Traders and investors use different indicators for analyzing events of the past and forecasting future patterns and price trends. These indicators represent mathematically-based tools for technical analysis and include the Bollinger Bands indicator, moving averages and so on. While fundamentalists rely on different economic and annual reports, traders, who prefer using technical analysis, give preference to indicators, which help them to make interpretation of the market. The main advantage and purpose of indicators is ability to identify trading opportunities. For instance, a trend change may well be preceded by a moving average crossover. In this case, if a trader wants to find possible areas of trend change on a price chart, he should apply the moving average indicator to this chart.

On the other hand, indicators are used in different strategies quite often, because they allow to determine entry, exit and trade management rules objectively and impartially. When we say “strategies”, we mean a definitive set of rules, which regulate the process of trade and specify the exact establishment, management and closure of trades. As a rule, one and even several indicators are used in strategies in detail in order to establish instances where trading activity will occur.

No concrete trading strategies will be reviewed in the given article, but we will try to explain the difference between indicators and strategies, and also say some words about principles of their combined work, which allow technical analysts to determine very probable trading setups.

Forex Indicators

Traders can study and analyze many different technical indicators. There are commercially available proprietary indicators as well as those in the public domain, for example, stochastic oscillator or a moving average. Moreover, some traders often resort to services of professional programmers to develop their own custom indicators or do it manually on their own. The majority of indicators are provided with user-defined variables that are used by traders in order to adapt key inputs in accordance with their needs.

For instance, a moving average is just an average price of securities over a definite period of time. This period of time is stated in the type of MA (for example, a 50-day MA). The number “50” means that the given MA will show you the average price for a 50-day time period. As a rule, closing price of securities is used in calculation of MA, but it doesn’t mean that other price points can’t be used for this purpose (for instance, open, high or low). The trader can specify the price point for making calculations an also the length of the MA.

Trading Strategies

Let’s define a trading strategy once again. It is a set of rules, which regulate the process of trade and define order and time of trader’s actions. As a rule, filters and triggers are based on indicators and included as compounds of a strategy. The aim of filters consists in identifying the setup conditions, and the aim of triggers consists in timing, i.e. they “decide” when some action should be done.

Here is an example of a trade filter: a price that has closed above its 200-day MA. This prepares the ground for the trade trigger, i.e. for some event that causes trader’s actions. It is also known as “the line in the sand”. For example, when price reaches one tick above the bar that breached the 200-day MA, it well may be a condition for a trade trigger.



It should be noted that it is wrong thinking about a trading strategy as about a simple instrument, which buys when price reaches a position above the MA. A strategy is a very evasive tool and it can’t provide any specified details, which help to take some actions. Here are several items, which should be followed in order to create an objective strategy:

1. You should know what kind of MA you are going to use. You should also know length and price point, which will be included into calculation.
2. It is necessary to define a point above the MA, above which price needs to move.
3. You should choose the moment, when the trade should be entered. There are three options: when price reaches the specified point above the MA, when the bar is closed or when the next bar is opened.
4. You should also choose the type of order (market, limit), which you are going to use in order to place a trade.
5. Of course, the amount of shares of contracts to be traded should be specified.
6. Make decision about the rules of money management.
7. Finally, define the exit rules.

An objective strategy can be formed only on the basis of the abovementioned preconditions.

Development of Strategies by means of Technical Indicators

An indicator itself can’t be considered as a strategy. It only plays a role of a tool, used by traders to identify market conditions. On the other hand, a strategy is a set of rules, defined by a trader, which specify application and interpretation of indicators for the purpose of making correct predictions of future market activity. Volume, trend, momentum and volatility – these are among different categories of indicators. As a rule, several different types of indicators are used by traders in their strategies. If a trader uses multiple indicators of the same type, so-called “multicollinearity” or multiple counting of the same information may occur. Such situation is not advisable because multicollinearity may influence other variables and underestimate their importance because of redundant results of multicollinearity. Therefore, it is much better to apply indicators from different categories in a strategy: for example, a trader can use trend and momentum indicators. It often happens that traders use some indicator for making confirmation of signal accuracy of another indicator.

