Smart Candle

Introduction

This EA is designed to survive the testing period of 1 year with low drawdown and high Sharpe ratio. There is something new in the concepts of calculation, but it is easily understood. And here are the best results.

Note that the 30% drawdown motioned above is the result from the strategy tester, which seems to use peak equity as a reference. Compare to the drawdown 10% result from this EA, which uses starting equity as a base. In this point of view, we will see the great performance of the EA. and the Sharpe ratio over 3.0 is categorized as a very good investment. Please see the attached video for the testing record.

Keys Concept of Program

The algorithm is composed of 4 main functions as follows:

1. Market Analyzing   -  The used method is extremely new but very simple, called "Smart Candle," that I developed by myself. It's like a normal candlestick, but the start and end of the bar are specified by the dump event (not by the time interval). By this way we will see the clarity of the movement of the price and also the support and resistance level.   

2. Trading Strategy  -  The simple higher-high and lower-low are used to determine the trend (higher-high = buy, lower-low = sell). The overprice movement limit was used to activate the trading direction as a counter trend. The pending order is used to open the trade. The lot of trading will auto scale to match the situation. The scale factor is based on current price movement and the current accumulated lot on each side, which the composition of the equation is unrevealed. But the user can adjust the overall scale factor by the parameter called "Overall lot scaling factor.".

3.Close Positive Position   -   This is one of the most important things. We will close the positive position when the potential of price movement is switching (buy to sell, sell to buy). The concept to indicate the switching point is the curvature of the price movement, which is calculated by the ratio of the price area divided by the idealized triangle area. Imaginary of the uptrend line. The first thing we have is a price difference in the y-axis and a time difference in the x-axis. Multiply these two values and divide by 2; the result is an idealized triangle area. Then we consider the area above the trend line that is a sell area. Integrate the sell area over the time domain of the trend line. and then we can calculate the area ratio. After this, we need to trial the value of the area ratio to get the best actual closing price. (See the attached image for the concept of area ratio.)

4.Close Trading Round—the trading round starts at the first time of placing an order. Then all trading activity has a record. The trading round will close when all these three criteria are satisfactory. The first criterion is that the profit must reach the target profit. The second criterion is the risk-reward ratio must reach the target risk-reward ratio. and the last criteria is the lot amount after the close positive is switching from higher to lesser.  When closing the trading round, that means all positions and orders will be cleared, and the profit round record will be reset. 

Parameters 

1.General Parameter

• Magic Number             

2.Auto Trade option

• Auto open order                      - select auto open order option. there is 4 choice ( Both ,Buy ,Sell and Manual ).
• Auto close positive position      - select auto close position option. there is 4 choice ( Both ,Buy ,Sell and Manual ).
• Auto close trading round          - select auto close trading round option. there is 2 choice - ( true or false ).

3.Trade option Control

• multiplier to minimum lot                                                   - The basic lot of trading is used to determine the actual lot trade. 
• Minimum Price Gap between previous position (Point)           - Control the spacing of each order. The recommended value is 300.
• Potential switching point defined by ratio of area                 -  Determine the potential switching. The recommended value is 0.2-0.3.
• Pullback Ratio of Price Range                                               -  use to count the wave and tip switching not effect to algorithm trading but intent to guide the manual trading. the recommended value is 0.2-0.3.
• Overall lot scaling factor                                                      - use to adjust the trading lot.

4.Price Movement Identification

• Size of Dump event in point                                                                -  specify dump event. the recommended value is 1000.*
• Rate of Dump event in point/minute                                                   -  specify dump event.  the recommended value is 100.*
• price over move limit in point                                                             -  specify over move limit. the recommended value is 7000.
• Strong Bar define by ratio of current bar to chain of movement           -  specify the ratio of the current bar movement to the chain movement to identify the strong bar. The recommended value is 0.6.

5.Trading Round Control

• target profit dollar per lot base                               -  targeting  profit  per lot base. 
• target risk-reward ratio                                           -  targeting risk-reward ratio. The recommended value is 1.5.

Objects in chart area