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Specification
The main purpose of this EA is to test the past performance of the 5BF trading strategy, going back as far 1-3-5-10-15-20 years, however many years FXChoice broker (FXChoice.com is the broker that I use for my forex trading) will allow using their MT4 data on their MT4 platform using their strategy tester. This EA uses the standard MT4 indicator known as Bill Williams Fractals, which is a 5 Bar Fractal (5BF) setup. We trade the 5 thbar in this setup after 4 bars completed their formation. Hence let’s call Bill Williams fractal arrow indicator as 5BF and let’s call this trading strategy as 5BF trading strategy for the purpose of this EA design. So, this EA will take the trade as soon as 5BF arrow appears, it takes an up trade when 5BF appears below the bottom wick (BW) of the candle and it takes a down trade when 5BF appears above the top wick (TW) of the candle. I explained below how the EA executes the trades.
All trades will be executed at 6PM Eastern Standard Time (EST is followed in USA). Forex markets start at 5PM EST all over the world. The reason EA executes the trades at 6PM EST is, by 6PM the forex spreads stabilize. By entering the trades at 6PM EST, we have an advantage and a disadvantage. The advantage is, the currency spreads normalize and reduce after an hour after the markets open up. But the disadvantage is, a smaller % of trades may not be triggered, which we will call them as non-triggered (NT) trades. I realize this and accept this reality.
Methods of Trade Entry: There are 2 methods of entry into the trade. These are BSR (Buy/Sell Rejection) entry and Fib (Fibonacci) Entry. But this EA will have 3 settings in the drop down menu for Trade Entry. These 3 are BSR entry, Fib entry and Default entry. If we choose BSR entry, the EA will execute all trades at 6PM EST based on conditions explained below. Fib retracement is a standard indicator on MT4 platform. If we choose Fib entry, the EA will execute all trades at 6PM EST using Fib retracement as explained here. If we choose default method of entry, the EA will select either BSR entry or Fib entry as per criteria mentioned here.
BSR Entry: In BSR entry, we make use of length of TW and BW of a candle. When the BW of a candle is longer than TW, it indicates to you to buy and when the TW is longer than BW, it indicates to you to sell.
But, let me explain the complete logic the EA will utilize in making the entry. As soon as 5BF appears, EA will enter into a trade in 5BF direction. The method of entry depends on BSR direction of the 4 thcandle in the 5BF setup. If BSR direction of the 4 thcandle agrees with the trade direction of 5BF, then EA will enter the trade at 6PM EST, which is 1 hr after forex markets start. If the 5BF trade direction and BSR direction of the 4 thcandle are the same, we need to determine at what price at 6PM EST we enter the trade. We have two price entry possibilities: these are open price (OP) of the 1 stH1 candle of the day or the close price (CP) of the 1 stH1 candle of the day. At 6PM EST, the EA will look at the 1 stH1 candle which just finished its formation and determine if it should enter the trade at the OP or CP of the 1 stH1 candle. The EA determines the trade entry at CP or OP by looking at 1 stH1 candle being a bull or a bear candle and if the trade is an up trade or a down trade. If it is an up trade and if the 1 stH1 candle is a bull candle, then EA will enter the trade at CP of the 1 stH1 candle and if the 1 stH1 candle is a bear candle, EA will enter the trade at OP of the 1 stH1 candle. If it is a down trade and if the 1 stH1 candle is a bear candle, then EA will enter the trade at CP of the 1 stH1 candle and if the 1 stH1 candle is a bull candle, EA will enter the trade at OP of the 1 stH1 candle.
Fib Entry: If BSR direction does not agree with 5BF trade direction, the EA still executes the trade in 5BF trade direction, but it will execute the trade by following the Fib retracement entry. The EA will enter an up trade at 61.8% Fib level by drawing Fibonacci retracement from the high of the D1 candle to the low D1 candle among the first 4 D1 candles in the 5-candle setup of 5BF (5 thcandle has not formed as yet; you are trading the 5 thcandle). The EA will enter a down trade at 61.8% Fib level by drawing Fib retracement from the low of the D1 candle to the high of the D1 candle among the first 4 candles in the 5-candle setup in 5BF (5 thcandle has not formed as yet; you are trading the 5 thcandle). For both up and down trades, EA will set stop loss (SL) at 0% Fib level and take profit (TP) at 161.8% Fib level. EA will bring the SL for all trades to entry point when price reaches profit distance equal to 1 time of SL. When the trade reaches profit of 1 time of SL, let’s call this break even (BE). If a trade calls for BSR entry, the EA will utilize the distance between 0% Fib and 61.8% Fib as SL and the distance between 61.8% Fib and 161.8% Fib as TP.
All Trades follow Forex Spread Rules: EA will make sure all trades to follow the forex currency spread rules using the prevailing spreads at the time of trade trigger (even though EA executes the trades at 6PM EST using BSR entry or Fib entry or Default entry, the trade may not trigger until much later, as all the trades EA will execute are either Buy/Sell Limit orders or Buy/Sell Stop orders.
Exiting the Trades: This EA will exit the trades when a trade reaches TP, BE, SL or when opposite side 5BF trade sets up. If the opposite side trade sets up, then the trade may be in the midst of partial profit (PP) or partial loss (PL), in which case the EA will close the existing PP or PL trades at 6PM EST (again EA closes the trades at 6PM EST, because the spreads stabilize an hour after the market open) and enter the fresh opposite side trade as per trade entry rules mentioned above.
Closing of NT Trades: EA will close all NT trades at 6PM EST the very next day.
Trading Days: EA will trade all trading days of the year, except for 2 forex market holidays, Christmas and New Year’s Day or any other holiday Forex markets are closed for.
Percentage Risk for Each Trade: EA will risk 0.5% of the trading account balance for each trade.
All 28 Major Pairs: There are 8 major currencies in forex: these are eur, usd, cad, gbp, jpy, chf, aud, nzd. Permutations and combinations of these 8 currecies give you 28 major pairs, which are found in all MT4 platforms. This EA determines trade entries from among these 28 pairs on whichever time frame that we choose to trade. Of course, I trade D1 candles majority of time.
Settings of EA:
1. Methods of Trade Entry: The 1 stsetting should have a drop down menu, from which I should be able to select BSR entry, Fib entry or Default entry. I explained above these methods of entry. In all these 3 methods of entry, the EA will utilize Buy/Sell Limit orders or Buy/Sell Stop orders and never market orders.
2. Closing of trades Based on an Equity Target: The 2 ndsetting of drop down menu should be Equity Closing (EC) versus Non-Equity Closing (NEC). When we choose NEC, the EA will follow the regular trading approach explained above by letting the trades exit by TP, BE, SL or PP/PL when opposite side trade setups show up. On other hand when we choose EC, the EA will ask us at what equity level the trades should be closed and it should give us a fill up the blank with the dollar amount at which all trades to be closed.
3. Time Frame Setting: This strategy can be applied to any time frame candles. Although I trade only D1 candles and up. So this EA should have a drop down setting for trading D1 or W1 or MN candles.
I attached here the Lot Calculator here that I use for calculating lot size for each trade entry. I put this in my MT4 platform under scripts.
If you design the EA like I desribed, EA should give us 5 fresh trades as below for this past Friday's D1 candle (Sept 3, 2021):
eurgbp down
gbpusd up
usdjpy down
usdchf down
cadjpy down
Let's say I select default entry for all these trades. So follow my trade entry logic explanation that I put in mql5.com.
Desciption of eurgbp entry: eurgbp has fractal down. Fractal direction is the trade direction. The 4th candle's BSR is up (I am referring to the 4th candle in 5BF setup. This is the D1 candle of Sept 3, 2021). So BSR is against the trade direction which is down. So EA should select fib entry. So, if EA draws fib retracement from the the high to the low of the last 4 D1 candles, the distance between 0.0 fib to 61.8 is 25 pips. Sell trade entry will be at 61.8% fib which is 0.8578 and the SL will be at 0.8603. The eurgbp spread was 1 pip at the time trade entry at 6PM EST. So we add 1 pip to the SL number bringing it to 0.8604 and TP will be at 161.8% fib which is 0.8539 and by adding 1 pip spread brings it to 0.8540. As far as spreads are concerned, EA should be able to select the spread values at the time of trade execution. Even though we enter the trades at 6PM EST, the trades may get executed when price reaches our desired level, because all our orders are stop an limit orders and never market orders. This will be more accurate. I take approximate spread numbers at 6PM EST and use them. I round all pips numbers to 4 decimals for non-jpy pairs and to 2 decimals for all jpy pairs. I round all SL and TP numbers to the nearest pip. So I risk 0.5% of my acct balance for each trade. You can open a demo acct on fxchoice.com and download their MT4 platform, select an acct balance of $100,000 and select FXChoice Pro Demo Server. I use a lot calculator on MT4 platform. If you need this calculator, I can send it to you. With 25 pips of SL, the lot calculator should give you lot size of 1.44.
Let me describe usdjpy entry: In usdjpy, the trade direction is down (fractal is down). The 4th candle's BSR is down. So, both trade direction and BSR direction are the same. Hence EA should select BSR entry. So to do BSR entry, EA will wait for 1st H1 canlde's formation. Once it finished, EA will look at 2 things: is 1st H1 candle bear or bull? and 2nd thing is the trade direction. In this case, 1st H1 candle is bull and the trade direction is down. So EA will enter the down trade at the OP of the 1st H1 candle. Depending on where the price is at 6PM EST, EA will enter either a sell stop or sell limit order. In this case, it will enter the sell stop down order at 109.91. To determine SL and TP, the EA will still need to draw fib retracement on the from the low of the candle to the high of the candle in among the 4 candles of 5BF setup, just like in the above eurgbp entry. This will give EA the SL 51 pips (distance between 0% and 61,8% fib) and TP of 83 pips (distance between 61.8% fib to 161.8% fib) . And then EA adds 51 pips of SL and 1 pip of spread to 109.91 entry, bringing the SL level to 110.43 and and it subtracts 83 pips of TP and 1 more pip for spread from entry point to give TP of 109.07.
If you understood my EA explanation that I gave on mql5.com and the above 2 explanations of trade entries, you will come up with your trade entries by yourself for gbpusd, usdchf and cadjpy. So ple. let me know where and how you will do the entries for these 3 trades. This will tell me that you understood the logic of this EA well. Also, based on the logic of this EA, ple. tell me how many trade entries you will have for Monday, Sept 6, 2021. What are those entries and how will the EA handle the trade entries for Monday? If you understand and feel comfortable with the logic of this EA, then I can choose you as the developer for the agreed upon price of $100.