For instance, a momentum indicator can be used to confirm the validity of the trading signal of a MA strategy. Relative Strength Index or RSI is a momentum indicator. It compares the average price change of advancing and declining periods. There are user-defined variable inputs in RSI as well as in other technical indicators, so a trader can define, for example, overbought and oversold levels. It means that a trader can use RSI for confirmation of any MA signals. If there are opposing signals, it might point to a lesser reliability of signal and probable insecurity of the trade.

Of course, a trader must do researches of the chosen indicator (or several indicators) in order to find the most appropriate application of this indicator. Trader’s style and readiness to risk should be also taken into account. The use of a strategy has one major advantage: it allows to perform backtesting, i.e. to use historical data in order to check if the given strategy would be successful in the past. Of course, there are no guarantees that the given strategy will be successful in future, but still it is a very helpful tool for development of a profitable trading strategy.

No matter what kind of indicators you are going to use, you must clearly specify interpretation of indicators and their precise actions in your trading strategy. Indicators are just tools and do not produce any trading signals on their own, so you should include them in a strategy and be as precise as possible, because ambiguity is very dangerous.

Picking out Indicators for a Strategy

Before choosing indicators a trader should decide what type of strategy he is going to create, because it influences the choice. And again, trader’s style and readiness to risk should be taken into account. If a trader is intended to focus on long-term moves and large profits, he might use a trend-following MA indicator and create a trend-following strategy; in case a trader is intended to focus on small moves and frequent small profits, he might try to create a strategy based on volatility. A trader can also use various additional indicators in order to confirm received signals.

Of course, there is another way: a trader can simply buy a so-called “black box” trading strategy or a commercially available proprietary strategy. There are advantages and disadvantages of using this type of strategies. The advantage is that all the necessary researches and backtests have already been done in advance (theoretically), and a trader shouldn’t do anything else on his own. On the other hand, there is a major disadvantage: a trader completely trusts developers of this strategy and often can’t make any customizations in accordance with his own style of trading

Conclusion

Trading signals are not produces solely by indicators. The ways of sending signals by indicators should be developed by a trader. A trader is also responsible for creation of trading strategies. Of course, it is possible to use indicators without being used in combination within a single strategy, but at least one type of indicator is necessary for creation of technical trading strategies. Creation of a strategy, which represents a set of rules, which regulate the process of trade and define order and time of trader’s actions, allows a trader to perform backtests in order to find out if his trading strategy would be viable. It also allows a trader to draw conclusions about behavior of a strategy in future. It is very important to technical traders, because it allows them to make constant evaluation of the strategy performance. Moreover, it allows traders to make decisions concerning time of closure of a position.

There are talks among traders about some king of “Holy Grail”, which would allow them to make profit instantly. Unfortunately, there is no perfection in our world, and there is no possibility to develop an ideal strategy that will bring guaranteed profit to all traders. There are many traders, and each has his own style, readiness to risk, temperament and personality. It means that everyone decides by himself what technical analysis tools he is going to use. Traders also have to make researches personally and develop strategies on their own, basing on the results of these researches.

http://iticsoftware.com

Forex Scalping Strategies Explanation Video

Best Scalping Expert Advisor 2010

Best Scalping Expert Advisor 2011

Learn more about Forex Grid Expert Advisors

Probably the most popular type of forex trading strategies can be considered as a forex scalping strategies. 

There are several reasons for this:

1. Not require a large initial capital
2. Opportunity to obtain high profits
3. Active trading style
4. Short period in the position reduces the risk of loss

There are many definitions of scalping strategy.  The most accurate definition of scalping strategy is receive a small profit (several pips) in a short period of time.

 A little bit history....

Several years ago, the company Metaquotes from Russia has released MetaTrader  terminal,  and MetaTrader server. This has stimulated the creation of a large Number of brokerage companies with small capital and only one goal: force the trader to lose all deposit. MetaTrader server has all necessary tools  for the destruction of any strategy. Such brokers can be compared to a casino. Advantage casino over the player is a large supply of money and time.  For this reason scalping strategy which does not require large deposit and order remains open for a few minutes or  seconds, give the trader an opportunity to win.  To prevent the winning brokers decided to expand spreads and limit the distance (up to 10 pips) between Stop Loss, Take Profit and Pending Orders and price.

Factors affecting scalping

• Liquidity – The liquidity  of a market affects the execution time and as a consequence on  performance of scalping.
• Spread - scalper's profit  is commensurate with the  spread. For this reason, any spread  increasing may affects on performance.
• Volatility - Unlike momentum traders, scalpers like stable or silent market.  Imagine if its price does not move all day, scalpers can profit all, making hundreds or thousands of trades.
• Time frame - Scalpers operate on a short time frames, like M1, M5 and M15. This maximizes the number of moves during the day that the scalper can use to make a profit.
• Money  management – usually 1 loss for scalping strategy can be 2 -10 times bigger then  1 profit. For this reason scalping strategy can have  very strict money management never allowing a loss to accumulate.

Scalping types

There are many methods of scalping. The most popular method is the opening orders in     on  the low volatility  market  in the moment when price  touch of the border of  regression channel  or support /resistance lines or High/ low level.

But I do not accidentally said  at first about  the scalping history of Factors affecting scalping.

Currently profitable scalping strategy can be created only by a professional who knows not only  forex trading but also the work of brokerage companies as well as having extensive experience in programming.  For example adding 3 lines of programming code  allows force a dealer to make a mistake,  can turn losing strategy in to a winning strategy.

For this reason for a successful scalping you need an expert adviser coded by a professional company and reliable broker. Good luck!

http://iticsoftware.com

PowerTradeCopier

Visit our website for more information

FIX API Module Explanation

More Information about FIX API Module

We get a lot of questions what is your best adviser, or what is your best indicator. I'll try to clarify some points.

Expert Advisors

We have a lot of Expert Advisors based on different algorithms. What could be the starting point when choosing a EA. I think best way is start choosing from information about account.
If your broker support minimal lot =0.1 and you account size $1000 or more; or your broker support 0.01 and your account size 100 or more, you can use scalping systems. I can recommend you Expert Advisor "SC-Market".

If your broker support minimal lot =0.1 and you account size $2000 or more; or your broker support 0.01 and your account size 200 or more, your can use scalping systems and also you can use hybrid (Scalping + Trend Following) systems. I can recommend you: Expert Advisor "SC-Market", Expert Advisor "TFOT"

If your broker supports minimal lot = 0.01 and your account $5000 or more, you can use Scalping, Hybrid and also  grid systems and systems with increasing lot (non martingale!).
I can recommend you: Expert Advisor "SC-Market", Expert Advisor "TFOT", Expert Advisor "SecureProfit", Expert Advisor "Eldorado".

Expert Advisor "Eldorado"    



Expert Advisor "SecureProfit"   



Expert Advisor  "TFOT"   




Expert Advisor "SC-Market"

Metatrader 4 Indicators

The indicator is not a trading system and part of the trading system. You should create your trading rules using indicator(s) or use rules provided by reliable sources. We have described several manual strategies and will post new strategies with recommended indicators : forex-profit-systems.com

For more than 10 years our company has been offering products and services for forex market and today we are giving our customers 25% discount for all products which were created during this term. Don't miss it - our Anniversary Offer expires soon!

2011 © iticsoftware.com

Regular Divergence

A divergence is a separation between price and indicator that warns of a possible short- to intermediate term change of trend. A bullish divergence arises during a down move when price makes either a lower low or a double bottom but the indicator makes a higher low or a double bottom.



A bearish divergence occurs during an up move when price makes either a higher high or a double top and the indicator makes a lower high or a double top. Classic divergences can occur at price tops or bottoms and also at price corrections.



For our opinion most correct way to determine divergence is determine divergence between fractals on price.

Hidden (Reverse) Divergence

In a bullish hidden divergence, the indicator makes a lower low, but price makes either a higher low or a double-bottom low. This type of nonconfirmation occurs mainly during corrective declines in an uptrend, but it may also be found on occasion at price retests of the lows.

In a bearish hidden divergence, price makes a lower high, but the indicator makes a higher high. This type of nonconfirmation is mainly found during corrective rallies in a downtrend but may also occur during retests of a price top.

Standard and Advanced Divergence Indicators

Standard divergence indicators shows divergence between price and standard oscillator (MACD, Stochastic, RVI, RSI, etc...)

Advanced divergence indicators hows divergence between price and advanced oscillators (PowerRVI, Hurst, John Ehlers Indicators )

2011 © http://iticsoftware.com

Whether it is a long-term investment or a short-term trade, it is important to both decide the appropriate time to exit a position, as well as determine the best time to enter into the position.

The Trailing Stop

They may appear similar as they both equally provide protection towards your capital if a  price were to move against you; however, that is all that is similar between a trailing stop and a regular stop.

When compared to a fixed stop loss, a trailing stop has more advantage in the sense that it is much more flexible, allowing traders to continue to protect their capital even if there is a price drop. Once the price picks up and increases, the trailing feature takes place to protect the profit while reducing capital risk.



To illustrate how trailing stops work, take for instance the trailing value is either at a fixed percentage of 5% or a fixed spread of 35 cents. Regardless, the trailing stop will follow the day’s high by the predefined amount. However, the thing to note is that once the trailing value is set, it cannot fall back, and even if the last price drops lower than the trailing stop value, the stop loss will be triggered, preventing loss.

The Parabolic Stop and Reverse (SAR)

Using the parabolic stop and reverse (SAR) technique, one can place stop-loss on both sides of the market so the movement is incremental each day with the changes in price. The SAR is in fact a technical indicator that is plotted along a price chart, occasionally intersecting with price when there is a reversal or loss of momentum in the security involved. When an intersection occurs, the trade is considered stopped out, creating an opportunity to take on the other side of the market.

Using an example to explain this, when your position is stopped out, the security will be sold, leaving the position closed. This allows you to sell short with a trailing stop immediately on the opposite (parabolic) to the level where you were stopped out in your position on the other side of the market earlier. Basically, the SAR technique allows a person to capture both sides of the market as a security faces fluctuation over time.

The major proviso of the SAR system is the erratic fluctuations of a security. When the price of the security fluctuates very quickly, the trailing stops will be triggered as well each time, making it difficult to achieve sufficient profits. In other words, your trading commissions and other costs will be greater than the little profitability you gain from a choppy market.

The second proviso of SAR is a security that does not show a significant trend. A trend that is too weak will make it impossible for the stop to reach, so your profits will not be locked in. Hence, the SAR is not suitable for securities that lacks trends or has trends that fluctuate back and forth too quickly. However, the SAR makes a perfect choice when it comes to determining your levels of trailing stops if you are able to identify opportunities between the extremes.

Universal Trailing Stop Expert Advisors

Universal Trailing Stop Expert Advisors included:
a) Standard Trailing: simple trailing, stoploss follows by the market
b) High/Low Trailing: trailing by bars High/Low
c) ATR Trailing: trailing by ATR indicator
d) Fractals Trailing: trailing by Upper/Lower Fractals
e) PSAR Trailing: trailing by Parabolic Stop And Reverse indicator
f) ProfitPcnt Trailing: trailing with lock of some pcnt of max. profit reached
g) TrendLine Trailing
h) MovingAverage Trailing
a) Standard Trailing: simple trailing, stoploss follows by the market
b) High/Low Trailing: trailing by bars High/Low
c) ATR Trailing: trailing by ATR indicator
d) Fractals Trailing: trailing by Upper/Lower Fractals
e) PSAR Trailing: trailing by Parabolic Stop And Reverse indicator
f) ProfitPcnt Trailing: trailing with lock of some pcnt of max. profit reached
g) TrendLine Trailing
h) MovingAverage Trailing

Read more about universal Trailing Stop

2011 © http://iticsoftware.com

Forex Grid Introduction

Forex Grid Trading is s trading strategy, which can be applied at the Forex market. This kind of strategy is based on determining the natural back and forth motion of the market. After determining this motion you can place orders below and above the current market. As a result, you will gain profit so far as market moves. The best advantage of such kind of forex strategy is that you almost don’t need to predict the direction of market movement.

From the other hand, instead of predicting the price you will have to lay special emphasis on money management, psychology of trading and grids visualization problems, which will arise when you try to use  forex grid trading strategy.  

In addition, you should realize that it is impossible to completely forget about market analysis even in case of using grid trading.

Basic Forex Grid Design

There are many different grid configurations, which are available for use, but, curiously enough, all these different versions are based on one common idea. Here is an example of the very basic forex grid for the EUR/USD currency pair.

It is the simplest example of forex grid trading, so the numbers in this example will be as simple as possible. Let’s take a snapshot of a hypothetical market and imagine that our currency pair (EUR/USD by default) is trading at 1.4500. Let’s use ten pip intervals.

As it was mentioned before, forex grid trading is based on placing orders below and above the current market, so we need to place our buy and sell orders above and below the price respectively, using specified preset intervals. Each order must have a uniform Take Profit target. There won’t be any Stop Loss orders at all. In order to further simplify management of the grid traders often use two trading accounts.

Don’t forget that our EUR/USD currency pair is trading at 1.4500; therefore, let’s place buy and sell orders above and below this value. For instance, our buy stop orders would be at 1.4510, 1.4520, 1.4530, etc, and our sell stop orders would be at 1.4490, 1.4480, 1.4470, etc.

Take profit and stop loss will be attached to each order. After that we can place our grid into motion.

Examples of Forex Grid Trading

The simplest probability here is if the price is moving up or down. In case of upward motion the buy orders will be opened; these orders won’t be closed until the price reaches their take profit level. In case of reverse of the price and downward motion the sell orders will be opened; these orders will be closed in profit as the price moves down. When some position is closed, a new order will be opened. In our example with ten pip intervals selling occurs every ten pips below the market price, and buying occurs every ten pips above.

As you see, it is much better that the necessity to predict the behavior of Federal Reserve for every week. Of course, our example is the simplest one, and everything is a bit more complicated in a real world. Let’s suppose that the market price fluctuates up and down, because such situation is much more probable.

As it was said before, a buy order will be opened if the price goes up, but what happens if the price starts moving down before the take profit level of the opened buy position is hit? Such position becomes loss-making, and the lower the price is, the more money such position loses. Even in case the price reaches your profit level of the sell orders, you still have this opened buy order which increasingly yields a loss.

Now we should add a bit more complexity in the situation. Imagine that the price starts moving up before the take profit level of the opened sell position is hit. As you see, it is the same situation, but it is reversed: your order, which is placed below the market price, yields a loss while the price is rising. The one positive moment here is that the abovementioned “dangling” buy position will begin to recover.

As you can see, one of the shortcomings of forex grid trading is a possibility to lose money because one position (or several positions) can be caught far away from the market price. In this case, loss is possible even in case other positions bring you profit. Actually, this is the point: your grid trading strategy would be successful if you were able to carry losing positions for some time, and this period can be quite long. Your psychological and financial condition should allow you to do it, otherwise you will fail.
 
First of all, let’s speak about your financial condition. It is obvious, that you should have enough money for carrying losing positions, because balance/equity of your account are lowered by this position and your margin is eaten away. There are even some cases when the market does not move back, and you have to pay swap. The only salvation of this problem is availability of funds in your account. Actually, it happens quite often that traders accumulate losing positions and deplete margin, so they have no possibility to wait until the market moves back.

Secondly, let’s speak about your psychological condition. In some way this matter is even more difficult in comparison to finances, and here is the reason. Many traders, who have decided to use grid trading, expect the market to move only back and forth (so their positions will be profitable all the time). They want to make money without learning the basics and worrying about fundamentals. So when they see that positions not only bring profit, but also can be loss-making, they become a bit confused. And only then such trades start understanding that grid trading do requires some basic knowledge about position of a given market at a given time.

One of the main challenges of Forex grid trading is the ability to manage a losing position or several positions, which can appear either at the top or at the bottom. And this matter puts a great strain on the grid trader. Grid trading is often criticized for such state of things.

Forex Grid Money Management

Money management is very important for grid trading, because it can help to solve problems concerning the constant threat of undesirable market movements, which can cause appearance of losing positions.

