Forex Trading Advisers

Indicator / non-indicator advisers

Allocated them to a separate group, because they are far from always being trendy. Again, let’s briefly state the essence.

First, consider the subtype – Forex indicator advisers.

The indicator adviser uses indicators in its algorithm to enter/exit the market. In this algorithm, there can be both “standard” indicators of your trading terminal, and some “author’s” indicators, about the mechanism of action of which it is better to clarify in advance.
Inside the indicator adviser, indicators can be used to identify the direction of the trend ( Moving average, Bollinger Bands, etc.) and oscillators (for example, RSI, Stochastic, etc.) that help you enter on probable “pullbacks” or from the border flat, and various indicators of volumes, the beginning/end of trading sessions, and some others probably unknown to me – there is quite a wide scope for creativity.

The Expert Advisor’s inputs, based on indicator signals, are united by the fact that a certain market situation with clear parameters is being traded. And for a beginner “manual” trader (who, of course, understands the mechanism of the adviser), just watching such an adviser will be very useful for gaining system trading experience. Because the “cold-bloodedness” of the adviser, as you know, can be envied – it is not subject to emotions from losing trades, it doesn’t matter – 2 losses in a row or 5, the current deal is in plus or minus, the gain is now on deposit or the loss is not the step will not deviate from its rules and methodically continue to conclude deals. Just watching the trading of such an adviser, you will see how a professional trader is trading and you will know what you should strive for in the “executive part” of trading.

The advantages of such advisers include:

  1. In most cases, a simple and understandable transaction conclusion algorithm: “it crossed here, it got out of such and such a zone – buying. If on the contrary – selling.”
  2. Variety. A lot of indicators have actually been invented. And even more, there are ways to interact with each other. Actually, you can choose an adviser with just such a mechanism that suits you as much as possible based on your internal sensations – adjust according to the time of work, by the style of entry (on a pullback or on increasing volatility), in the direction (trend / counter-trend), by the degree of “confirmation “signal (there is a legend that when few indicators are used, the signal is less confirmed, and when there are many, it is more confirmed. I will leave it without comment), etc. If you really like research, then the field is not plowed.

In addition, if you decide to test such advisers, this is a great opportunity to familiarize yourself with the mechanism of action of a huge number of indicators, as well as how they interact with each other. Based on this information, you may have some of your own developments for manual trading, which you subsequently “drive” through the tester.

  1. In most cases – a small number of transactions (compared to those advisers that are for “adventurers). I recorded it in advantages because the result of trading such an adviser is easier to track and analyze. It goes without saying, and in” adventurous “advisors and in more “conservative” you can simply study statistics, one if the adviser is “in no hurry” – it will be much easier for you to track how much slippage affects its results, how it behaves during the news, how it trades in a calm market, etc. In real-time, it tsledit easier than studying statistics Knowing the approximate mechanism transactions, not necessarily sit and look at the monitor all day -. about enough to understand at what point will make an entrance, for example, if you know.

A small number of transactions will also positively affect the emotional background of the trader – realizing that 2-3 transactions occur every day that will be opened according to the calculated risk management rules, there is simply nowhere for stress to come from, which means that again you can do something it’s more useful than tracking his work every minute and summarize, for example, according to the results of the week.
Now let’s move on to the disadvantages:

  1. Indicators will not adapt to a changing market. I will give an example. Let’s say the adviser is guided by a simple intersection of the moving average (MA) with a period of 5:
  • Above MA – buy
  • Below MA – we sell

And if the adviser more or less adapts to wider movements (for example, candles began to move not by 10 p, but by 15 p), then when the volatility of movements changes (there was a more “directional” market, but it became flatter – see the figure), the adviser with a large with some probability it will start to fail.

  1. The presence of signals from the “copyright” indicators. Sometimes it happens that by their mechanism of work there is simply no description, and if so, then even after testing for a certain period of time, you still trust the “black box” to trade on your deposit. Of course, it is up to you to decide, but, in my opinion, this is a rather greater risk, even if the test results are positive.

To summarize, the motto of the indicator adviser is “Quiet work, an understandable mechanism.” However, the user must understand that the indicator adviser is in most cases a temporary measure and, after some time, most likely will stop working. Therefore, it is an acceptable option to put it on a small deposit, and in case of profit equal to the initial value of the deposit, transfer it to another trading account, allowing the adviser to risk only with the money earned.

As an option, I suggest trying the Breakthrough_BB Expert Advisor, based on breaking through the boundaries of the Bollinger Bands indicator.
We turn to the non-indicator forex advisors.

