100% Price Action EA no Indicators

Trading Systems Free Forex Trading Systems
1

I want us to look into this trading system, build on it and write an EA that will trade any pair using this system. It does not require any indicator to make its decision, it is 100% price dependent. I have back tested this system using 1 min time frame to get the feel of the price action and it works pretty well but we need an EA to get a better feel.

Conditions for Expert Advisor using MQL for MT4:
For these conditions we are considering the pair EUR/JPY with a spread of 4pips.
More details are provided in parenthesis.

Always open a short and long position at the current price (Hedging) with a 14pips stop loss. (Open two positions based on the fact that you cannot predict the direction of the trend)

If only one of the stop loss is triggered, then
Move the stop loss of the other position to the current price. (This closes out one position and allows the other to continue in its direction otherwise closes out both positions with a loss of just both spreads of �8pips. In a range market the process continues until it starts to trend in a direction.) �
And activate a 15pips-trailing stop. (This locks up profit as long as that direction is maintained)

Open a new hedged position at the current price �If and only If� both stop loss of the previously hedged position has been triggered. (If only one stop loss is triggered, the trailing stop locks up profit until the final stop loss is triggered to exit trade� a newly hedged position is automatically opened at that price.)
The lot size must be a derivative of a margin, which is 25% of the net profit balance at that time. For instance If you have a $2000 balance in your standard account at the time the first hedged position is opened, a 0.5 lot (i.e. 500 margin) will be used continuously until you result in a net profit balance. The next lots size will be calculated based on the current net profit balance.

A spread monitor should be configured so that it does not open positions during major announcements i.e. when spread is greater 5pips.

EDITED
Based on more thoughts, I have to make a little adjustment to the sytem:
The Hedged position should both be opened with the 15pips-trailing stop at the initial start. If only one stop loss is triggered, then the trailing stop the of the other position locks profit untill the last stop loss is triggered and the process continues.

If both stop loss is triggered, it leaves us with -28pips loss.:frowning:

I will really appreciate it if we can treat development of this system with a lot of patience and optimism because my God mind tells me that we are going to hit something cause we are not too far from the target. If we have to use an indicator to make a better entry then we may have to… but we have to develop this concept with th right mind set.

Hope to get contributors here.

2

I could look into this for you, but moving the stop on the second position to +14 when the first half of the hedge is hit will mean this stop will almost certainly get hit instantly too - even in a trend. The problem is that any price tends to get hit multiple times, even if this is multiple times in one minute as spot makes its way through this price.

Now, the very first time a paricular price is hit (which matches one of our stops), the stop gets hit, closes half the hedge, and moves remaining half stop to current price. This price will almost certainly get revisited within a few seconds and we’ve lost 8pips (spread) almost everytime.

Also, you can’t move a stop to within x pips of spot so I’d have to code it to either move the stop a few pips back from spot, or wait until spot is at +20 before moving the stop on the second half of the hedge.

Any comments / ideas ?

3

The initial hedge is of no value and incurs a loss- guaranteed.

If you open a long and a short together with a SL of 14, when one side gets stopped out, the other side will be +14 (minus the spread) in profit. If the spread is 4, you will have lost a total of 4 pips.

Why do it to begin with?

Why not just pick a time to start? Wait until price moves 14 pips then open a position in that direction? At that instant you will be exactly where you would be had you opened the spread. You will be -4 pips with an open position in the direction of the last 14 pip move.

The whole exercise is pointless.

I have looked at dozens of these hedge methods and have never seen one that makes any sense, if you trace it through and analyze it.

4

Yes, from what I can see the straddle approach makes more sense than opening a hedge with a guaranteed loss (sounds like a brokers dream). If you are going to straddle though the length of the move in one direction has to give you some reason to believe that its going to continue and pay off. Because of spread and commission this has to work more than 50% of the time just to breakeven unless of course your reward equation is above 1R. As always I am interested in seeing ideas developed but cant see how this one can work but look forward to being proved wrong!

5

On second thought, I was being optimistic.

When one side gets stopped out you have lost 8 pips, not 4.

With a spread of 4, it only takes a 10 pip movement in price to hit a -14 SL.

Your profitable side will be +6. Your loser -14.

[B]You have lost a total of 8 pips.[/B]

A straddle would be much better. At the moment it is triggered, you are only down 4 pips.

Now you have an open directional position with no reason to believe that price will continue in the same direction, as Tony pointed out.

Grids, hedges and martingales are the damnation of newbies.
I know, because I’ve lost money on all of them…LOL

6

LOL indeed but experience is of course the best teacher

7

Hey Andwk,

I really appreciate your contribution, observation and willingness to code the EA for this system. I have made a little ammendment to the system based on more thoughts… check out #1 of this thread.

I can get what you are talking about when a took a look at the tick tick chart… the price really oscillates in a minute but I think all that will be taken care of in the editted message.

8

Hey BillB,

Check out page #1 of this thread where I made a little amendment to the system to take care of the short-comings.

The system is based on the fact that you do not know the direction that the trend will go and the EA will open the trades (Hedged positions) automatically so you don’t have to wait for any time or particular movement before a trade is made.

I have taken time to analyze this system with a tick-tick chart back in time and have seen success but need an EA to get a better feel. Just stay tuned with this thread and you will see the sense in this in no distant time.

Happy Trading

9

Hey Tonymand,

Thanks for your contributions, please check out page #1 of this thread for a little change made on the system.

I have no problems with the straddle approach… the issue is this: If you allow price to move 14pips before you make an entry in that direction where do you place your stop loss? is it going to be less than 4pips + spread(-8pips)?
Since you cannot guarantee price continued movement in that direction because of its initial 14pips move, you must be prepared for a loss anyway(how much loss will this be?).

We need to think out of the box to be able to get at something, so I really need all your necessary contributions.

Happy Trading

10

Do you want a system that guarantees you an 8 pip loss on any 10 pip movement- either direction?

This is precisely what you are starting with.

Anything you do after that, must first compensate for this loss, in order to even break even.

The spread is difficult enough to overcome with out adding to it needlessly.

11

Hey BillB,

Let me put it like this,
I need the EA to open a hedged position, activate a 15pips-trailing stop and a 14pips stop loss on both positions at the monent it is initialized irrespective of the anticipated price direction.

Maximum allowable open orders = 2

A newly hedged position can only be opened after the stop loss of both orders have been trigered (either by the action of the trailing stop or the stop loss)

The pair under observation trends well daily so we may not have problems with ending up in a net gain. We are not really particular about a guaranteed loss… the most important thing is that if this pair comes out of range and starts trending the losses will be compensated for leaving us in net positive profit. I donnot think that the main focus should be on making a guaranteed 8pips loss in a 10pips price movement because if the EA code has been written, the parameters (SL,Trailing stop) can be varied to get the desired result… Let us just come out with an EA with these parameters which is liable to changes and must be ran on a demo account… but I want you to also know that I have back tested this system using these parameters on a tick-tick chart back in time and found great successes so will want to have a better feel forward testing with the EA.

Thanks

12

why dont you go long on any currency pair that pays off a positive swap and when that long position is up like 5 pips open a short position that way you are always in profit and your making profit daily on the swap

13

how if we made this price action ea with my entry rule with trendline on h4 and daily time frame,