Introduction Welcome back to our algo-trading series! Having understood the basics and the importance of risk management, we now move forward to introduce some advanced algo-trading strategies and demonstrate their implementation in MQL4.
What Are Advanced Algo-Trading Strategies? Advanced algo-trading strategies are methods designed to make trading decisions on your behalf, based on complex algorithms. These strategies use mathematical models to predict market movements and generate signals to place trades.
Example 1: Mean Reversion The Mean Reversion strategy operates on the principle that the price will return to its average over time. Traders using this strategy will typically buy securities that are underperforming and sell those that are overperforming.
Here’s a simple example of how you might implement a mean reversion strategy in MQL4:
mql4
double array[];
int length = ArraySize(array);
double sum = 0;
for(int i = 0; i < length; i++) {
sum += array[i];
}
double mean = sum / length;
if (Close[0] < mean) {
OrderSend(Symbol(), OP_BUY, LotSize, Ask, Slippage, StopLoss, TakeProfit);
}
if (Close[0] > mean) {
OrderSend(Symbol(), OP_SELL, LotSize, Bid, Slippage, StopLoss, TakeProfit);
}
This script calculates the mean closing price of a security and places a buy order if the latest closing price is below the mean, and a sell order if it’s above the mean.
Example 2: Trend Following Trend following strategies aim to capitalize on market trends. These strategies generate buy signals when a trend is rising and sell signals when it’s falling.
Here’s a simple example of a trend following strategy in MQL4 using the Moving Average indicator:
mql4
double shortTermMA = iMA(Symbol(), 0, ShortTermPeriod, 0, MODE_SMA, PRICE_CLOSE, 0);
double longTermMA = iMA(Symbol(), 0, LongTermPeriod, 0, MODE_SMA, PRICE_CLOSE, 0);
if (shortTermMA > longTermMA) {
OrderSend(Symbol(), OP_BUY, LotSize, Ask, Slippage, StopLoss, TakeProfit);
}
if (shortTermMA < longTermMA) {
OrderSend(Symbol(), OP_SELL, LotSize, Bid, Slippage, StopLoss, TakeProfit);
}
In this script, we calculate two moving averages: a short-term one and a long-term one. If the short-term MA is above the long-term MA, the script places a buy order. If the short-term MA is below the long-term MA, it places a sell order.
Conclusion These are just two examples of the many advanced strategies that can be used in algo-trading. Remember, the key to successful trading is finding a strategy that works for you and sticking to it. In the next blog, we will discuss the pitfalls to avoid in algo-trading. Stay tuned with Tradomite!
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