An indicators indicator is an adviser that uses either price formations in decision-making (this can include both candlesticks, like a pin-bar or absorption, and graphic ones like “flags”, “pennants”, “butterflies”, etc.), or special trading time (for example, news – when a couple of minutes before the news release a buy order is placed just above the current price, and a sell order is placed a little lower). What unites them is that trade also does not depend on the current trend direction, but is carried out approximately according to the following scheme

  1. Price attenuation – some kind of graphic figure is formed, a candle formation or just a flat (figure)
  2. On both sides (as a rule), orders are placed: at the top – to buy, below, to sell. The exception is the candle formation. Here the order is placed only in one direction – to where the formation itself shows (figure)
  3. We are waiting for the price to fly in any direction, and we are behind it (also a picture with 3 situations)

Now let’s take it one after another:

  • Advisors based on graphic formations.

Here there can be a fairly wide range of different figures, from the simplest ones mentioned above to those that the author of the article may not know (you never know what was invented in the last couple of hours).

For beginner manual traders, such advisers are just as an excellent option for training – you can watch in real-time how a “cold-blooded” adviser builds/sees/calculates certain figures. If you test several such advisers (especially those based on the same graphic patterns), you will see that each author usually has a different way of “understanding” how this or that graphic figure should be built, and, as a result, you can choose for yourself exactly the option that you prefer.

  • Advisers based on candlestick formations.

The range of candle patterns is rather narrow – as a rule, 3-5 of the most popular ones are used, therefore various horizontal or inclined price levels are often screwed to these advisers.

I do not presume to judge regarding effectiveness, but in terms of training, this type of adviser is also a great option. Firstly, such advisers, as a rule, use the most “high-quality” candlestick formations for entry. Therefore, observing the work of such an adviser will teach you to automatically select only the highest quality from all candles, which can improve the results of your manual trading (give an example of a good and bad pin bar in the figure).

  • Advisors based on the opening of trading sessions/news releases, etc.

The essence is the same again – during the “calm market,” we place an order from above and order form below and wait. Most loved by novice traders, because it is extremely reminiscent of the “grail” of the market. But they are very easy to use. Watching their work can also be useful, but only in terms of seeing firsthand how quickly Forex can change the nature of price movements (in principle, this can be observed without an adviser).
The advantages of indicators advisors include the same as indicator ones, but there is one additional, very important: indicators inputs are perfectly adapted to changing market conditions.

The shape of a “triangle” or “flag” will be the same in properties as with a candle size of 10p, which with a candle size of 50p. If the movement becomes more “directional” – the patterns will simply be smaller in size. If it’s more “flat”, it’s bigger in size, but the essence of trade is the same in both cases.

The same goes for eternal formations – “Pin-bars” doesn’t matter whether the flat is now a trend, and it doesn’t matter either, it takes 10 p or 30 p. The bottom line is one
About news trading and opening, session trading is the same. We are just waiting for a strong price impulse at least in one direction. Yes, it’s much more interesting for us if the range is narrower before the impulse (then the risk is less, give an example), but the essence, again, is the same – in wide movements, in narrow movements, in trend ones, and in flat ones.

Now for the disadvantages:

  1. The complexity of the parameters for those who are just starting to look closely at the advisers. Due to the fact that the figure/candlestick pattern/flat width in front of the news will be different each time, it is necessary to find out whether the EA puts fixed stop loss and take profit, and whether it really “acts on the situation.”

If it doesn’t, then understanding the mechanism for setting stops/take will be quite difficult, because Each time, the adviser must somehow calculate where to put the stop loss and take profit based on the current situation. Here either ask the author or delve into the parameters. If you neglect the understanding of this, you can one day see, for example, a super-huge stop-loss set unclearly were and not clear why. (example)

If the adviser nevertheless sets fixed stops and take, we slip into the disadvantages of indicator advisers, namely, the fact that such an adviser simply does not adjust to decrease/increase volatility or the duration of price movements (example)

  1. Technical flaws in order execution, namely slippage, requotes

Due to the fact that in most cases, advisers of this type conclude a deal as if “for a breakdown” (example), therefore, the entry will be concluded with a market order. And if so, then with a sudden expansion of the spread, we can get the price that was not expected at all, and this will lead to a violation of the risk management rules that we calculated based on a certain ratio of stop loss and take profit.

There are, in principle, no special recommendations on the use of indicators advisors – the method of calculating risk management is the same as in the case of trending advisers. The only thing is that you need to adjust the lot size to the current volatility because getting a stop loss of 50p and a stop loss of 30p are different things if you use the same trading volume. But you will not guess the change in volatility – it can only be tracked after everything has happened. In an illustrative way, this will help to make the ATR indicator (figure). If you see that it has increased, you can revise the traded lot downward. If it has decreased, the opposite is true. Otherwise, everything is the same – we test, identify the maximum series of losing trades, calculate the traded lot at a comfortable level of risk, put it on deposit.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *