If you are considering forex day trading than this article is for you. On the net themselves will lay a wager more products and forex trading systems sold favor day consignation than for any form of transmittal and this forex article crave give you the new forex technic up against forex day trading.
The most important fact is it doesn't work longterm and you will get wiped out here's why:
ShortTerm Volatility is random
Millions of forex trader's trade trillions of dollars every days and to says you can tell what this huge diverse mass of mens will do in a few hours or a day is ridiculous.
Humans are un-predictable in short time frames - PER IOD.
All Volatility is random
This is a resultant belief as regards the above and of course short term unreliability is arbitrary.
If this is so, then all support and resistance levels are not valid in a daily time frame, as volatility takes prices anywhere in a day and you have no way of forex trading.
Tools that work in other forex currency time frames, simply don't work in intraday forex trading and never can - that's why a day forex trader can never get the odds in their favor and his luck will soon run out.
So why is it so popular?
Because it's a good story and internet marketers know this.
The establishment ballyhoo foolish e-books claiming rapid profits and infinite riches, all for a minim sheriffalty dollars! if subconscious self worked, a kraal nonuniqueness forex traders would mix small change and they don't.
It sounds low risk forex scalping small forex profits that build up over time but the reality is a thumping quick loss of equity for the trader.
But I have seen the track record you may say...
Sure you have but you never see a real one - there always hypothetical simulations done knowing the closing prices - how hard is that?
Anyone could do it even a kid could - but life in forex is not like that, you have to trade going forward and not knowing the closing prices and that makes things a little more difficult!
Its a yea couche and approximately in connection with the advertising vicar is fantastic but it's a tale but brave stories don't put through money. My kids love irk Potter aside from superego don't think they can fly!
Forex trading intraday appeals to greedy and naive traders who are looking for a fast buck and in forex markets making money is not easy and nor would you expect it to be - with the rewards on offer.
THE PERFECT FOREX NEWS IS...
There are far better ways to make money than forex trading and these methods use longer time spans where you can get the odds in your favor.
Traders can and do make money in forex trading - but the day traders end up in the 95% of losers and if you don't want to do the same, avoid forex day trading.
Get proper sensible trading forex education and trade the longer term trends for more forex profit.
More forex eduction you can find here - Forex Trading
Learn more - True Forex Scalper - Forex Expert Advisor - Download
Showing posts with label best forex indicators. Show all posts
Showing posts with label best forex indicators. Show all posts
Thursday, January 15, 2009
Sunday, October 19, 2008
Forex Trading Indicator - MACD Dots - Forex Signals
Hello dear Forex trader. I want to take a few minutes of your time to explain a few things about the dots that may or may not be intuitive.
They are:
• What is MACD and how is it developed?
• Why I think forex MACD is the best forex indicator around
• How the MACD dots were developed
• What other indictors should be considered
• How to trade the MACD dots as a forex system I think very few of us can actually explain how MACD is developed. It is of utmost importance to understand your forex indicator. All have limitations and if you don’t know and appreciate them you’ll soon be looking for another forex indicator.
In figure 1 we begin to develop the MACD. It consists of a 12 period EMA (olive line) and a 26 EMA (purple line). The difference between those 2 lines is the “Fast Line” (yellow line). Now we have an oscillator. The only difference between this and other oscillators such as forex Stochastics, RSI, and others, is that they are normalized in a way that they are usually bounded by 0 on the bottom and 100 on the top. They “oscillate” between those two extremes. There are limitations to that type of oscillator which we will later. But, MACD isn’t done yet.
The “Fast Line” (yellow line) is smoothed again by a 9 period EMA to create a “Slow Line” (blue EMA). The difference between the Fast Line and the Slow Line is often plotted as a histogram (Green Plot). Smoothing the Fast Line and creating an additional moving average is why MACD is often referred to as an “oscillator of an oscillator”. Personally, I think MACD is the best and most versatile forex indicator around.
By observing MACD you can tell 4 things about price action:
• The forex trend of price action. By observing the relationship of the Fast Line and the Slow Line we can tell the direction of the forex market. If the Fast Line crosses above the Slow Line the trend is up. This is the premise of a moving average crossover forex system.
• Divergent situations. By comparing neighboring peaks and valleys of the histogram we can identify areas of regular and hidden divergence. If you do not understand divergence read this.
• Momentum. When the forex market makes a move the Fast Line and the Slow Line separate. The difference can be seen on the histogram. When this movement subsides the lines come back together and the histogram approaches zero. We can observe the histogram rolling over, or rolling up, towards zero. This is an indication that momentum is drying up.
