Avoiding price spikes

[Simon]

Hi,

 

I’m testing some EA’s on the small timeframe on Demo, and several times I have seen that many of them are doing well, only to be wiped out by enormous spikes in price, probably news event or similar.

Is there a way of building a strategy to avoid these spikes? Perhaps some “no news” or “close before news” indicator in EA Studio?

Or any other method? An EA that closes all positions before the news?

 

[Petko Aleksandrov]

Hello Simon,

it is pretty hard to use such an indicator because the news is different every day. Yes, some are at the same time, but they are not really in line…

You can find an online script that closes all trades at the same time. Also, you can disable the EAs from MetaTrader.

I have done that a lot before but recently I am at fully algorithmic trading.

The problem with the spikes is that the brokers do not execute the trades so quickly. This is one of the reasons why I prefer M15 chart.

 

[Simon]

Yes, I can understand that it would be difficult to implement.

Perhaps a larger stop loss could help? Although in the past, I have been amazed at how often the spikes go just a little bit past my stop loss!!

Thank you for the reply 🙂

[Petko Aleksandrov]

Hey Simon,

yes, this might happen very often when you trade while news.

You know what? When we generate strategies with EA Studio or FSB Pro we actually use the complete Historical data we god. It includes the news, right? This means that the generator finds SL that work while news. These news happened many times during the data. And when you trade in the future, the news will happen again (of course they are not the same, but they are similar, their effect on the price is similar). So we should expect to get well over the news, even there will be times when the SL is hit.

[Author]

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