collection

So what I will do? I will leave the Reactor running for 600 minutes, which is 10 hours. Something else that I will do right now is to open the very same EA Studio on the other 2 browsers and I will generate strategies at the same time for M30 and for M15. And not just on different tabs, but on separate browsers, because this way the software works faster.

This is one of the things that I liked most the first time when using EA Studio. You can run multiple Reactors on your computer on different browsers.

I will leave it now for H1. Then I will open 2 more browsers actually for M30 and M15. And in the Bitcoin Algorithmic Trading course, I show you how many Bitcoin trading strategies I have generated and what strategies we will have in the Collection.

Thank you, guys, for reading. I hope this lecture will be useful to you and will help you to understand how to generate simple and complex Bitcoin trading strategies in less than a day using the EA Studio strategy builder.

If you have enjoyed the lecture, share it across social media or just leave a comment below to show your appreciation.

I will see you in another lecture.

Trend Following Strategies vs Range Trading Example

Posted on February 4, 2021 | by Petko Aleksandrov

Some traders feel more comfortable while trading with trend following strategies, while others like more range trading. It pretty much depends on what type of trader you are. Do you prefer to follow the trends or do you prefer to trade in the range, buy when the price is cheap, and sell when the price is expensive?

EA Studio generates both types of trading strategies, and in this lecture, I will show you how to recognize them. Moreover, I will give you some examples.

So for the beginner traders, let me open the TeamViewer and I will just use the chart to show you what is a trend following strategy and what is the opposite thing when we have range trading, as I call it. When we want to buy at a cheaper price and sell when the price gets expensive.

Trend Following Strategy Example

So the trend following strategies are the type of strategies when we buy together with the direction of the trend.

Let me just go quickly through some of the strategies.

And I think here we had a few trades that show that this EURUSD strategy on the H1 chart is a trend following strategy. So you see in November 2020, EURUSD has been very bullish. The trend is going upwards.

What is an uptrend?

For the beginners, what is the trend? This is when we have a series of higher highs and higher lows. This is how the uptrend is defined.

The trend goes up. What we have from this strategy are long trades. So it follows the trends.

trend following strategy example — The trend goes upwards in the EURUSD strategy on the H1 chart

Range Trading Example

And if I switch to the other EURUSD strategy on M15, you can see that this period, especially the last week or the last 2 weeks have been bad for this strategy because it’s a range strategy.

You see that I had 2 short trades that ended on losses.

range trading example with 2 short trades — The 2 short trades that ended on losses in the EURUSD strategy on M15

So in this case, the strategy Sells when the price is expensive. But this is just for that period of time.

the moment when the trend following strategy sells — This range trading strategy sells when the price is expensive

And then it will buy when the price is cheap. But this is based on the Indicators that stand behind the Expert Advisor.

The buy signal

So if you see that period of time right here, this value is expensive. The strategy sells. However, the price continues upwards. And this type of strategy is very, very appropriate when the market is in a range just like that period over here.

So this type of strategy will try to buy when the price is cheap and they will try to sell when the price is expensive.

Just when the price goes in the range, they work much better than the trend following strategies where I have a similar strategy on H1.

Range Trading Strategies in EA Studio

So let me show you how you can recognize these strategies on EA Studio in the collection.

If I click on the 1st strategy, let’s see what we have here, Stochastic line crosses the signal line downward and this is for long entry or for the buy signal.

the long and the short entry show this is a range trading strategy — The long and short entry

One more time Stochastic line crosses the signal line downwards and the next condition is the Fast Moving Average is lower than the Slow Moving Average.

The long trade

What that means is that it is a range strategy. It doesn’t follow the trend because it wants to Buy when the Stochastic line crosses the signal line downwards, or in other words, when the price goes down.

And as well, the Moving Average is lower than the Slow Moving Average. 2 of them will identify when the price is going down.

Let me click on the Indicator chart and I will show you what we have. Let me find the 1st long trade so it will be easier for you to understand it. Here it is.

the long trade in EA Studio shows this is a range strategy — The long entry

The Stochastic line crosses the signal line downwards, and in that time, the Fast Moving Average is below the Slow Moving Average.

The confirmation

There was a huge drop of the price which forced the Fast Moving Average to go below the Slow Moving Average. And then what happened? The Stochastic shows that the market was overbought. The Stochastic goes below the signal line which usually is a Sell signal. But in this case, it is a Buy signal and we Buy. And you can see that the price hit the Take Profit a little bit later.

Let me look for some other examples. For example, here is a short trade.

The Fast Moving Average is already above the Slow Moving Average, which means that we had an up move. And then when the Stochastic line crosses the signal line upward, we have the confirmation and we Sell. So you see the price goes up, we Sell and it goes down.

These are the type of range strategies. Now, let me look for a strategy that follows the trend. Here it is.

The directional Indicators, DI+ line crosses DI- line upwards. Let me click on the chart.

The short trade

So this is how the directional Indicators look like. And we have the Buy signal at this moment right here when the green line crosses the red line upwards.

The Take Profit was hit.

Here is a short trade.

The short trade in EA Studio — The short trade

The negative one crosses the positive one upwards. So you see, we are following the direction. The price goes down, we Sell price starts to go up, we Buy. So these are the trend following strategies and they work obviously great when the price is in a trend.

But usually, the statistics show that about 70% of the time the price stays in a range and only about 30% of the time the price trends. So what I personally prefer to do is to have the 2 of them together combined. I would like to have a strategy that follows the trend and I want to have a strategy that works better when the price is in a range.

It’s up to you to decide which kind of trader you want to become. That is why on the chart I showed you 2 different strategies, one on M15 and one on H1.

One more time, it’s up to you if you are a trend follower and you want to trade only with the trend. Absolutely understandable. Many of the traders do it.

At the same time, there are many swing traders and people who prefer to trade channels and they want to Buy when the price is cheap and they want to sell when the price is expensive. So then you might want to look for the strategies when the Indicators cross opposite.

How to Recognize Trend Following Strategies in EA Studio

So, one more time, let me click on any of the strategies and I hope now you recognize it.

Example of a trend following strategy with indicators crossing opposite — Example of a strategy with indicators crossing opposite

The RVI line crosses the Signal line upwards, and Volume changes its direction upward. This is for a long. When we want to Buy, when we see upward, it means that this is a trend following strategy. Because it will Buy when the event or the cross of the Indicators is in the same direction as the direction we want to go.

The Trend Following Strategy

And if I click on it, you will see that there are different entry rules. But on EA Studio, first, we see the long entry and then if I go to short, we will see the opposite thing. But by default, it stays long. So when you open the strategy and you see what are the rules, you will understand if this a trend following strategy or it’s not.

And what will give you the tip that this is a trend following strategy when you see the words upward or the line is higher than the Signal line, for example.

If something is higher than the other thing or it crosses upward, then we are going up in the same direction.

If you see the opposite with the long entry going down is below, downwards, then this means that the strategy will buy when the price gets cheaper and it will sell when the price gets more expensive. Or in other words, it’s a range strategy.

I hope I have succeeded to explain clearly what’s the difference between trend following strategies and range trading strategies. Thanks for watching. If you have found that video useful give it a thumbs up and subscribe to our YouTube channel if you haven’t done it yet.

Have a wonderful day! Bye!

Williams Percent Range Indicator Strategy Ethereum

Williams Percent Range Indicator Strategy on Ethereum

Posted on February 2, 2021 | by Petko Aleksandrov | Leave a Comment

Williams Percent Range Strategy

Hello traders, in this lecture, I will teach you a Williams Percent Range strategy for Ethereum. This is one of the most profitable strategies I have been using so far. It is for the H1 chart and it is very easy to apply. So what I will do now is I will open one chart for Ethereum, right-click over it in the Market Watch, and I click on Chart Window.

MetaTrader 4 Chart Window — I click on Chart Window

And again, I will use a template, black background,

Switch template in MetaTrader 4 — I use my Black background template

so all of them will be similar and I will switch to 1-hour time frame.

I have called this strategy the Will Ethereum H1 because it uses the Williams’ Percent Range Indicator. I go to Oscillators and I click on the Williams’ Percent Range.

Select the Williams Percent Range indicator — How to find Williams Percent Range Indicator

So for the period, I will be using 38, and I will have a level of negative 35. And then on the top, I will have obviously 65, as we said, the sum always to 100.

And actually, in this case with the Williams’ Percent Range, they are negative. I click on OK and you will see it displayed below the chart.