• forex Market noise. If the market is going sideways there will be no separation between the Fast Line and the Slow Line. The forex histogram will necessarily be very close to 0. This is a good time to stay out of the forex market or look for forex opportunity when price breaks out of the existing range. I started this forex system by trying to develop an forex indicator that would alert me to MACD crossovers.
This is the Fast Line crossing the Slow Line or vice versa. I found that, in many cases, the move was over or well under way when the crossover occurred. I wanted a way to anticipate the crossover. When momentum stalls, the histogram ceases to continue in a given direction. I thought if I could identify turns in the histogram, I could enter the forex market earlier than if I waited for an actual crossover of the lines.
In figure 3 I colored the histogram green when rising and red when falling. For me, this makes it more visually apparent which way momentum might be heading. I included red arrows to show where momentum has peaked. The blue arrows show that downward pressure is slowing and that a reversal is possible. On the figures to follow, the forex charts will have yellow dots above price to indicate a sell signal and blue dots under price to indicate buy forex signals. They will approximately agree with the red and blue arrows I used in Figure 3.
There are only two problems left to solve:
• What if the forex market isn’t moving?
• How do I reduce false forex signals?
Figure 4
Figure 4 shows how both of these problems are addressed in the code. In the first third of the forex chart and the last third of the chart no forex signals are given (no yellow or blue dots). Sideways forex market movement is filtered out by requiring that the forex MACD histogram be above or below a certain height before any further calculations are permitted. The horizontal lines show the value above or below that is necessary to register a forex signal. The lower vertical line shows the first occurrence of the histogram beginning to fall. The upper vertical line shows the price at which the actual sell forex signal was generated. The code records the height of the histogram.
When the value of the histogram begins to fall it must exceed a preset differential before a signal is given. This prevents a forex signal from occurring too early or a spurious bar from generating a forex signal. Figure 5 represents a typical chart setup for me.
Figure 5
The yellow dots are forex sell signals, the blue ones are forex buy signals. The blue moving average is the 15 min 62 period EMA (this is a 15 min forex chart) and the white dashed line is the 62 period EMA from a 1 hour forex chart. I use a time of 4 times higher than the chart I am looking at to get a sense of the overall forex trend. It is very important to know if you are forex trading with or against the trend. Money can be made in either direction, but when going with the trend the probability of success is greatly improved. The bottom forex indicator is an oscillator. I use one called RSX but any oscillator that is capable of giving overbought or oversold indications will work well.
If a buy forex signal is generated concurrent with an oversold condition, or a sell forex signal is concurrent with an overbought condition, the odds are again improved. One last discretionary pattern that I suggest using are candle patterns. As price nears an extreme, the candles should become smaller and reversal candles should begin to show up. These are doji, hanging men, hammers, inverted hammers, shooting stars, and spinning tops. At this point it’s not much of a mystery how these dots can be traded as a forex system. There are additional indications that can be used to increase the odds of success.
These are:
• forex Trading concurrently with an overbought or oversold condition
• forex Trading with the prevailing trend
• Looking for reversal type candle forex patterns
• Looking for obvious levels of support and resistance where a reversal is likely to occur
• Looking for divergence and hidden divergence. There is an example of this directly in the middle of figure 5.
• Waiting for the forex signal candle (the one with the dot) to be exceeded prior to taking a forex trade. Sometimes this can keep you out of a lousy trade. If you are only looking for a quick forex profit, waiting may not be prudent since several points could be a large percentage of the gain you are looking for. But, if you are looking for larger gains waiting to see that the forex trend has indeed reversed can often be helpful.
Monday, October 13, 2008
To refresh forex EAs and or forex Indicators without shuting down MT4
1. Copy forex EAs and or forex Indicators to their proper directory
2. Fire up MetaEditor
3. Click on Compile (This would update MetaTrader Navigator's List)
4. Right Click on MetaEditor's Navigator list and then click on Refresh (This would update MetaEditor EA and or Indicator List)
How to tell forex Experts from forex Indicators - Read
Best trader info here http://www.e-junkie.com/trader-info?&pn=1
2. Fire up MetaEditor
3. Click on Compile (This would update MetaTrader Navigator's List)
4. Right Click on MetaEditor's Navigator list and then click on Refresh (This would update MetaEditor EA and or Indicator List)
How to tell forex Experts from forex Indicators - Read
Best trader info here http://www.e-junkie.com/trader-info?&pn=1
Sunday, October 12, 2008
MetaTrader 4 Forex Backtesting F.A.Q.
I decided to write up this little tutorial, because backtesting different forex systems comes up very often in threads on this forum. There seems to be a lot of confusion about reliability issues and how to go about achieving the most accurate possible results. I am not a programming or forex trading guru, but I believe I can provide a helpful little FAQ on backtesting using MT4.
