Hello everyone, I’m working on a price action EA based on volume within next few weeks. I’m looking for input around what my pending strategy is , how it can be improved, etc. When this EA is done, profitable by 70% or more profitable weeks, tested and bug free, i’ll be releasing it free in this forum. Everything here is part of a pending strategy and is up for discussion. I am thinking of using a trailing stop strategy that breaks even at times market goes up then back down for example, minimizing loss.
[B]Options for EA[/B]
- Being able to use 4 digit or 5 digit broker.
- Option to pick a time frame and day in which the EA will not trade.
- Option for trade lot size
- Being able to apply the EA to any time frame
- Set the EA so it follows US regulatory requirements with broker platform [on or off function within EA settings]
- Trade when market is sideways: OFF/ON option
[B]Candlestick Definitions:[/B]
hammer candle: when open price, close price and high price are nearly the same within a bullish candle body. Also, there is a long lower shadow, twice the length as the real body. Also, when the high and the close are the same, a bullish Hammer candlestick is formed and it is considered a stronger formation because the bulls were able to reject the bears completely plus the bulls were able to push price even more past the opening price.
Hanging Man: The bearish candlestick version of the Hammer is the Hanging Man formation . It is created when the open, high, and close are roughly the same price. Also, there is a long lower shadow, which should be at least twice the length of the real body.
engulfing candle : An engulfing bar is a two bar setup that usually acts as a reversal signal it but can also be a continuation signal. As the name says, it is formed when a candle fully engulfs the previous candle. It can engulf more than one candle but one is the minimum. The more bars it engulfs the more powerful and reliable the engulfing bar is.
long legged doji: A Doji is formed when the opening price and the closing price are equal.
Shooting star: The Shooting Star candlestick formation is a significant bearish reversal candlestick pattern that mainly occurs at the top of up trends. The Shooting formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow, generally defined as at least twice the length of the real body. A shooting star with a below average volume in an upward trend is signalling a possible pause in the upwards trend. Two shooting star candles in a row and or 2 shooting star candles relatively close to each other within the same price area, this increases the signs of market weakness. EA then uses volume to know if market is weaker. Example: if there is rising volume within 3 shooting star candles within the same price range and in close range to each other and volume is higher within each shooting star , clearly the price is going to fall shortly on the next candles following.
[B]Other Definitions:[/B]
Real Body: The difference between the open and close; colored portion of the candlestick
anomaly : Something that is different then what is expected
selling frenzy: Price is volatile with surges higher followed by a close back to the open price within each candle. There is multiple candles doing this. High and or extremely high volume is happening during this time almost and or at the top of volume indicator space
buying frenzy: price goes lower follower by a close back to the open price within each candle. There is multiple candles that are doing this. Each candle has high or extremely high volume, almost and or at top of the volume indicator space
[B]Notes:[/B]
- EA always looks for support and resistances.Support and resistance meaning highs and lows. EA does not place buy trades near resistance. Sell trades are not placed near support.
- EA will not place a trade if any anomalies.
*EA does not trade during a sideways market. It trades during trends and trend reversals only
[B]Ways I’m thinking on having trades closed:[/B]
*EA compares each volume stick on the volume indicator to each and every candle formed in present and past of current trend. If an anomaly is seen after trade is placed, trade is closed immediately.
- EA looks for long legged doji candles . If one is spotted after trade is placed, trade is closed immediately on next candle.
- When trend is continuing but volume is low. Example: Rising prices and increasing spreads on candles, but volume is falling. Example 2: Modest spread in price but high volume. This is a anomaly and a trade should be closed immediately following this analysis. Example 3: Price spread is wider then the previous candle but the volume is lower. This is 2 anomalies and a trade is closed based on this analysis as well. Example 4: wide spread candle and lower volume then on previous candles in the trend, this is also an anomaly EA looks for. EA will not place a trade if any anomalies. EA will close trades on anomolies.
- If a hanging man candle, a shooting star candle or a hammer candle are spotted, trade is closed immediately.
- Take profit level is hit
- stop loss is hit
[B]When EA won’t open a trade in existing trend[/B]
*If an anomaly is seen during existing trend. When trend is continuing but volume is low. Example: Rising prices and increasing spreads on candles, but volume is falling. Example 2: Modest spread in price but high volume. This is a anomaly and a trade should be closed immediately following this analysis. Example 3: Price spread is wider then the previous candle but the volume is lower. This is 2 anomalies and a trade is closed based on this analysis as well. Example 4: wide spread candle and lower volume then on previous candles in the trend, this is also an anomaly EA looks for. EA will not place a trade if any anomalies.
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EA spots a long legged doji candle
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If a hanging man candle, a shooting star candle or a hammer candle are spotted
More…coming soon and much will be added pending discussion and testing