First of all, as we’ve already mentioned, you should have enough money in your account to be able to stay in the ever-moving market and to allow your grid strategy to work. Your account won’t be blown up because of your conservatism or too small lot size, but it will be blown up if you don’t have enough money in reserve.

Secondly, you should decide for yourself for how long you can afford yourself carrying losing positions.  You should clearly understand that such positions will arise almost all the time you use grid trading.

Forex Grid Conclusion

Grid Trading is a very popular strategy for Forex trading. Automation and visualization are two main advantages of grids. From the other hand, you should understand the basics of the market in order to use grid trading more efficiently.

Forex Grid Trading requires use of money management and advertence concerning available margin, because margin calls are very dangerous. Forex Grid Trading has a very good structure, but it is not a “magic stick”, which will bring you money with ease. You can be successful with the help of Forex Grid Trading, but at the same time you should learn its specifics and know how to deal with its challenges.

Forex Grid Professional Strategies

Expert Advisor fo MetaTrader 4 "Eldorado"

• Currencies: CHFJPY, EURCHF, GBPUSD
• Timeframe: Any
• Using Indicators: No
• Trading Time:24 hours per day
• Risk: Medium
• Minimum Deposit: $5000 ($500 with Lot =0.01 )
• Recommended Deposit: $20000 ($2000 with Lot=0.01)
• Orders Type: BUYLIMIT and SELLLIMIT pending orders
• Money Management: Stop Loss and Take Profit, closing by profit, closing at time
• Metatrader expert advisor Customization: possible upon the request
• NOT sensitive for broker

More information about Expert Advisor "Eldorado"

2009-2011 ©  http://iticsoftware.com

MM for Expert Advisor - Percent by Account Balance

First and most popular type of money management for expert advisor is lot size calculation proceeding of account balance.

Lot Size = percent by account balance

Example 1
Percent =10%
Account balance = 10 000
Lot size = 1000 (1 standard lot)
Your expert advisor win 2000 and account balance became 1200 next lot size will be:
Lot Size = 1200 (1.2 standard lots)
etc.

This money management system useful for traders preferring high profit/risk ratio. During favourable market conditions may be prompt profit increasing and vice versa.

MM for Expert Advisor -InvestMM

(BJF Trading Group innovation, 2011 © iticsoftware.com)

Second types of money management for expert advisors most useful for traders preferring low risk. Similar type of money management uses by banks for some types of mutual funds portfolios. The basic principle for this money management  - trade with the highest risk at the beginning and risk reduction by the end of the period of investment.

Example 2

Investment period 1 year
InvestPeriod.Start = D'2011.01.01 0:00';
InvestPeriod.End = D'2012.01.01 0:00';
Initia lPercent  15 %
Final Percent = 3%
Initial deposit 10 000

Expert advisor will open first trade with lot  = 1500 (1.5 standard lots)  and then percentage will gradually decrease and by the end of the investment period percent will be 3% 

External Parameters:
extern bool     UseInvestMM = false;
extern datetime InvestPeriod.Start = D'2011.01.01 0:00';
extern datetime InvestPeriod.End = D'2012.01.01 0:00';
extern double   InitialPercent = 30.0;
extern double   FinalPercent = 10.0;
extern bool     FixBalance = true;
extern double   FixedBalance = 10000.0;

MM for Expert Advisor - Winning Series MM

 (BJF Trading Group innovation, 2011 © iticsoftware.com)

The basic principle for this money management  - expert advisor will reduce lot size after a series of (a few in a row) of profitable trades.  Lot size will decrease until expert advisor will open a losing order. After losing order, the lot size will be the initial again.  Such an approach, with  the correct parameters , will let open a non profit  order with a minimum lot size.

Example 3

Initial deposit 10 000
Success Deals Number 3
Lot percent  60%

1st order lot size = 1
2d order lot size = 1
3d order lot size = 1
4th order lot size =  0.6
5th order lot size =  0.36 (losing order)
6th order lot size =  1
etc.

External Parameters:
extern int     SuccessDealsNumber=2;
extern double  LotPercent = 50;

We can add any type of money management for your expert advisor (source code, mq4 file is required)
contact us