It is very important to backtest your Expert Advisors using data with a quality as high as possible. The Metatrader strategy tester simply does not provide the high quality tick data that is needed to run an accurate backtest.
High Quality Commercial Tick Data for MetaTrader!
Soon MTProgramming we will be offering downloadable commercial quality tick data to all of our customers for free. This will include any customers that have paid for Programming Services or have purchased our Expert Advisor. The tick data will be available in several formats that can be imported into the MetaTrader Platform. Using high quality commercial tick data while backtesting will help in fine tuning the settings of an Expert Advisor for use in live trading.
More details will be posted here when this service becomes available.
MetaTrader Commercial Quality Backtesting History Tick Data
The coppock Formula was made by Edwin Sedgwick coppock and used to recognize major bottoms in the stock markets. After every extreme bottom combined with several other indicators you get a strong signal of change of direction, this is done by looking at the curves to recognize if there is a sell signal or a buy signal.
Uses of the coppock guide in trading with EA’s.
Most EA’s strategies are based on recognizing trend changes, volatile markets and when no to make trades (drawdowns), the coppock guide can be used together with the Bollinger bands indicator to create a strong signal of major bottoms in the market, which allows the EA’ to make the right buy or sell in the right time and profit from it.
Coppock Curve = 10-period WMA of 14-period RoC + 11-perod RoC
WMA = Weighted moving average
RoC = Rate-of-Change
Screenshot of the coppock curve as seen in charts
taken from stockcharts.com
Video that desmonstrate the uses of coppock curve
Coppock Guide (Coppock curve) and its uses in trading
Ease of movement is a momentum indicator that shows the connection between the rate of price change of an asset and its volume. This indicator tries to determine the amount of volume required in order to move prices. A value greater then Zero usually means that the stock is being bought, and a high positive value indicate that the prices move upward on a low volume. On the other hand, a negative value indicates increased selling, when a strong negative value tells that the price is moving downward on low volume.
Ease of Movement in algo-trading (With Expert advisor)
Ease of Movement is a powerful indicator when combined in an EA’s strategy. The ability to know if the stock is in high buying or selling, help traders take more wise decisions, and on a EA platform its priceless.
Screenshot of Ease of Movement as it looks inside the mt4 metatrader
Taken from – investopedia.com
This lessons describes Ease of Movement Indicator, and shows how it works on example charts
Ease of Movement Definition and strategy uses
Volume is the number of contracts/shares traded in a market/security during a specific time period. Volume is a way to measure activity of shares that trade hands from sellers to buyers.
Volume is a key factor in technical analysis and measurement of market move. Big changes is a market price will always be due to high volume.
Volume in algo-trading (With Expert advisor)
Volume as an indicator is crucial when combined in an EA’s strategy. The ability to react based on the volume in the market, can help the trader react before price changes, therefore saving money or making more profit.
A Video that demonstrate how to spot trends using the volume indicator
Volume the definition and how to use it to spot trends
Equivolume is a chart that comperes price and volume. On the chart, the height of each bar represents the “high” and “low” while the width of the bar represents the volume, over a specific time period.
Equivolume in algo-trading (With Expert advisor)
Equivolume charts are an excellent tool for analysis changes in volume. An EA that can use Equivolume chart data, can basically identify the volume and price changes, when they start, and buy or sell.
Equivolume chart as it looks inside the mt4 metatrader
Taken from – http://www.investopedia.com/
A demonstration of the dynamic volume bars indicator
Equivolume definition and strategy uses in automatic trading
Momentum refers to the rate of acceleration of a price. Momentum is to assume that the price of a security is more likely to stay on its course rather than to change direction. Momentum also helps identifying trendlines in technical analysis.
Momentum traders use the momentum of a stock’s price in order to take long or short position, believing the momentum will continue (upward or downward direction).
Momentum in algo-trading (With Expert advisor)
Momentum is a key factor in EA’s strategies. Identifying the momentum of a stock’s price and having the ability to react in a split of a second can make you more profit when using it as a strategy for your expert advisor.
Screenshot of a momentum as it looks inside the mt4 metatrader
taken from – stockcharts.com
A Video that explains how to do momentum trading and use momentum in trading as a strategy
Momentum and its uses in trading
This is a form of technical analysis which allows you to determine good exit and entry points to trade. It does so by trailing Stop And Reverse (SAR).
In trading it is important to know when it’s a good time to enter and when it is a good time to exit or not to enter, the PSAR or parabolic stop and reverse allows you to do just that. It is basically allows you to know when to sell (when trading is below the PSAR) or when to buy (when the Trade is above the PSAR line).
Parabolic indicator is used in EA’s strategy combined with other indicators to determine the good entry points and exit points to sell and buy, when using it with stochastic strategy or with the correct stop loss settings the profit can be huge.
Screenshot from stockcharts.com showing the parabolic SAR
taken from – stockchart.com
Parabolic SAR definition and uses in trading
Price ROC is a technical indicator that measures the percentage change between the most recent price and the price in a specific period (“n”) in the past.
Price ROC is used to measure the rate of change or the the strength of momentum of change.
Traders often use price ROC to indicate upward or downward momentum.
Price Rate of Change in algo-trading (With Expert advisor)
Price rate of change is extremely important indicator in EA’s features. A lot of EA’s strategies use price ROC in trading, and the ability of the EA to identify the momentum can lead to high profits
Screenshot of price ROC as it looks inside the mt4 metatrader
Taken from investopedia.com
A quick video on ROC and how to read it of charts when doing technical analysis
Price Rate of Change (ROC)
RSI is a momentum indicator that compares recent gains and losses, in order to determine if an asset is overbought or oversold.
The formula for calculating RSI is:
RSI = 100 – 100/(1 + RS*)
*Where RS = Average of x days’ up closes / Average of x days’ down closes.
Traders that uses RSI knows that the big problems is when large surges and drop in the price can cause the RSI to show false buy or sell signals.
Relative Strength Index in algo-trading (With Expert advisor)
RSI is a valuable complement in EA’s strategies. If an EA can determine a RSI of an asset, the process of buying and selling will be more accurate and will the trader gain more profit.
Screenshot of Relative Strength Index as it looks inside the mt4 metatrader
Taken from – investopedia.com
A video tutorial that teaches you how to read and trade with Relative Strength Index
Relative Strength Index (RSI)
The MACD (Moving average convergence divergence) is a trend following momentum indicator which shows relationship between two moving averages of prices.
This is mainly used as a signal of changing trends or of certain momentum upwords or downward (bullish or bearish)
There are several ways to use the MACD indicator as a signal:
1. When the MACD line is rising dramatically and in short amount of time, this signals that the market is currently overbought and will return soon to average.
2. Divergence – when the security price breaks the line of the MACD it usually indicates on the end of a current trend.
3. crossover – When the MACD falls below the signal line it means that it is might be a good time to sell, because the market is bearish, if it goes above the signal line it indicates it is a good time to buy because it is bullish, the crossover traders usually wait for a confirmed crossover before putting positions.
MACD as a strategy in EA algo trading
MACD is one of the most familiar signals or indicators used by human traders to detect trends of the market, combining a crossover tactics with Bollinger bands can create a strong signal of trends, the key factor of profit is to recognize the trends as they begin. This strategy can be implemented into Expert advisors to help make them better and increase % of profit.
Image of MACD and short explanation on reading it
Taken from Wikipedia
A video on technical analysis using the MACD
MACD Definition and strategy