Good backtesting is important when considering a forex system-trading approach, because you want to have some idea of the feasibility of your idea before you go live with it [at least I do]. If you're backtesting with a 50% model quality, eh... you can't really be sure what's going on. If you have a 90% modeling quality, you can have more confidence on how your forex system actually would have performed.
+=========================+
MCBoogs' MT4 Backtesting FAQ v1.0
+=========================+
Contents:
- Section 1: Is MT4 Backtesting Reliable?
- Section 2: Downloading/Importing/Converting 1M Data
- Section 3: Configuring the Backtester
- Section 4: Other Issues
Section 1: Is MT4 Backtesting Reliable?
This question often gets pretty heated and people even get to the point of flaming each other about it. Backtesting in MT4 can be reliable, but its reliability is contingent upon the data you are backtesting on. Demo account data that is streamed in through a demo account forex broker has gaps, holes, and is basically not suitable for testing.
When backtesting, you want to use the EVERY TICK MODEL and have accurate 1M data to get the most accurate test possible. The forex 1M data is important, because the EVERY TICK MODEL uses whatever the smallest available timeframe available is and "fakes" the movement of price within the smallest available bars. Having 1M data allows for the fractal interpolation within bars to occurs only within the very narrow range of forex 1M bars.
The easiest [and only] solution to this is to use good 1M data. The most complete data you can get [at least for free] is from Alpari's Databank. They have data in MT native format, on the 1M timeframe back through mid 2004. However, setting up the data for use requires some doing.
Section 2: Downloading/Importing/Converting 1M Data
(1) You need to modify MT4 to allow for more bars. Go into the Tools Menu, then go to Options [or just hit C+O]. Go into the charts tab and put in 9999999999999 for bars in history. MT4 will default to whatever it's maximum is.
[Note: The reason MT4 has a limited forex bar count to begin with is because more bars (particularly when used in backtesting models) means MT4 is going to eat up more HD space.]
(2) Download the 1M data from Alpari's Databank in whatever forex currency[ies] you're going to test on.
(3) Import the data into MT4 using the History Center. Go to Tools => History Center [or push F2]. Make sure you import it in proper forex currency and in the M1 timeframe. You don't want EUR/USD data being important into USD/CAD for instance.
(4) Convert the data using the period converter script included in MT4 [you only have 1M bars right now]. You have to open offline forex charts to do this.
-Go to the File Menu, then Open Offline, select the 1M data of the currency you need to convert. A chart will pop up with that data.
-Then drag & drop the period_converter script onto the offline forex chart. The ExtPeriod Multiplier int that you can modify is the multiplier you are applying to the chart. So making it 5, will convert 1M data into 5M data.
-For simplicity's sake, you need to run the period converter with the following integers to get all the backtesting timeframes: 5,15,30,60,240, and 1440.
[NOTE: you can also convert 1M data to timeframes not native to MT4 if you want to do some forex indicator analysis or something on another timeframe.]
Congratulations, you have now imported and converted data into MT4. Now, for the sake of illustrating one of my earlier points, open up a currency you have imported data on. Look at the difference in the bars from the downloaded data as opposed to data streamed in from a Demo broker [So, if you downloaded 1M data from July 04 to August 05, look at the forex chart at August 05's end and September 05's beginning]. You will notice that the bars (on every time frime if you have converted them properly) from your downloaded time period will be more complete.
Section 3: Configuring the Backtester
Now that you've succesfully imported complete data, there are a few more things you need to do to run a reliable backtest.
(1) Check the recalculate option the next time you run a backtest, because you need the backtester to utilize your shiny new happy data (which it won't do unless you tell it). Anytime you import new data, you need to recalculate (I recalculate every few tests just to feel safe, maybe its a reflection of internal confidence problems, but that's for another FAQ).
(2) Check the use date option and set the date range only over a time period where you have good reliable data. This way you're only backtesting the good stuff. It will be reflected in the modeling quality percentage.
(3) Make sure the model is set to EVERY TICK. If you're not, all this hard work we just did was for nothing. I addressed why we do this earlier in the FAQ.
Section 4: Other Issues
MT4 is a work in progress, sometimes there are strange bugs that crop up in backtesting. However, usually when you think you have a bug on your hands, there is something wrong with your code. I can't emphasize enough how important debugging is. If you have problems, check your code first because it's probably the problem. If you really think you have a legit bug on your hands, post it to the MT4 forex forums.
Because you are not actually backtesting on every tick that happened [you are dealing with an interpolation on 1M data], it is still not a perfect reproduction of what actually happened in the markets. Because of this, 1M and 5M forex scalping EAs that get in and out of trades really quickly will run into some problems just because of this limitation. The longer timeframe you are trading on, the less likely your testing is to be hampered by this.