How Williams Percent Range is displayed below the MetaTrader chart — Williams’ Percent Range displayed below the chart

As well, we have exit Indicator which is the DeMarker. I will go to Oscillators then DeMarker.

DeMarker Indicator in MetaTrader 4 — How to find the DeMarker

We have a period of 28, and we have Levels of 30 and we have level of 70. Here it is, 0.70, and I click on OK.

Setting levels for DeMarker — DeMarker levels

The exit indicator for the Williams Percent Range strategy

You will see the DeMarker below the chart. So the exit Indicator is that we want to see the DeMarker crossing the level line upwards.

The exit indicator for this Williams Percent Range strategy — The exit indicator

So before I share with you what is the Stop Loss and the Take Profit for the strategy, I just want to make sure that you understand the entry and the exit.

So, for example, right here you see that the Williams’ Percent Range crosses the level line upward and that’s an entry. Or at this moment, we Buy.

There is another entry right here. So if we took that trade, we would still be into the trade because the level line that the DeMarker must cross is the 0.30, not 0.70.

So in this case over here where you see the DeMarker crossing upwards, that is the exit for the long trade.

But you can see that actually right here, the entry comes a little bit later.

So let me look for some decent examples because the exit is when the DeMarker crosses the level line upwards. But it’s the 0.30 level, not the 0.70.

The entry for the Williams Percent Range Strategy

So I’ll just need to look for an example. So here I see that the Williams’ Percent Range crosses the level line upwards and I will put a horizontal line and a vertical line. Here is the cross on the opening of the next one, here it is. I will put a horizontal line which I will make green.

Since this is a long trade, here is the entry. Now what I see is that DeMarker crosses the 70. It goes down and when it crosses the 0.30 up. This is an example that I saw with the exit condition. So at that moment, we should be taking the profit because of the exit condition.

OK, the DeMarker goes up, down and when it goes up again and crosses the 0.30, we are taking the profit. In this case, we are losing a lot of the profit. But that’s just an example that I notice. However, let’s see if the Stop Loss or the Take Profit would be hit in this example.

The Stop Loss and Take Profit

So we have entry-level of 382.87 and the Take Profit for the strategy is 90 USD which would make it 472.87. That’s too high. 400. I will place it anyway. 472.87 I will leave it to 72. And then we have the Stop Loss, which is at 15 USD lower. So the entry is at 382.87 and 15 USD lower. I will change it to red and that would make it 367.87. I click on OK and you see.

What happens, we have the Williams’ Percent Range crossing the level line upward. We Buy on the opening of the next candle and then the price goes up, down doesn’t reach the Stop Loss goes up again and it fails to take the Take Profit, which is higher. So with this strategy, we have a very good risk-reward, Stop Loss of 15 USD and Take Profit of 90 USD.

And after that, we must exit because of the DeMarker when it crosses the level line 30 upwards right over here. So, we still benefit in this case that would be a distance of 28 USD and 37 cents I think. So still a profitable trade. But it would be of course better if Take Profit was hit. However, I pick random examples from the chart so I will be able to show you different outcomes.

Negative trade

As I said, there will be always a different outcome on the market. And I would like to show you, as well some negative trades, I think we have one right here. The Williams’ Percent Range crosses the level line downwards. So first, it crosses it right here. Let me remove all of the lines, so you will not get confused. I will just show it quickly.

The Williams’ Percent Range crosses the level line downward, the -65, first time in here. Then it crosses a few times here and then here and here. It’s like 4 times right in this period. But I think no matter which one you take, it will end up on Loss because after that the price goes up and it will hit the Stop Loss. Even if we take the first one, which is at this bar, the price is 390.

We have a Stop Loss of 15, which will make it at 405. So right here we are taking the loss and it’s not reaching the Take Profit. And as well we need to see the DeMarker crossing the level line of 0.70 downwards. Right over here would be the exit.

The exit of this Williams Percent Range strategy — The exit

So first, we have the Stop Loss. So that’s a negative trade. But you can see simply what happens. The price goes down and then it reverses.

We take the profit

And you should know that this happens on the market. But here I see a very nice example. We have the Williams’ Percent Range crossing the level line upwards. Here it is. We Buy at the opening of next bar. So the cross is at that moment. And then on the opening of the next one, we take the trades, here it is, let me put very quickly just the entry and I will not put the Take Profit and the Stop Loss.

You will see why it’s not needed. I will switch it just quickly to green color. So here is the entry. I will put it just precisely on the opening of the bar.

So you see what happens, the DeMarker goes up above the 70, goes down here, it touches it, it’s not really going under and then going above that would be an exit. So if I put the mouse, you will see that the value is 0.3002. Very close, but it’s not a cross.

We want to see the DeMarker going below the level then going up and that would be the exit. But in this case that didn’t happen. It happened right over here. So this is at the price of what is it right over here. The price is 388. Still, we are getting the profit. Here is the entry, the price goes up and here we are taking the profit at around 388.

Feel free to ask if you have any questions

So this is about 70 USD of a profit. But as we said, we have Take Profit of 90 USD, which means that if we enter at 318 + 90 USD, that would be 408.31, is it reached? These candlesticks here reach to if I put the mouse on the closing, you will see where they reach. They have a high of 406.

So that’s one of the examples where we see the price getting very close to the Take Profit, but it doesn’t close there.

This is what I’ve said. If I’m in front of the computer and I see the price going very close to the Take Profit, I will just close the trade and take a little bit smaller profit. But there is always the risk, the price to reverse. However, in this case, we are still in the profit because of the exit condition of the DeMarker. So that’s quite an interesting and simple strategy for Ethereum with very good risk-reward. As I’ve said, Take Profit of 90 USD and Stop Loss of 15 USD.

If you have any questions about any of the strategies, don’t hesitate to ask me in the comments below. I will make it clearer to you and I will see you in the next lecture.

Cheers.

Candle Color Strategy: Trade Bitcoin on H1

Posted on January 27, 2021 | by Petko Aleksandrov | Leave a Comment

Candle Color Strategy

Dear traders, Candle Color Strategy is the 4th strategy that I will be teaching you. This is one of my favorites trading strategies because it is very easy to follow. And it’s more of a price action trading because the entry rule is not based on an Indicator in MetaTrader, but it is when we have such consecutive candles going down or going up. So when we have bullish or bearish candles formation. And I will explain that in a while.

So let me open one more chart window for the Bitcoin. It will be on H1. I will change the template on black background. Here it is.

So the rule that we have in this candle color strategy is to Buy when we see 4 consecutive candles formed in one direction, I guess this is easier for me to explain.

Or in other words, if we see 4 consecutive bullish candles, 4 consecutive bars, or 4 consecutive candlesticks that are with the same color on the 5th one, we open the trade.

candle color strategy shows us when to buy — We buy on the 5th one

This is a bullish example. I will put quickly 1 horizontal line and 1 vertical line. Let’s make the horizontal lime because this is a Buy trade. It’s all right. Here, we Buy 1, 2, 3, 4, and on the 5th one, we Buy.

So that’s not really an Indicator. But we are just looking for 4 candlesticks with the same color to Buy, 4 candlesticks or bars with the opposite color to Sell with this candle color strategy.

The 4 Candlestick Values

The black bodies are the positive ones and the white ones are the negative candlesticks. And we have 1 condition. We need to see a minimum body height of 50 pips. So for the beginners, one more time.

The body of the candle is the distance between the closing and the opening. We have 4 values. If I put the mouse on any of the candlesticks, we have 4 values open, high, low, and close.

The 4 values of the candlestick — The 4 values

We have the open of the candle. The price goes up and down.

We have the lowest point that it reached, the highest point, and here is the closing.

The highest and lowest point, and the closing

So with the bullish candles, the body height is the close price minus the open price. For the bearish, this candle, for example, is the opposite thing. We have the open price minus the close price.

So the condition here is that we need to see minimum 50 pips of body height. And now, I don’t want to make you confused about pips and USD here with the Bitcoin for Pepperstone, for example, we have 2 digits after the decimal comma.

So these are the pips.

The Moving Averages

And if I say 50, then it would be 50 cents. So if we have 3 digits, then we have pips and point. But if we have just 2, this is pips or in other words, to make it very simple, we need to see 4 consecutive candlesticks and the body of each one must be minimum 50 cents of the price of the Bitcoin.

So in this example, the small candle that we have has a close of 10367.01 and it has an open of 10361.51, so it’s much more than 50 pips in this case. So we Buy and then what we have as an exit condition. We have 2 Moving Averages.

I will add them to the chart. From the Insert menu in MetaTrader select Indicators, then Trends, and click on Moving Average.

Using Moving Average in our Candle Color Strategy — Moving Average

The 1st Moving Average is with period of 15. I will make it red.

And the 2nd one that I will add to the chart, this is a Moving Average with period of 45 and let me make it blue, for example. I click on OK and here it is.

So when the fast Moving Average or this is the 15-period Moving Average crosses the slow Moving Average in this case, this is the 45 downwards, we exit the trade. And let’s see where this happens, it happens right over here.

OK, I will put quickly 1 vertical line and 1 horizontal line.

Take Profit and Stop Loss

So the exit is again on the next bar. We have the cross and it is confirmed on the opening of the next one. We have 4 consecutive bullish candles with a minimum body height of 50 pips.

And then the price goes up, up, up, up, and then a little bit down. And then when the fast Moving Average crosses the slow Moving Average downwards, we Take the Profit. In this case, it is a profit of 329 or something like that, above 300 USD of a profit.

The profit from this candle color strategy — We made a profit of above $300 profit

But again we have Stop Loss and Take Profit. The Take Profit is 240 USD. So first we will have the Take Profit hit I guess somewhere in this candle 240 USD above the open price. So it’s 10505 plus 240. That will be 10745. Actually it’s a little bit earlier, 45.

I guess it will be hit with that candle. Exactly 45. So we have the Take Profit a little bit earlier and then we have a Stop Loss below of 215 USD Stop Loss. This is a great example of this candle color strategy. Now, right here, we see the opposite example. 1, 2, 3, 4, on the opening of the 5th one, we have a Sell trade.

Candle color strategy sell trade — The sell trade

Candle Color Strategy With a Few Indicators

For sure, these candlesticks, they have over 50 pips or as we said, for the Bitcoin, this is 50 cents. We Sell on the opening of the 5th candlestick. And here again, we will have the Take Profit hit because the price is 10688 minus 240 USD of a Take Profit.

That would be 10488, we Sell and then we Take the Profit. So one more time. This is one of my favorite strategy because the chart is very simple and you really don’t need to have a lot of Indicators over it. All you need to look for is 4 consecutive candlesticks with the same color.

And then on the 5th one, you open the trade. And again, I will attach the PDF with a description of the strategy, very simple Candle Color.

And we have bullish candle formed to Buy and bearish candle formed to Sell 4 consecutive candles and minimum body height of 50 pips.

And we have the exit Indicator, which is the Moving Average cross.

Thanks for reading this lecture. I wish you always have a great day.

Robustness testing check Forex trading example

Robustness Testing Example: Check If Forex Strategy Is Profitable

Posted on January 25, 2021 | by Petko Aleksandrov

Robustness Testing in Forex Trading

Hello traders, in this lecture, I will show you an example of a robustness testing check using the Reactor in EA Studio.

So as I’ve already said a few times, what the Reactor does is automate the whole process. We have the Generator where the trading strategies are generated. Then if we want, they go through the optimization process and then they go through the robustness testing check.

Showing how to use the Reactor tool for Robustness Testing — The Reactor

And something very important to note is that when we use the optimization, any of the 3, this will change the strategy that comes from the Generator. But the robustness testing will not change it. It will just test if it is robust.

And this is possible again with 3 different options. One is the Walk Forward validation, very similar to what I described in the previous lecture for the Walk Forward. But the difference is that it doesn’t change the strategy.

It just proves if the strategy is robust or not, if the result of the Walk Forward is worse than the initial strategy, then this initial strategy that came from the Generator is over-optimized. And if the strategy fails, the Walk Forward validation, or any of the other 2 robustness tests, then we will not see it in the Collection at the end.

Perform Robustness Testing With Monte Carlo Validation

In the collection, I have that strategy that I used previously to show you.

Strategies go in the Collections in EA Studio — The collection

But I will leave it because I want to show you how the Monte Carlo works and the Multi Market. Monte Carlo is the tool that I always use when generating trading strategies. So this box is always checked for me.

Monte Carlo robustness check — The Monte Carlo

What Monte Carlo does in very simple words, it tries to break the strategy before we start trading with it. It runs a variety of robustness tests.

If I click on Monte Carlo, you will see that I have the option for different simulations that are separated.

robustness testing
with Monte Carlo in EA Studio — Monte Carlo simulations

We have market variations, execution problems, and strategy variations.

How to know if your strategy is over-optimized

So how I usually use it is with the last 2 – Randomize Indicator parameters and Randomize backtest starting bar. And what that means is that the Monte Carlo will perform a variety of simulations with different or randomized indicator parameters, and it will simulate backtest from different starting bar back in time.

This way, we will know if the strategy was optimized for the Indicator parameters. Just what I explained about over-optimizing. And we will know if we start at any moment at any bar with this strategy with this Expert Advisor, is it going to be still profitable or not? And this way, we will know if the strategy was over-optimized exactly for the period tested.

Robustness Testing Check

So if I go to Collection and I select that strategy again, you see that it showed that it was over-optimized for that period.

balance chart for the strategy in EA Studio — The balance chart

And let’s go to Monte Carlo and I will click on start and let’s see what will be the results in the robustness testing check. Here they are.

The results from the strategy — The results

We have 19 out of the 20 tests validated. So all of these tests here are with different parameters, different backtest starting bar. But one of the results is losing here.

The Optimizer

So there is a very huge chance that this strategy was over-optimized. This is because I actually optimized it in another lecture. With a step of 1 using the Optimizer. And we saw that it optimized it very well for this period.

But then when I added previously 8 years, then the strategy is not really what we want to see. And actually, I changed the data a little bit, but it’s very similar. So that’s the one that I have set, for XM. And now, I will go back to Monte Carlo and I will tell you about the market variations. This is where we have Randomize spread, Randomize history data.

You can use that if you’re using different historical data or for different brokers with different spreads.

Execution Problems

Well, this will be applicable if you have some execution problems with your broker. It often skips positions or there is a vast slippage, which is not really the best thing we want to have with the broker. You can check as well the strategy with such simulations. But this is how I use it. The last 2.

Robustness Testing With Multi-Market Validation

And if I go back to the Reactor and I go to Multi Market, this is the last robustness testing checks that we have on the list.

A strategy that comes from the Generator, that passes the optimization, the Monte Carlo, everything on the top, and reaches the Multi Market, we will be able to check if this strategy is performing well on the other markets as well.

We can change these markets to whatever we want. Usually, if we are generating for EURUSD, for example, we want to know how the strategy performs on other currency pairs. Not on gold or stock or oil or anything like that. So I have clicked randomly on a few currency pairs and if I use the Multi Market, it will perform backtest on these currency pairs, the same strategy and it will validate a number of tests.

So if we have like 5 here and we select 3 that are validated, it means that it will validate for sure for EURUSD. And then we want another 2 to be validated.

Avoid Over-Optimization

Let me demonstrate very quickly how that works with the current strategy that we have in the editor. I will go to Multi Market and let’s change the brand to EURGBP, for example, and as well, I will select AUDUSD. And then I have AUDNZD, it doesn’t really matter. I just want to have 4 pairs and I will click on start. Let’s see how this strategy performs in robustness testing examples on other 5 markets. 1 of 3, 1 of 4. And we are waiting for the last one, here we go. All the others are losing.

Results from other markets — All the others are losing

The initial strategy for GBPUSD is profitable.

But one more time, I have optimized that and I think I over-optimized that. This is not like a 100% event. I cannot say 100% that I have over-optimized the strategy. But from what I saw after adding the previous 8 years is that the strategy is losing for most of the time and I see that the Multi Market shows me losses on the other markets. Probably the best way to say it is it’s most likely that I have over-optimized the strategy. We are not 100% sure but the chances are big.

So that’s why I don’t recommend using the Optimizer, it’s better to use the Walk Forward or the normalization. And don’t get me wrong, it doesn’t mean this is a bad thing. Not at all. You just need to know how to use it carefully and what robustness testing exactly you need to perform after that to make sure that the strategy is not over-optimized.

Robustness Testing in EA Studio

Some of the features in EA Studio are so good and the algorithm behind it is so smart. I can say that it becomes dangerous for some of the strategies because it finds quickly the best parameters. It optimizes them very quickly. This is the work of the Optimizer, but at the same time, this is risky not to over-optimize it, just like driving a very fast car, which is dangerous.

People want to drive always fast cars, but this is when usually the accidents happen. So you need to be very careful when using it or just play more with it, see how it’s working. And if you have any questions, of course, feel free to ask me in the forum.

Setting Data Horizon

I will remove now this strategy from the collection and I will run the Reactor. This is how I perform a robustness check most of the time. Usually, it works faster.

But again, I have a few more running on the same computer. So when you run 3, 4, 5, or more, they might get slow. Keep in mind that EA Studio works in the browser and it loads from the server the 1st time and then it works on the browser. It’s web-based, which gives you the opportunity to run it on multiple browsers at the same time.

So what do I usually do? I set 1 for EURUSD. And now just next to the recording screen, I have a few more for GBPUSD, EURGBP, and this is how I am generating strategies. One thing I forgot to do is to reduce the data. I will go to Data, Data Horizon and I will do it just for the last 5 years.

I will start again.

And one thing, keep in mind that the more data you use, a little bit slower it will be, the less data, the faster it will be. It’s logic. So this is how I am using the Reactor.

It’s a lot of possibilities through the options. You can test it, use whatever makes sense to you. But definitely, it’s the best thing we can use in algorithmic trading nowadays to have robust strategies and to have many strategies.

How does it work?

It will generate strategies if they pass the Acceptance criteria, the Out of Sample, the Normalization, and the Monte Carlo robustness check. I will see them in the Collection.

So basically, they will go through a tough robustness testing. And at the end of the day, I will have hundreds of strategies, maybe thousands of strategies, and I will see the best ones into the collection.

I will leave it now running for some time. Actually, I have set exactly 10 hours. And after 10 hours, I will show you what results I have in the Collection and you will see how easy it happens. I don’t do anything.

I will leave it overnight and in the morning I will have some ready strategies in the collection.

Thank you very much for reading. If you found that article useful, leave a comment below and if you haven’t subscribed to our YouTube channel, make sure to do it now.

If you have any questions, let me know.

Cheers.

How to Backtest Trading Strategy

Posted on January 22, 2021 | by Petko Aleksandrov

How to Backtest Trading Strategy

Dear traders, in this lecture, I will show you how to backtest a trading strategy on MetaTrader. Moreover, I will compare some results that we have from EA Studio with the trading strategy backtest in MetaTrader. You will see that it’s the same thing.

Now, I have run here the Reactor for EURUSD on the H1 chart. Already, I have 23 strategies in the collection. And let’s have a look at the first one where I have a very simple trading strategy for backtesting – entry rule, Stochastic signal, exit rule, Envelopes. We have a Stop Loss of 95 pips and a Take Profit of 70 pips. A very simple strategy with 1 entry and 1 exit condition.

But you can see a great balance chart, and this strategy did 542 trades for the last 5 years and a net profit of $4,114 which is for 0.1 lot. If I increase the lot to 1 and I click on Accept, it will be 41,143. It depends on the lots that you are using, but I will go back to 0.1.

What Strategy properties we use when backtest trading strategy — Strategy properties

And especially if you are trading with a smaller account, you need to use a smaller lot.

Now, for the strategy, we can see a lot from the report.

This is where we have a lot of statistics in EA Studio, and we have as well the report in MetaTrader. In addition, we have the journal that we can compare with the trading strategy backtest in MetaTrader.

Every Trading Strategy Backtest Has Losing Trades at Some Point

As well, we have the balance chart,

backtest trading strategy with the balance chart — The balance chart

and we have the indicator chart, which is really great.

The indicator chart in EA Studio — The indicator chart

In addition, you can see exactly where the trades were opened and closed. Let’s see one more time, what the entry rule was. The stochastic line crosses the signal line upwards. Going to the report, indicator chart, and here is the cross.

The Take Profit was hit. The green line shows where the Take Profit is. And if I look previously, here is a short trade, here we have the cross, Take Profit is hit.

Every strategy has negative trades, keep that in mind.

Profit factor

Of course, we are looking for strategies that have more profits than losses or what I said, the Profit factor – the net profits divided by the net losses. So when I set the Acceptance criteria in the reactor with a Profit factor above 1.2, I have really great strategies and you can see that I have more profits than losses.

After that, what I want to show you in this lecture is how to backtest a trading strategy using the Expert Advisor. I will go back to the editor and I will export this strategy for Meta Trader 4, you can export it as well for Meta Trader 5, depends which platform you use.

Now, I will open the MetaTrader and I will paste the Expert Advisor here. I will go to File, Open Data Folder,

and then I click on MQL4,

and I click on Experts.

Then, I will paste the Expert Advisor from my Downloads folder, and here it is.

One more time, for MetaTrader 5, you need to open the Expert Advisor with the MetaEditor and you need to compile it.

For MetaTrader 4, you can go to Expert Advisors, right-click and hit on Refresh.

MetaTrader 4 backtest trading strategy — Right-click on Expert Advisors and refresh for MT4

This will compile the Expert Advisor.

The Magic number

And if you want to trade with this Expert Advisor, make sure you enable the AutoTrading, it must be green. However, if you want to just backtest a trading strategy, you don’t need to enable AutoTrading. So you will avoid opening trades. And in order to put it over the chart, you either drag it or double-click on it.

In addition, from Inputs, you can see the Stop Loss and Take Profit. The entry lot, you can change it from here if you want to increase it or decrease it. And we have the parameters for all the indicators. We also have the Magic number which is very important, especially when we trade with many Expert Advisors, which I will show in this course.

The Magic number allows us to follow the performance of each strategy and it’s very useful when we are doing portfolio trading with Expert Advisors.

The input menu in MetaTrader — The input menu

I click on OK, and the Expert Advisor is attached to the chart. There is a sad face because I disabled the AutoTrading.

I don’t want it to open trades with this strategy right now. I just want to show you how to backtest a trading strategy. So, I right-click and I go to Expert Advisors and I click on Strategy Tester.

MetaTrader Strategy Tester — I go to Expert Advisors, then Strategy Tester

A new window will open below and we can set the Expert Advisor. Usually, it will be the one that we have on the chart, the symbol.

The graph display is the same on both Meta Trader and EA Studio

As a model, you need to use Open prices only.

This is because the Expert Advisors from EA Studio open trades on the opening of the bar. When there is a new bar coming, it checks for the entry rule. If it’s true, it will open the trade. So I click on Open prices only, and as Period, I have H1, and I have a spread of 10, which is OK. It is rounded to the higher number.

As we said, this is better for the backtest. The current spread with EURUSD is 2-3 points, but I will backtest the trading strategy with 10, which is a more pessimistic backtest and more realistic. I don’t want to test it with 2-3 points and because we have a floating spread with most of the brokers, there will be times when the spread will be higher.

This is how we do it more pessimistically and it’s the better thing you can do. If I click on Start, the backtest is really quick. This is because the code is great, no mistakes, no errors. If I go to Journal, you will see there are no errors.

using the journal to backtest trading strategy — The journal

And if I go to the graph, what you will notice is the very same graph as what we have in EA Studio.

backtest trading strategy with the graph — The graph

I will show you in detail that it’s the same thing.

MetaTrader & EA Studio Have a Difference in Their Trading Strategy Backtests

Let’s see how much profit this trading strategy backtest made. In the end, we have about 13,529. On the other hand, what we have in EA Studio is 14,114. Where does the difference come from? From the historical data. Let’s go to the editor one more time.

What we had was data starting from the 15th of July, 2015. This is what I have set in the Data Horizon.

Use Data Horizon to backtest trading strategy — The Data Horizon

Let’s find out what data range we have in Meta Trader. How can I do that? Firstly, I will press the Home key on my keyboard and I will go to the beginning.

It is on the 11th of December, 2015. A couple of months are missing. I will need to make it the same as much as I can. So 10th of December, I will go back to the Data Horizon in EA Studio, and I will enter 10th of December, 2015.

And I go back to the strategy. So what we have, the 10th of December. And I have 13,546. Very close to what we have in Meta Trader. Now, there might be a very small difference because the MetaTrader trading strategy backtest is not as good as the EA Studio backtest is.

EA Studio Works on a More Pessimistic Trading Strategy Backtest Outcome

If we have a very long candle and we have a trade open, and then if the Stop Loss or the Take Profit is within this candle, the Meta Trader will take the positive outcome because it doesn’t know what happened inside the bar.

The price went up and down. It will take a positive outcome, which is sometimes misleading. And this could happen with some strategies quite many times in the backtest. And EA Studio takes the negative result.

So again, it works on a more pessimistic trading strategy backtest outcome. Let me compare some of the results at the end of the backtest just from the last couple of days in EA Studio. I will click on Report. And here are all the trades that happened. I will go to the last page and have a look at some of the trades that we have.

Actually, the data that we have from Dukascopy that we have downloaded from the Free Historical Data App is until midnight yesterday. So from there, we can have a very small difference in the final result with the backtest.

EA Studio and MetaTrader data comparison

Now, let me try to make them both visual. For example, what I have on the 13th of July, I have a sale, and let’s see the other platform, on the 13th of July, yes, open short.

example of data comparison in backtest trading strategy — The data comparison

It is at 10:00 p.m, it is 10:00 p.m. on Meta Trader as well. And the price is 1.1352, 1.1352. Stop Loss, 1.1448, 1.1448. Take Profit 1.1283, 1.1283. I’m not looking at the last digit, which is the point, because it depends on the spread. It depends on whether it’s floating or not. And there might be a little bit of a difference with the final profit.

Let’s see one more trade. For example, the one that opened on the 10th of July. What is it? It’s a buy at 1.1270 and it is at 9:00 o’clock, 9:00 o’clock, the 10th of July, we have 1.1270 long trade. So for the very beginners, the backtest matches from EA Studio and Meta Trader.

This shows a very simple thing, the Expert Advisors and the strategies that we build with EA Studio are real, they have a real backtest. Not just in EA Studio where they were created, but as well on MetaTrader. And, one more time, the backtest trading strategy in EA Studio works much better, much faster than the backtest on MetaTrader.

What we will learn next

And we have many more statistics which are very useful to improve our trading strategies. I will leave now the reactor working, but before I show you the results, I will record one more video where I will show you the 4 different ways to test Expert Advisors and I will show you which is the method that I like the most because it’s the fastest, it’s the most reliable way, and it works really nice for me.

Thanks for reading. We’ll see you in the next lecture.

How I doubled my trading account with District0x DNT crypto & Civic

Posted on January 17, 2021 | by Petko Aleksandrov | Leave a Comment

Hello, everyone, today I will show you how I succeeded to make over 100% of profit for less than 12 hours last night with District0x DNT crypto. It was with one of the top gainers that we have at the moment on the Crypto market.

So at the moment, Bitcoin tries to break the $16 000 and today is actually the 6 of November 2020.

Bitcoin price when breaks 16 000 USD — Bitcoin tries to break $16 000

We’ll see how far Bitcoin goes but as you know if you have watched some of my courses and especially the Cryptocurrency Investment trading course, you will know that what I’ve been trading is smaller Cryptocurrencies and not Bitcoin. And this is because they just move faster. And especially I will show you what I did with the District0x DNT crypto last night. I have bought a piece of 600 EUR DNT.

The price was below 2 cents, you can see it right over here.

Bought the District0x DNT crypto — The District0x DNT crypto

And then what happened early this morning when I woke up? The price was 100% higher and I can just go to the top gainers and it is still a top gainer today with above 341% and you can see where the price is. It is above 4 cents. And if I click on it, you will see how aggressively it goes higher, and if I go to all where I will see all the prices, you can see that District0x DNT crypto back in January 2018, it reached nearly 50 cents.

The Civic

Now that’s kind of an impossible target for now but I’ll be happy to hold it until the 10 cents. Having in mind it’s at 0.04 right now. All of these levels here about the 10 cents would be a great target for me. So we’ll see how it’s going and actually, Coinbase has this great option if you click on prices, and then on the right side where you see tradable assets, you have the option to select the top gainers.

The top cryptocurrency gainers — Top gainers

Here you can follow which are the Cryptocurrencies that gain the most at the moment and it’s super cool because obviously there are hundreds of assets, it’s hard to follow all of them. But at any moment you can look and see which is the one that currently profits the most. And usually, these are very small Cryptocurrencies just like the District0x DNT crypto but sometimes they might bring you great profits.

Of course maybe a little bit of luck is involved to know if it will continue higher because not a lot of fundamental data about some of the small Cryptocurrencies. The next one is the Civic which did as well a great profit and I’m considering to take some more of it on the next pullback. Probably, if it drops down to 5 cents.

The Counter Trendlines

This is how I have gained 100% with one of the small Cryptocurrencies last night but as I said I will be a little bit greedy hold it for a long time to see how it will go. I’m not in a rush to sell anything. I will keep you updated with my investments on the Crypto market.

The Bitcoin did a fantastic move up until it bounced from the 16 000, failed to reach them, failed to close above, failed to break. But look at this move. Now, as I’ve said already in the previous videos, a lot of the money are flowing into Bitcoin.

Not too much on the other Cryptocurrencies. But I’ll show you something unique that I caught and I will show you what I have bought this time on Coinbase. So if I zoom to the current setup, you’ll see that after that extreme move that we had from the Bitcoin, I had 3 Counter Trendlines that, if I go back, you will see that this was the first one where I had the chance to draw a Counter Trendline and then I had a very small failure of the recent low.

The District0x DNT crypto

So I consider this candle to be a failure of this candle.And this is where I bought one time and then the price went to the downside I didn’t have an entry here, OK, right over here, because there is no failure, OK, lower low, lower low, no failure so that one doesn’t count. I didn’t buy over here. Then I had the chance to draw a more aggressive Counter Trendline right over here. And here is the failure break, another entry break, another entry.

Simply, I didn’t have the time to record all of these entries 1, 2, 3 entries so far. And I will show you what I bought. Something very interesting that drove my portfolio much higher. OK, if I go to the hourly charts or the 24 hours, it doesn’t really matter, hourly chart or 24 hours. You will see what a constant growth I had and it reached 16 300. So this is above 8 000 EUR.

At that point I doubled my account

It could be a little bit more or less, but it’s around 100% profit on my account. OK, and you will see what I have in my portfolio. I have the DNT, which is known as DistrictOx, and as well I have the Civic. But this one so far didn’t bring me profits, but that one did. So this is a very cheap Cryptocurrency that I have bought one time. I think it was below 2 cents. Let me click on that and we’ll see the first time I bought it.

Yeah, it was below 2 EUR cents and then I’ve bought a little bit more at 0.0315 and I have bought 2. So I had 2 pieces of 600 EUR, as you see that the price reached 0.12. This is in Bulgarian Lev. So it’s above 0.06 EUR cents. OK, so I’ve bought it for 2, 3 and then it reached 6 EUR cent, which is a lot of profit. You can see that just for the last 24 hours it did 131% of a profit. If I go to weekly, you will see something amazing, 450% of a profit with the District0x DNT crypto.

And how I noticed that District0x DNT crypto is going up?

So you see where I’ve bought it the first time right here when was super cheap. And if I go to Prices, I will show you something interesting on the right side on the top of the tradable assets. If you click on the drop-down menu, you will see top gainers. So I often keep an eye on those to know which Cryptos are profiting the most at the moment.

And the District0x DNT crypto is on the top for the last few days together with the Civic. And this is how I noticed that there is a movement with the DNT. So I have taken 2 pieces and another piece of Civic and these are very small Cryptocurrencies. And when I say small, they are cheap. At the same time, its market capitalization is very small. You can see 52 million for the District0x DNT crypto and 64 for the Civic.

The potential in District0x DNT crypto

So I think it’s a lot of potential with these Cryptos. So we’ll see how it goes. You can read more about them, of course, over the Internet, but they brought my portfolio in the great profit. OK, you can see it was right here at about 12 000. So this is about 6 000 EUR, which was a little bit of a drawdown even. And then boom, it’s up to 8 000 and at the moment about 7 000, so a little bit pull back from this Cryptocurrency as well, so I’ll see how it’s going.

Just keep an eye on these top gainers that we see on Coinbase because you might catch some very volatile Cryptos that are just jumping with 100, 200, 400% as you see what the District0x DNT crypto did during the last week. Of course, I wish I have bought it here, but for a long time, there was no movement. If I go back to monthly or even yearly. OK, monthly, you will see that it was just nothing in there.

So why would I put my money into it? But when there is such a move boom, there is something going on in there. And most of the time I really don’t want to know what’s going on in there. I don’t read so much of the news anymore and follow what’s going on because it’s so many Cryptocurrencies. But from my experience, I know that if there is such a move, there is something going on.