Well, that's all I can think of now. I read this over, I think I made everything clear and have the steps outlined correctly. If you notive a mistake, let me know, and I'll correct it in my next version of the MT4 Backtesting FAQ.
Acknowledgements:
I learned most of what I know about MT4 and forex trading in general from these forums and others like it. Thanks to all the people who contribute that have provided me with useful tidbits of information. There are too many names [and some of them are weird, have lots of numbers in them, etc.] to list, but a serious thanks to all the forex Strategy Builder contributors out there.
Best of luck in the markets everyone.
EuroX2 - Forex Automated trading
Good backtesting is important when considering a forex system-trading approach, because you want to have some idea of the feasibility of your idea before you go live with it [at least I do]. If you're backtesting with a 50% model quality, eh... you can't really be sure what's going on. If you have a 90% modeling quality, you can have more confidence on how your forex system actually would have performed.
+=========================+
MCBoogs' MT4 Backtesting FAQ v1.0
+=========================+
Contents:
- Section 1: Is MT4 Backtesting Reliable?
- Section 2: Downloading/Importing/Converting 1M Data
- Section 3: Configuring the Backtester
- Section 4: Other Issues
Section 1: Is MT4 Backtesting Reliable?
This question often gets pretty heated and people even get to the point of flaming each other about it. Backtesting in MT4 can be reliable, but its reliability is contingent upon the data you are backtesting on. Demo account data that is streamed in through a demo account forex broker has gaps, holes, and is basically not suitable for testing.
When backtesting, you want to use the EVERY TICK MODEL and have accurate 1M data to get the most accurate test possible. The forex 1M data is important, because the EVERY TICK MODEL uses whatever the smallest available timeframe available is and "fakes" the movement of price within the smallest available bars. Having 1M data allows for the fractal interpolation within bars to occurs only within the very narrow range of forex 1M bars.
The easiest [and only] solution to this is to use good 1M data. The most complete data you can get [at least for free] is from Alpari's Databank. They have data in MT native format, on the 1M timeframe back through mid 2004. However, setting up the data for use requires some doing.
Section 2: Downloading/Importing/Converting 1M Data
(1) You need to modify MT4 to allow for more bars. Go into the Tools Menu, then go to Options [or just hit C+O]. Go into the charts tab and put in 9999999999999 for bars in history. MT4 will default to whatever it's maximum is.
[Note: The reason MT4 has a limited forex bar count to begin with is because more bars (particularly when used in backtesting models) means MT4 is going to eat up more HD space.]
(2) Download the 1M data from Alpari's Databank in whatever forex currency[ies] you're going to test on.
(3) Import the data into MT4 using the History Center. Go to Tools => History Center [or push F2]. Make sure you import it in proper forex currency and in the M1 timeframe. You don't want EUR/USD data being important into USD/CAD for instance.
(4) Convert the data using the period converter script included in MT4 [you only have 1M bars right now]. You have to open offline forex charts to do this.
-Go to the File Menu, then Open Offline, select the 1M data of the currency you need to convert. A chart will pop up with that data.
-Then drag & drop the period_converter script onto the offline forex chart. The ExtPeriod Multiplier int that you can modify is the multiplier you are applying to the chart. So making it 5, will convert 1M data into 5M data.
-For simplicity's sake, you need to run the period converter with the following integers to get all the backtesting timeframes: 5,15,30,60,240, and 1440.
[NOTE: you can also convert 1M data to timeframes not native to MT4 if you want to do some forex indicator analysis or something on another timeframe.]
Congratulations, you have now imported and converted data into MT4. Now, for the sake of illustrating one of my earlier points, open up a currency you have imported data on. Look at the difference in the bars from the downloaded data as opposed to data streamed in from a Demo broker [So, if you downloaded 1M data from July 04 to August 05, look at the forex chart at August 05's end and September 05's beginning]. You will notice that the bars (on every time frime if you have converted them properly) from your downloaded time period will be more complete.
Section 3: Configuring the Backtester
Now that you've succesfully imported complete data, there are a few more things you need to do to run a reliable backtest.
(1) Check the recalculate option the next time you run a backtest, because you need the backtester to utilize your shiny new happy data (which it won't do unless you tell it). Anytime you import new data, you need to recalculate (I recalculate every few tests just to feel safe, maybe its a reflection of internal confidence problems, but that's for another FAQ).
(2) Check the use date option and set the date range only over a time period where you have good reliable data. This way you're only backtesting the good stuff. It will be reflected in the modeling quality percentage.
(3) Make sure the model is set to EVERY TICK. If you're not, all this hard work we just did was for nothing. I addressed why we do this earlier in the FAQ.
Section 4: Other Issues
MT4 is a work in progress, sometimes there are strange bugs that crop up in backtesting. However, usually when you think you have a bug on your hands, there is something wrong with your code. I can't emphasize enough how important debugging is. If you have problems, check your code first because it's probably the problem. If you really think you have a legit bug on your hands, post it to the MT4 forex forums.
Because you are not actually backtesting on every tick that happened [you are dealing with an interpolation on 1M data], it is still not a perfect reproduction of what actually happened in the markets. Because of this, 1M and 5M forex scalping EAs that get in and out of trades really quickly will run into some problems just because of this limitation. The longer timeframe you are trading on, the less likely your testing is to be hampered by this.
Well, that's all I can think of now. I read this over, I think I made everything clear and have the steps outlined correctly. If you notive a mistake, let me know, and I'll correct it in my next version of the MT4 Backtesting FAQ.
Acknowledgements:
I learned most of what I know about MT4 and forex trading in general from these forums and others like it. Thanks to all the people who contribute that have provided me with useful tidbits of information. There are too many names [and some of them are weird, have lots of numbers in them, etc.] to list, but a serious thanks to all the forex Strategy Builder contributors out there.
Best of luck in the markets everyone.
EuroX2 - Forex Automated trading
Friday, October 10, 2008
RSI-R2 – SUPER RSI forex Expert Advisors Frequently Asked Questions
History: (from www.tradingmarkets.com/.site/stocks/commentary/editorial/The-Improved-R2-Strategy.cfm)
The Improved R2 forex Strategy: 84% Correct with Just 6 Rules
By Larry Connors & Ashton Dorkins
TradingMarkets.com
February 21, 2007
In early 2005, we published the R2 forex Strategy on TradingMarkets which quickly became one of our more popular forex strategies. The forex strategy was also presented at "The Traders Expo" in Fort Lauderdale last year. In the "MoneyShow.com Best Webcasts of 2006" it was voted the number one presentation in the "Best for Traders" category. We recently updated and improved our research, leading to this article that shares our latest findings with you.
What is the Improved R2 forex Strategy?
The Improved R2 forex Strategy is a simple six-rule forex Market Timing Strategy which uses the 2-period RSI as its primary tool. Our research has shown that there is little statistical evidence using the standard 14-period RSI. But, when you shorten the period to a 2-, 3- or 4-period RSI, test results significantly improve. By using the 2-period RSI as we do here, you can see back-tested results of 84.31% correct in the S&P 500 Index going back to 1995 (12 years).
Here are the Rules:
The SPX is above its 200-day simple moving average (you can use any S&P 500 derivative product, including the SPYs, E-minis, etc).
Day 1 - the 2-period RSI is below 65. This tells us that the market is in a neutral to possibly oversold condition.
Day 2 - the 2-period RSI closes lower than Day 1.
Day 3 - the 2-period RSI closes lower than Day 2.
Buy the market (SPX, SPY, E-mini, etc) on the close Day 3.
Exit when the 2-period RSI closes above 75.
Comment by EA Author: The forex EA only references the closing values of RSI for the prior three days. Whatever RSI is doing during the current day has no bearing on anything and will not be taken into consideration for any forex signals. Therefore, a forex signal is generated immediately after closing of the 3rd day if all of the criteria are met, and that forex signal will be valid all day during the 4th day.
EA development history
Peter Henry introduced this concept to this trading group after trying to get forex EA programmed by members of Forex-TSD . He explained that this forex method had been designed for stocks but had universal appeal and can be applied to any market. He then posted within this Yahoo news group requesting help in designing an forex EA, as Forex-TSD members produced an forex EA but did not make the code public. Bluto responded and took on the project from there on. Peter’s original post.
www.forex-tsd.com/expert-analysis/6494-rsi-r2-84-accurate.html
Then, a Yahoo MT Group member known as Bluto picked up the above story and developed an EA titled RSI-R2, which evolved in version 1.0 to 1.3. At that point, Bluto decided to add further refinements but keeping the code unavailable (Versions 1.4 onwards). At about the same time, another member (Dave Roland) developed the same forex EA but able to trade ALL forex currencies without needing to open a chart for each and add the forex EA into it manually. That EA's title is: Multipair RSI. It also developed several versions.
How it works
In layman's terms, this is how the RSI-R2 Ver 1.1 forex EA works:
With each new tick, the EA is called and control passes to the init_start() mainline
function. First, we perform the money management option via the "Calc_Money_Management()" function call if the value of the UseMoneyMgmt variable is set to true. This function calculates the appropriate lot size to use based on available equity and the "RiskPercent" setting. If money management is disabled, the value of the default "LotSize" variable is used.
-Then-
Using a daily timeframe, first, get the closing value of RSI three days ago (RSI_Day_1), the closing value of RSI two days ago (RSI_Day_2) and the value of RSI one day ago (RSI_Day_3) . Also, get the closing value of a 200-day simple moving average one day ago (SMA200_Day3). We will analyze the behavior of a short term RSI over the prior three days as our primary buy/sell trigger.
-Then-
Check for forex Buy Signal: We're looking for a decreasing value of RSI over the past three days into a deeper oversold status as price remains above SMA200. If the value of RSI_Day_1 < 65 and the value of RSI_Day_2 < RSI_Day_1 and the value of RSI_Day_3 < RSI_Day_2 and the value of Closing Price from one day ago is SMA200_Day3, we have a forex Buy signal, so set the boolean Buy Flag (Buy_Mode) to True, otherwise set it to false.
-Then-
Check for forex Sell Signal: We're looking for an increasing value of RSI over the past three days into a deeper overbought status as price remains below SMA200. If the value of RSI_Day_1 35 and the value of RSI_Day_2 RSI_Day_1 and the value of RSI_Day_3 RSI_Day_2 and the value of Closing Price from one day ago is < SMA200_Day3, we have a forex Sell signal, so set the boolean Sell Flag (Sell_Mode) to True, otherwise set it to false.
-Then-
Before we act on any potential signals that may have fired, we do some housekeeping on any order that may already be open. The forex EA only allows one sell or one buy order to be open at a time. If we have an open Buy order in progress and the value of RSI_Day_3 75, we close the order because RSI is entering extreme overbought status (reversal coming?) If we have an open sell order and the value of RSI_Day_3 < 25, we close the order because RSI is entering extreme oversold status.
The order closures would actually happen on the opening bar of day 4 since we're on a D1 timeframe.
We then update trailing stop using Parabolic SAR. Managing these stops can cause an order to stop out if things get nasty.
-Then-
We now act on any new forex buy and sell signals:
- If we have a new forex buy signal and there isn't a buy order already open (OpenBuyOrders = 0), we check first to see if a sell order may be open and if so, we close it. Then we simply open a new buy order and increment the open buy order counter (OpenBuyOrders++). The counter keeps us from opening multiple buy orders since we only want one. - If we have a new forex sell signal and there isn't a sell order already open (OpenSellOrders = 0), we check first to see if a buy order may be open and if so, we close it. Then we simply open a new sell order and increment the open forex sell order counter (OpenSellOrders++). The counter keeps us from opening multiple sell orders since we only want one.
That's it. Control then passes back to MT4 via the last statement of "return(0)" in the init_start() routine until the next tick occurs and calls the forex EA at which point we repeat the entire process again.
I hope that this helps clarify what the forex EA is doing under the hood.
-bluto
Forex Indicators used with the EA (not required to use the EA):
For those interested in knowing what is "under the hood" of the forex EA, there is a list of indicators which can be utilized with the EA.
R2_Arrows_v4 is and indicator for RSI_R2 EA by TransportDavid. It places buy/sell arrows. He also made another forex indicator for Robert's Optimized EA. (AnyMA_Rsi_R2_Indi_Opt.mq4)
Forex Indicator written just for bluto's Super RSI does not exist at this time. But you can use R2_Arrows_v4 on it. It is close although not 100% since bluto's Super Rsi have some additions.
With both forex EA you can also use another forex indicator which is regular RSI with daily dots on top of it, so you can easy see follow forex buy sell rules. Made by Accrete. Name RSI_LiDo.mq4 (included in V. 1.9)
The most recent versions (June 16, 2007) of this forex EA are
AnyMA_RSI_R2_EA_Opt.mq4 - Robert
Super RSI Ver. 1.7.ex4 - Bluto
Super RSI Ver. 1.8.ex4 - Bluto
Super RSI Ver. 1.9.ex4 - Bluto
Super RSI Ver. 1.9.1.ex4 - Bluto
These versions use the same logic, the same forex method, but they are different enough to try them. Robert is using addition filter HMA3.mq4. With Robert's EA you can play with different Moving Averages, not only simple as in original forex method. You can also try many different (trailing) stops.
Bluto's EAs offer two different exits. Default is parabolic stop. If you want to use his trailing stop, you should turn off parabolic stop (lots of Q’s on this below).
What else? Open all charts on DAILY timeframe, put EA and both forex indicators on each chart, let EA use default settings - optimized RSI. Each, Bluto's and Robert's EA use different optimized RSI numbers.
Roberts numbers you will find inside EA in the code, and Bluto's optimized numbers you will find in setting menu of EA. Don't forget to enter correct RSI setting into each forex indicator for every chart. Remember, each chart have it's own RSI settings.
Both EA's use Daily forex charts.
The RSI-R2 EA FAQ: mostly replies by Bluto (43) to questions (38). New with V. 1.9: “Authors comments”
Q: Bluto, are you using this forex EA (on Daily charts) on all of the forex currency pairs or just the 4 majors? Also, when you say "15 lots per forex signal", are these standard lots or mini lots and which broker are you using? Thank you.
A: I'm running the forex EA on a chart for every pair. It should work equally well for any pair. I'm using 15 mini-lots @ IBFX. And yes, those would be daily forex charts. The EA is coded to use daily RSI & SMA forex signals.
-bluto
Forex Trading ECN Lesson
More about forex market http://www.e-junkie.com/trader-info?&pn=0
The Improved R2 forex Strategy: 84% Correct with Just 6 Rules
By Larry Connors & Ashton Dorkins
TradingMarkets.com
February 21, 2007
In early 2005, we published the R2 forex Strategy on TradingMarkets which quickly became one of our more popular forex strategies. The forex strategy was also presented at "The Traders Expo" in Fort Lauderdale last year. In the "MoneyShow.com Best Webcasts of 2006" it was voted the number one presentation in the "Best for Traders" category. We recently updated and improved our research, leading to this article that shares our latest findings with you.
What is the Improved R2 forex Strategy?
The Improved R2 forex Strategy is a simple six-rule forex Market Timing Strategy which uses the 2-period RSI as its primary tool. Our research has shown that there is little statistical evidence using the standard 14-period RSI. But, when you shorten the period to a 2-, 3- or 4-period RSI, test results significantly improve. By using the 2-period RSI as we do here, you can see back-tested results of 84.31% correct in the S&P 500 Index going back to 1995 (12 years).
Here are the Rules:
The SPX is above its 200-day simple moving average (you can use any S&P 500 derivative product, including the SPYs, E-minis, etc).
Day 1 - the 2-period RSI is below 65. This tells us that the market is in a neutral to possibly oversold condition.
Day 2 - the 2-period RSI closes lower than Day 1.
Day 3 - the 2-period RSI closes lower than Day 2.
Buy the market (SPX, SPY, E-mini, etc) on the close Day 3.
Exit when the 2-period RSI closes above 75.
Comment by EA Author: The forex EA only references the closing values of RSI for the prior three days. Whatever RSI is doing during the current day has no bearing on anything and will not be taken into consideration for any forex signals. Therefore, a forex signal is generated immediately after closing of the 3rd day if all of the criteria are met, and that forex signal will be valid all day during the 4th day.
EA development history
Peter Henry introduced this concept to this trading group after trying to get forex EA programmed by members of Forex-TSD . He explained that this forex method had been designed for stocks but had universal appeal and can be applied to any market. He then posted within this Yahoo news group requesting help in designing an forex EA, as Forex-TSD members produced an forex EA but did not make the code public. Bluto responded and took on the project from there on. Peter’s original post.
www.forex-tsd.com/expert-analysis/6494-rsi-r2-84-accurate.html
Then, a Yahoo MT Group member known as Bluto picked up the above story and developed an EA titled RSI-R2, which evolved in version 1.0 to 1.3. At that point, Bluto decided to add further refinements but keeping the code unavailable (Versions 1.4 onwards). At about the same time, another member (Dave Roland) developed the same forex EA but able to trade ALL forex currencies without needing to open a chart for each and add the forex EA into it manually. That EA's title is: Multipair RSI. It also developed several versions.
How it works
In layman's terms, this is how the RSI-R2 Ver 1.1 forex EA works:
With each new tick, the EA is called and control passes to the init_start() mainline
function. First, we perform the money management option via the "Calc_Money_Management()" function call if the value of the UseMoneyMgmt variable is set to true. This function calculates the appropriate lot size to use based on available equity and the "RiskPercent" setting. If money management is disabled, the value of the default "LotSize" variable is used.
-Then-
Using a daily timeframe, first, get the closing value of RSI three days ago (RSI_Day_1), the closing value of RSI two days ago (RSI_Day_2) and the value of RSI one day ago (RSI_Day_3) . Also, get the closing value of a 200-day simple moving average one day ago (SMA200_Day3). We will analyze the behavior of a short term RSI over the prior three days as our primary buy/sell trigger.
-Then-
Check for forex Buy Signal: We're looking for a decreasing value of RSI over the past three days into a deeper oversold status as price remains above SMA200. If the value of RSI_Day_1 < 65 and the value of RSI_Day_2 < RSI_Day_1 and the value of RSI_Day_3 < RSI_Day_2 and the value of Closing Price from one day ago is SMA200_Day3, we have a forex Buy signal, so set the boolean Buy Flag (Buy_Mode) to True, otherwise set it to false.
-Then-
Check for forex Sell Signal: We're looking for an increasing value of RSI over the past three days into a deeper overbought status as price remains below SMA200. If the value of RSI_Day_1 35 and the value of RSI_Day_2 RSI_Day_1 and the value of RSI_Day_3 RSI_Day_2 and the value of Closing Price from one day ago is < SMA200_Day3, we have a forex Sell signal, so set the boolean Sell Flag (Sell_Mode) to True, otherwise set it to false.
-Then-
Before we act on any potential signals that may have fired, we do some housekeeping on any order that may already be open. The forex EA only allows one sell or one buy order to be open at a time. If we have an open Buy order in progress and the value of RSI_Day_3 75, we close the order because RSI is entering extreme overbought status (reversal coming?) If we have an open sell order and the value of RSI_Day_3 < 25, we close the order because RSI is entering extreme oversold status.
The order closures would actually happen on the opening bar of day 4 since we're on a D1 timeframe.
We then update trailing stop using Parabolic SAR. Managing these stops can cause an order to stop out if things get nasty.
-Then-
We now act on any new forex buy and sell signals:
- If we have a new forex buy signal and there isn't a buy order already open (OpenBuyOrders = 0), we check first to see if a sell order may be open and if so, we close it. Then we simply open a new buy order and increment the open buy order counter (OpenBuyOrders++). The counter keeps us from opening multiple buy orders since we only want one. - If we have a new forex sell signal and there isn't a sell order already open (OpenSellOrders = 0), we check first to see if a buy order may be open and if so, we close it. Then we simply open a new sell order and increment the open forex sell order counter (OpenSellOrders++). The counter keeps us from opening multiple sell orders since we only want one.
That's it. Control then passes back to MT4 via the last statement of "return(0)" in the init_start() routine until the next tick occurs and calls the forex EA at which point we repeat the entire process again.
I hope that this helps clarify what the forex EA is doing under the hood.
-bluto
Forex Indicators used with the EA (not required to use the EA):
For those interested in knowing what is "under the hood" of the forex EA, there is a list of indicators which can be utilized with the EA.
R2_Arrows_v4 is and indicator for RSI_R2 EA by TransportDavid. It places buy/sell arrows. He also made another forex indicator for Robert's Optimized EA. (AnyMA_Rsi_R2_Indi_Opt.mq4)
Forex Indicator written just for bluto's Super RSI does not exist at this time. But you can use R2_Arrows_v4 on it. It is close although not 100% since bluto's Super Rsi have some additions.
With both forex EA you can also use another forex indicator which is regular RSI with daily dots on top of it, so you can easy see follow forex buy sell rules. Made by Accrete. Name RSI_LiDo.mq4 (included in V. 1.9)
The most recent versions (June 16, 2007) of this forex EA are
AnyMA_RSI_R2_EA_Opt.mq4 - Robert
Super RSI Ver. 1.7.ex4 - Bluto
Super RSI Ver. 1.8.ex4 - Bluto
Super RSI Ver. 1.9.ex4 - Bluto
Super RSI Ver. 1.9.1.ex4 - Bluto
These versions use the same logic, the same forex method, but they are different enough to try them. Robert is using addition filter HMA3.mq4. With Robert's EA you can play with different Moving Averages, not only simple as in original forex method. You can also try many different (trailing) stops.
Bluto's EAs offer two different exits. Default is parabolic stop. If you want to use his trailing stop, you should turn off parabolic stop (lots of Q’s on this below).
What else? Open all charts on DAILY timeframe, put EA and both forex indicators on each chart, let EA use default settings - optimized RSI. Each, Bluto's and Robert's EA use different optimized RSI numbers.
Roberts numbers you will find inside EA in the code, and Bluto's optimized numbers you will find in setting menu of EA. Don't forget to enter correct RSI setting into each forex indicator for every chart. Remember, each chart have it's own RSI settings.
Both EA's use Daily forex charts.
The RSI-R2 EA FAQ: mostly replies by Bluto (43) to questions (38). New with V. 1.9: “Authors comments”
Q: Bluto, are you using this forex EA (on Daily charts) on all of the forex currency pairs or just the 4 majors? Also, when you say "15 lots per forex signal", are these standard lots or mini lots and which broker are you using? Thank you.
A: I'm running the forex EA on a chart for every pair. It should work equally well for any pair. I'm using 15 mini-lots @ IBFX. And yes, those would be daily forex charts. The EA is coded to use daily RSI & SMA forex signals.
-bluto
Forex Trading ECN Lesson
More about forex market http://www.e-junkie.com/trader-info?&pn=0
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