All questions are welcome

If people are buying it, I will buy. But when it’s cheap, OK, maybe the current price is cheap as well. If the price reaches to let’s see where it was back in 2017 and you can see how far it went to 0.78 Bulgarian Lev. So that would be about 0.40 cents, EUR cents. But if it reaches any of this level to not 40 but let’s say 20 to 25, I will have a very decent profit into my account.

And anyway, I would be just happy even to buy some of the dips. So if it goes just about these levels one more time to 0.05 or to even 0.06 or somewhere in here, I’ll be happy to buy some more of it. Of course, if I have entries from the Bitcoin strict to the system.

This article is based on a free lecture from the Cryptocurrency Investment Strategy Without Losses course. You can enroll in the course on our website. Thanks for reading. Feel free to ask if you have any questions.

I wish you safe trading. Cheers!

Backtest Forex Strategy: MetaTrader vs. EA Studio

Posted on January 16, 2021 | by Petko Aleksandrov

How to Backtest Forex Trading Strategy?

Hello everyone, in this lecture, I will show you how you can backtest Forex strategy Expert Advisor on MetaTrader & EA Studio.

It is very important to backtest an Expert Advisor before trading with it. And as well, you need to know how to backtest it exactly, depending on how the Expert Advisor works.

As I’ve said, these Expert Advisors work on the opening of the bar. So this is the option we will be using.

Market Watch with Forex Expert Advisors — The Expert Advisors

Now, if you want to backtest Forex strategy Expert Advisor, you need to click over the chart, go to Expert Advisors and go to Strategy Tester.

Showing how to Backtest Trading Strategy with MetaTrader Strategy Tester — Click on Strategy Tester

A new window will pop up below and usually, everything is fulfilled automatically.

Model Options Settings in MetaTrader — A new window pops up below

You can see the Expert Advisor, the currency pair, and Model is Open prices only because these Expert Advisors open trades on the opening of the bar. So they use the open price.

And if I click over it,

Model options in MetaTrader 4 — The Model options

you will see that we have every tick, the most precise method, it says, but there is no tick data in MetaTrader. It’s a kind of an illusion here that we actually don’t have big data, but there is such an option. So, don’t go for it. So we have control points and we have on the bottom the open prices only which says the fastest method and you will see actually how fast it works. On the right side is the period, the spread.

The Report

And all you need to do then is just click on start and you see it happens for less than a second. It’s super fast. And if I go to results,

you will see that I see every single trade where it was opened, where it was closed, how the balance line went and how many trades basically I had. And if I go to the graph,

the more interesting thing is you can see how the equity line went with the strategy. It is on profit.

We have as well report where we see some statistics.

backtest trading strategy results — The results

But this is really not enough what we see as statistics. We have consecutive wins, consecutive profit. And what’s interesting here, we have consecutive losses as well. We have the maximal drawdown, which is 1.71% pretty good. But for me, that is not enough

How to Backtest Forex Strategy in EA Studio

Now, I will show you how to backtest a trading strategy in the EA Studio strategy builder software.

But let me close it and I will make one more backtest on USDJPY on M15 for example. I will right-click and go to Expert Advisors and I will go to Strategy Tester. Here it is. All is set automatically and I click on start and let’s see what we have as a graph. Here it is.

backtest trading strategy graph — The graph

You can see the strategy is different. The backtest is different. We have a bigger drawdown right here.

Use Historical Data to Backtest Forex Strategy

I guess we will see in the report. Maximal drawdown of 3.07%.

But again, this is not enough as statistics and as well it is not enough as total trades 121.

And why I have all the 121 trades is because I don’t have enough historical data on Meta Trader. 121 trade that happened in the past is not enough for me to consider this strategy as robust. Of course, I know it is robust because I have done the test on EA studio and I know that for many more count of trades the strategy is profitable.

But if you buy an Expert Advisor from the market and you test it on Meta Trader and see just 121 trades, you will be like, oh, I’m not really sure if this is a robust strategy. Because the strategy executed just 121 times and I’m not sure if it will work in the future. That is why we want to see a minimum 300 count of trades, 500 is preferable, more it is even better.

I continue about a week after I have placed these 12 Expert Advisors on a small Live Trading Account for the purpose of this course. And you can see that already I have a 15 USD profit, not a lot of profit for 5 days.

But as you notice, as time goes by, the profit gets a little bit bigger. We see all the trades that opened and closed. Some more Take Profits were hit, and 15 USD in 500 account is 3%. Not bad for 1 week.

Demo Account

And obviously, I have these Expert Advisors on bigger accounts. But, one more time, I wanted to show a relatively small amount for this course because I don’t want anybody to accept it as a recommendation. If I show a bigger amount, I don’t want anybody to feel like trading with a bigger amount. I want you to start with an amount you feel comfortable with. Of course, as I always say, start first with a Demo Account.

You saw how the backtest on MetaTrader works and how it looks. And now I will show you what’s different when we backtest Forex trading strategy with strategy builders. We did it for the USDJPY. Here it is. You see some nice trades, some short trades happened recently.

recent trades — Some short trades happened recently

I will go to File, Open Data Folder,

I will grab these Expert Advisors for the USDJPY. So I will click on Experts,

and I will take the 2 USDJPY Expert Advisors. Let us copy them and I will minimize the VPS.

I have the Expert Advisor Studio with some strategies that I recently generated for the GBPUSD. But I will show you later on in the course how I am doing it. I will go to Strategy, and right into the editor we see an arrow where we can have a drop-down menu and I will go for the option to Import an Expert Advisor back or this is possible as well with the ctrl + I from your keyboard. I will just click on it.

backtest trading strategy expert advisor in EA Studio — Import an Expert Advisor back

Williams’ Percent Range

And on the folder that I have prepared before the lecture, I will paste the 2 Expert Advisors for the USDJPY. Here they are.

Let’s open the first one, for example, the one for the hourly chart. Click on Open and you can see what is the strategy behind the Expert Advisor.

I will show you so much more statistics. You see what a balanced chart I have.

As well, you can see backtest outputs where we see the most important like profit per day, but that’s for 0.1 lot, maximum drawdown, return to drawdown ratio, count of trades. And in the middle, we see the strategy itself. Something we don’t see in the trading strategy backtest on MetaTrader. I have an entry rule with the Williams’ Percent Range. If I click on it, you will see that Williams’ Percent Range is the Indicator and the rule is Willams’ Percent Range crosses the level line upward, period of 23, Level of -14.

And I have an exit rule with the Envelopes and the condition is the bar opens above Upper Band after opening below it, and we have the parameters below.

backtest trading strategy with the exit indicator — The exit indicator

What more do I have? I have the Indicator chart which is absolutely fantastic.

backtest trading strategy with indicator — The Indicator chart

You can see where the trades were opened and closed exactly. And where we have short trades and long trades. So for example, when we have red bars or small lines, you can call them below the chart, it means we are in a short position. And for example, right here we have 2 long positions.

Take Profit and Stop Loss

So you see where the new bar opened according to the entry rule and where the Take Profit was hit. The green small lines are the Take Profit and below that is the Stop Loss.

So every strategy obviously has losing trades and don’t expect to find strategy only with profits. But, of course, we wanna have more profits than losses. And with strategy builders like EA Studio, it’s very easy to find such strategies. And I will show you later in the course. But let’s have a look, for example, at that trade here. The bar opened after we have the Williams’ Percent Range crossing the level line.

Then we have the Take Profit, Stop Loss is somewhere below. I cannot see it at the moment. And I have as well the exit condition, which in this case, I think applied right over here. With this trade, you can see the trade was open here. The Take Profit was not hit. I have the exit condition.

trading strategy exit conditions — I have the exit condition

If I go back to Editor one more time and I click on Envelopes, the bar opens above the upper Band after opening below it, we have the bar that opened above the upper band after opening below it.

backtest trading strategy real example — The bar that opened above the upper band after opening below it

The Bollinger Bands

And this is actually a very interesting situation and example that I caught here accidentally. And I want to explain it a little bit more. So stay with me. This is very important what I will tell you in the next few minutes. Now, in manual trading, when you go back over the chart and you put the Indicators and you want to see how the strategy would behave, where is the trade, where the Indicators crossed, and so on, it is very tricky and misleading because the Indicators are repainting.

Now, at this moment right here, the opening of the bar was above the upper band and the opening of the next one is higher. What happened is just the Bollinger bands, it continued and it changed and when we look at it later, it looks like the bar was below the upper band. But the strategy builder, the software clearly shows that at that moment the bar opened above the upper band and not below it.

I will say it one more time. At that moment when this bar opened, the Bollinger band was below the opening point. And we see it above now because the Indicators repaint. They follow the price and they change after the price. So if I put the mouse exactly on the opening of the bar, I want you to focus on the values that we have below the chart. You will see that I have a bar with open price 105.988.

The Envelopes

The exit Indicator, which is the Envelopes, has upper band with value 106.01 which is the fixed value after the bar was closed.

But at that moment when the bar was opened and the price went up and down for 1 hour, this value for the upper band of the Envelopes, it was moving up and down, OK, it was not 106.01 the whole time it was moving, it was changing. And at the opening of the bar, it was below the price of 105.988.

That value of 106.01 came later when the bar was closed. So what happened? The trade actually closed here, but if we go back and look at it, we will not see that we have the exit. So this is the huge, huge difference when we use strategy builders like EA Studio and this is the benefit to backtest Forex strategy because we see exactly what happened, where the trades were open and closed. You can see here consecutive profitable trades. Very beautiful.

Long trades, another one, third one, fourth one, fifth one 5 consecutive trades on a profit. Very nice. And if I don’t have that and I just put the Bollinger band and Williams’ Percent Range on MetaTrader, and I look at the chart. I don’t know when this happened. I don’t know at any moment am I in the trade already or am I starting here? Should I exit here? You can see how hard it is. It is just on the upper band of the Envelopes.

Backtest Forex Strategy with EA Studio

Sometimes, it is so hard to understand the value of the Indicator, it is just a few points and pips, and here I can see very clearly that I had a trade opening. In this case, it was because of Williams’ Percent. Same thing with Williams’ Percent Range. You see that there is a cross. Sometimes it looks like a touch and you cannot be sure on the chart on MetaTrader whether there was a cross or not.

But if I put the mouse on it, you can see very clearly now that the Williams’ Percent Range level at this moment was -15.831. And the previous value was -10.484 which means that it was below the -14 and then it went higher.

But sometimes it looks like a touch over the chart and you cannot understand what happened there. Was there a cross or not. And if you don’t backtest Forex strategy and if you don’t have the strategy builder, you cannot really understand how the strategy works.

You don’t know where the trades were open and closed, but with EA Studio especially, which I find to be the best strategy builder at the moment for the last 3 years, I can tell that this. It’s not just because we have integrated on our website, but because we have been testing all of the strategy builders out there, all of the software available. And obviously, I want to use the best one at every moment.

The most profitable trades

EA Studio is so much ahead of every other software. And that’s why we have integrated on the website. There is a free trial that you can take advantage of on the homepage. There is a free course as well. And in the next lectures, I will show you more about EA Studio, how I am using it, how many other traders are using it, how we generate and create new strategies, and how much easier is algorithmic trading with such a piece of software.

What’s more, statistic is not just the Indicator chart, the balance chart, and what we see right here on the Editor. But if I click on the report, you will see stats information which will give you so much more about the strategy.

This is the backtest outputs. So you see how many things we have as information. We have the Balance Chart. We have the Count of entries by weekdays, Profit and loss in currency by weekdays.

So we can see when this strategy profits the most. Obviously, in this case, it is on the Thursdays. And if I scroll lower, you will see much more information and you can see the profits and losses by entry hour you will see the position profit by position holding time.

So what that means is that the most profitable trades are just in the first hours. You can see a lot of green dots over here and below we have monthly performance in currency so we can see back from, in this case, November 2017.

Risk Diversification

I have said it this way, just to have a look at it for the last 3 years. But you can notice that there are months of losses for this strategy. This period over here in 2018 was horrible for this strategy, but that’s normal. We always have profitable trades, losing trades. We have profitable months, we have losing months as well. But the idea is that with EA Studio we can have these kinds of strategies where we will have more profits than losses.

And when I trade a portfolio of strategies or I trade, for example, 12 Expert Advisors like what I’m demonstrating in this course, they compensate each other. When this strategy was losing in this period, the others were profiting. And this is exactly the risk diversification. And I’ve mentioned that I have selected to use 3 years of historical data to backtest Forex strategy, but if I go to data and I go to data horizon, I can increase it as much as I want up to 200 000 bars.

And this is because I’m using the premium data or this is the data from the Forex historical data app that I already showed, which is the best solution. And this data comes automatically in EA Studio, so I don’t need to download it. It is here all the time. All I need to do is to make it work for the broker that I have selected to use and in the next videos, I will show you how I’m doing that.

Take advantage of the 15 days free trial

So this is the difference between when we use EA Studio software and when we backtest Forex strategy on MetaTrader. Honestly said I’m not doing backtest on MetaTrader. I just show them in some of my courses when I compare the software and I compare MetaTrader, it’s a huge difference. But of course, that’s professional software. However, I will share some more of it in this course.

But if you don’t want to do it by yourself, no worries. I will include the already 12 Expert Advisors always. So you will not need to do it by yourself. All you can do is just play with it. Use the 15 days free trial. It has no obligations and you can export as many Expert Advisors as you wish. That’s the beauty – with 1 click I export the Expert Advisor. I don’t need to have programming skills. I don’t need to hire developers. It works with 1 click. This is why initially I took it.

Then after I saw its capabilities, I knew immediately that we needed in the Academy and everyone in the team uses it and now hundreds of our traders. And that’s why I’m sharing it with you. Let’s go for the next lecturers together and you will see more of the course and you will learn more about Expert Advisors.

Cheers, guys.

When to Buy Cryptocurrency With Bigger Volume

Posted on January 14, 2021 | by Petko Aleksandrov | Leave a Comment

Hello, investors, in this article, I will show you how I decide when to buy cryptocurrency. Moreover, I will show you some more examples of investment opportunities that I have on the market at the current moment.

What happened since the last lecture? The target was reached, the 12 168, and I have sold all the Cryptos that I had on a profit. And then the market pulled back, which was very expected and it gave me a new opportunity, ОК, a new buying opportunity after a nice aggressive Counter Trendline.

So first of all, this is the new Fibonacci that I have from the levels of 12 486 down to 9 802.

It is a huge Fibonacci. But let me show you why I have this Fib. The previous one was at the top of 10 152. And then I start the Fibonacci from the lowest point, which, if I zoom, you will see, is at this level at $9 802. So here it is. And I have the new top, which is after the break. So it’s from this level 12 486 down to 9 802.

It’s a huge Fibonacci and the targets are pretty high, very high. 14 146, 16 830 is the second one. So I guess this time I will be looking to sell at the 14 146. Or in other words, if the price reaches this level, I will just check what I have in the portfolio. If I have good profits with some of the Cryptos, I would sell them at that first target and I expect further retracement form the Bitcoin.

I wanted to increase the entry

It can reach these levels of the Fibonacci easily, according to me, 11 460, which is the 61.8 level, and the 11 150. And if it drops below 10 000, then I guess it will be really bearish market for Bitcoin and we can expect further drop and we might have new lower lows and lower highs which will form the downtrend, and at this moment I will pause the investing. And when the new uptrend is formed, then I will be looking to buy cryptocurrency and draw new Fibonacci.

This is what I already showed in the Cryptocurrency Investment Strategy Without Losses course. But for the moment we are still in an uptrend. And I had these Counter Trendlines. So one Counter Trendline coming up from the top and then a second one aggressive Counter Trendline from these candlesticks through these lower highs.

the Counter Trendlines — The Counter Trendlines

And yesterday, the price broke it, we have a failure of the recent low. So until this moment, there were lower highs and lower lows.

And then there was this higher low which failed to take this low and the price broke it. Not very aggressively, but there was a break then retested and continues higher. So I took 500 EUR of Chainlink. And something I forgot last night when I was buying Chainlink is that I wanted to increase the entry. Because what I shared with you in this course is that I divide all the investments into 10 pieces.

Please don’t take my advice for a recommendation

And so far I was buying cryptocurrency with 500 EUR, but now my wallet has over 6 000 EUR. Actually, I took one piece with 500 EUR for the Chainlink, so it was 6 500. Anyway, it’s above 6 000. I can increase the single investment to 600 EUR. But I just missed doing it last night because I took the Chainlink from my phone and I will tell you a little bit later how you can do it from the phone easier, you don’t really need to be in front of the computer.

So one more time until the moment I was buying 500 EUR each time I invest. But now, because my EUR wallet got bigger because of the profits that I did, I can increase it to 600 EUR for one investment. Or if you are planning to invest, let’s say, totally 2 000 EUR. Then you divide it by 10, you will have each time 200 EUR. Now, after you have profits, if your EUR wallets get to 3 000 and you complete a cycle, you can increase it to 300 EUR for one investment. It’s up to you. You can withdraw the 1 000 that you did profit and you can continue 10 times with 200 EUR.

These are not recommendations, guys, but just tips.

And if you are planning to trade 2 000 EUR, you really don’t need to put all 2 000 in your wallet for the first time and then start buying cryptocurrency. As I showed you, the first time when I bought the first Cryptocurrency in this course, I have bought them from my Visa, they were not in my EUR wallet, so I didn’t put straightaway 4 000 to 5 000 EUR in my wallet.

How I decided when to buy cryptocurrency

I bought them piece by piece and that what I sold everything, everything goes into the EUR wallet.

But you really don’t need to put all the money you are planning to invest in your wallet and then start buying the Cryptos. You can go one by one. But now after I have the 6 000, I can increase the single investment to 600 EUR instead of 500 EUR. And last night I bought Chainlink for 500 EUR.

So simply what I will do right now, because even the Chainlink got a little bit cheaper since last night. If I click on overview, you will see that there was more decline from the Chainlink.

Chainlink decline — The decline from the Chainlink

So I will just buy crypto from the EUR Wallet for another 100 EUR and I will consider this to be my first entry, the total will be 600 EUR. I preview the order and I buy cryptocurrency.

decide when to buy cryptocurrency — I select Preview Buy then Buy Now

It will take just a couple of seconds and I will have the cryptocurrency in my portfolio. So I consider this to be the first investment in crypto from the next cycle.

Following the Counter Trendline When Buying Crypto

And something that I want to add, and I think I forgot to share with you during the course, is that you can have the Coinbase app on your phone and as well you can have the TradingView on your phone.

And actually, the chart there is very nice, they have improved it a lot. You can draw the Counter Trendline and you can see where the price of Bitcoin is at that moment.

But usually, I don’t do any drawings on the phone. I just follow the market. And if I’m outside and I see that there is a break of the Counter Trendline, I can easily buy cryptocurrency from the Coinbase app. This is what I did last night. But what’s interesting is that in TradingView on the top-right corner we have this clock, which is an alert.

the clock alert in TradingView — The clock symbolizes alerts

How the alert notified me when to buy cryptocurrency

So you see what alert I had last night and that it was triggered. If I click on it, you will see that I had the alert if the Bitcoin is crossing up, you have different conditions. The value of 11 830, will notify me on the app. It will show a pop-up. It will send me an email.

Simply, I was outside, I saw the notification I opened up TradingView. I saw that the Bitcoin was breaking here and I took the Chainlink from my phone. And just this morning I figured out that I can increase it to 600 EUR per one investment because I have 6 000 EUR now in my EUR wallet.

My Future Cryptocurrency Investment Plan

I don’t really need to withdraw any cash at the moment, so I will just keep it. And my future investments will be at 6 000 EUR. And I keep it for the purpose of this course, with this amount. As I explained in the beginning, I don’t want to invest too much money in cryptocurrency because I really don’t want to stimulate anybody trading with a lot of money. You should be trading with the amount you feel comfortable with.

Even if you trade with just 200 EUR, that is fine. You’re still divided by 10 and each time you will invest 20 EUR. No problem, do that as long as you are strict with the strategy, you are fine. It really doesn’t matter how much money you are trading. Obviously I am doing this for a long time and in my other accounts I’m trading with bigger volume. But for the purpose of this course, I have decided to use this amount of money and one more time, don’t take it as a recommendation, I want to teach you the strategy, the system, the money management, which is very important.

So I will keep recording more examples which will be useful to you to compare your chart with mine. Where are my Fibs? Where are my Counter Trendlines and Aggressive Counter Trendlines? And I will be happy to hear your feedback, share your results with me and I will help you. And I will give you tips always to help you improve your trading.

Thank you, guys, for reading, and I will see you in the next lecture. If you have any questions, don’t hesitate to write a comment below, and if you haven’t subscribed to our YouTube channel it’s a great time to do it now.

Bye!

Most Traded Currency Pairs

Posted on January 11, 2021 | by Petko Aleksandrov

Most traded currency pairs

Hello traders, in this lecture, I will share with you what is the plan that I follow while trading with the portfolio Expert Advisors, which are the most traded currency pairs, and why I use these major Forex pairs in my trading. Moreover, I will share with you what timeframes I select for my trading.

For this trading portfolio, I have selected the GBPUSD, the EURUSD, and the EURGBP. I will tell you why.

For the previous year, you can see above that the EURUSD was the most traded currency pair with 24%. Secondly is the USDJPY with 13.2%, and the third is the GBPUSD with 9.6%.

These 3 are not just the most trader currency pairs for the last one year. Usually, these are the most traded currency pairs in general. My trading is around these Forex major pairs. The Aussie (AUDUSD) which is in fourth place with 5.4%, USDCAD with 4.4%, together with the NZDUSD are known as commodity currency pairs.

Their value quite often depends on the export and the import of these countries. Sometimes there are unexpected moves. For example, the USDCAD is very closely related to the price of the oil, because one of the main exports of Canada is oil.

Usually, I stay away from these Forex currency pairs when I do portfolio Expert Advisors. This is because I really don’t want to combine trading with the Expert Advisors with the fundamental analysis. I can do that, but especially for beginner traders, it’s quite difficult. I don’t want to get into these details.

EURUSD leads the most traded currency pairs

So I have selected the EURUSD, which is definitely the number 1 most traded currency pair. Moreover, I have selected the GBPUSD, which is the third. In addition, I have selected the EURGBP so I can have equal exposure. Because in EURUSD, I have one time the EUR, I have one time the USD.

In GBPUSD, I have one time the GBP and one time the USD. Meaning I have 2 times the USD, 1 time the EUR, 1 time GBP. And when I add EURGBP, I will have for the second time EUR, and I will have the second time the GBP. Each currency appears twice in these pairs. In total, 3 currency pairs, 3 currencies, and equal exposure.

This is something we have discussed with many of the students and recently with my colleague Ilan, that it is really important to keep equal exposure between the different currency pairs. Quite often, the mistake is that the traders test many Expert Advisors and strategies, like dozens or hundreds, and they take the top 10 performers, for example.

Equal exposure

But quite often, the top performers are all with the USD. It could be EURUSD, GBPUSD, and USDJPY. If you place these top performers on your live account, you will have huge exposure to the USD because it is in each currency pair that you trade.

Let’s say you are testing many of the Expert Advisors from our courses on a Demo account and you take the top 20.

I would suggest you take, for example, 5 from EURUSD, 5 from GBPUSD, 5 from EURGBP, for equal exposure. It’s not necessary to choose the Forex major pairs. If you want to have 5 from USDJPY, you need to have 5 from EURJPY as well or from GBPJPY so you have equal exposure between the different currencies. I hope that’s clear.

It’s quite important because if you select to trade Expert Advisors only with the USD and there happens to be a dramatic change in the price in one day or in a week with the USD, it might affect the whole portfolio negatively, something we want to avoid.

But when we have 3 currency pairs, even if the USD, for example, has an unexpected move, then EURGBP will not be really affected by that. You will not have that risk in your account.

Stay with me to learn more about algorithmic trading with the most traded currency pairs

For the purpose of this course, I have selected to use GBPUSD, EURUSD, and EURGBP. They have equal exposure, and I have selected to use the H1 timeframe.

This is one of the timeframes that I like the most. Not that I’m a fan of this timeframe. But after testing so many strategies and Expert Advisors during the years, H1 is very suitable for algorithmic trading, especially for the beginners, to follow the results.

I will be sharing these strategies and these portfolio Expert Advisors with you. That’s why I have selected the H1 timeframe because I find it very suitable for both beginners and advanced traders. What I will do in the next lectures of this course is to show you how I create the Expert Advisors, how I test them for one month, and how I place them for trading in my accounts.

This is what I do all the time. I create Expert Advisors, I test them, and I trade with them. As I trade with Expert Advisors, I create new ones and I test them. That’s an ongoing process. I’m quite happy to share these portfolio Expert Advisors with you.

In conclusion, I will show you how I create them and how I’m testing them in the next lectures.

Stay with me and you will learn a great system for algorithmic trading.