Develop a custom Expert Advisor (EA) for news-based trading

To seize ucrative trading opportunities, many traders turn to automated advisors, tools designed to capitalize on these fluctuations swiftly and efficiently.

Let’s delve into the intricacies of news-based trading, and through strategies and real-world examples, understand the power and utility of automated advisors.

 

Understanding News-Driven Market Dynamics

At the heart of the Forex market’s dynamism lies the economic news. These aren’t just routine bulletins; they are powerful drivers influencing the direction and momentum of currency pairs. Consider events like the release of the US GDP, unemployment reports (non-farm payrolls), decisions regarding interest rates from the US and Eurozone, and inflation reports in the US (PCE). These pieces of information don’t just create ripples – they can generate tsunamis, leading to significant price movements within minutes.

However, the trick isn’t just in anticipating the news but in predicting and reacting to the market’s response. It’s a double-edged game where the news and the subsequent trader reactions determine the market’s direction.

Embracing Automated Advisors for Optimal News Trading

In the world of news trading, every second counts. Here, fortunes can be made or lost based on split-second decisions. That’s where automated trading advisors come into play. They execute pre-configured strategies with pinpoint accuracy, ensuring traders are well-positioned to maximize their gains from news-induced volatility.

For instance, tools like BreakoutEA can:

Initiate both buy and sell orders simultaneously just before a news release, offering protection from unexpected market movements.

Set stringent stop-loss measures to shield against potential unfavorable shifts.

Designate take-profit levels, ensuring trades align with the trader’s risk and profit objectives.

Real-world Application: A Dive into USD/CAD Trading Amidst News Release

To understand the real-world efficacy of these strategies, consider a trading scenario with the USD/CAD pair during a joint American-Canadian unemployment data release for October.

As the 13:30 UTC release time approached, the market was rife with anticipation. The chart showcased buy and sell entry points, marked by blue and red arrows, respectively. Initial stop-loss levels, represented by red lines, were strategically set, while the buy order’s stop-loss was adjusted, indicated by a pink line.

Once the news was out, the market’s reaction was immediate. The sell order faced a rapid exit, as depicted by a left-pointing red arrow. In contrast, the buy order remained active for an hour post-release, eventually generating a significant profit, effectively covering the sell order’s loss.

The Unmatched Benefits of Automated Advisors

Automated advisors are more than just convenience tools. They provide:

Protection: Ensuring traders are shielded from sudden and extreme market volatility.

Precision: Offering rapid trade executions, ensuring no opportunities are missed.

Simplification: Allowing traders to focus on overarching strategies, rather than the nitty-gritty of individual trades.

The Power of Personalization

While automated advisors offer ready-to-use solutions, their real value lies in customization. By making tweaks, traders can adapt these tools to diverse market conditions or personal trading styles. With the right modifications, they can even automate entire trading systems or integrate specific trading ideas, enhancing efficiency and profitability.

Advantages of Automated Advisors in News Trading

The inherent nature of Forex, influenced heavily by economic news, demands swift and precise reactions. Automated advisors offer:

Protection from Market Volatility: By setting predefined parameters, traders are shielded from unfavorable market shifts.

Precision in Executing Trades: Automated systems ensure trades are executed at the optimal moment, capitalizing on market conditions.

Simplifying Complex Trading Decisions: With automated processes, intricate decision-making becomes streamlined, allowing for more efficient trading strategies.

The Potential for Full Trading Automation

The adaptability of these tools is vast. Not only can they cater to news trading, but they can also be reconfigured to match various trading scenarios:

Adapting Tools for Various Market Conditions and Strategies: Whether dealing with currency pair fluctuations or interest rate shifts, these tools can be tailored to suit specific conditions.

Toward Full Automation: Beyond just assisting traders, with the right configurations and continuous refinements, these advisors can become the backbone of a trader’s approach, potentially handling all trading activities based on preset rules and conditions.

A Practical Example of Developing Simple and Effective Expert Advisors for News Trading

Breakout Advisor. It places stop orders.

At a specified time, it places (one or both, based on settings) pending orders: BuyStop and SellStop – at a Distance from the current price. With the possibility to disable placing one of the orders. With settings for lot size, take profit, and stop loss.

Breakout EA1 settings

Start Time = 00:00 // Advisor start time and placing of pending orders.

Distance = 100 // Distance from the current price to the set order (regardless of whether it’s 4 or 5 decimal places in MT).

Buy Stop = true; // Place or not.

Sell Stop = true; // Place or not.

Lots = 0.1; // Lot size for orders.

TakeProfit = 300; // Set value (regardless of whether it’s 4 or 5 decimal places in MT). If = 0 – no take profit.

StopLoss = 200; // Set value (regardless of whether it’s 4 or 5 decimal places in MT). If = 0 – no stop loss.

The advisor, at a specified time based on the current price, opens Buy and/or Sell with separate parameters for each of the settings.

Notes

This EA is designed to capitalize on breakout strategies, a common tactic in trading where traders seek to enter a position as early as possible during a significant price movement.

The advisor places either a BuyStop or SellStop order or both, at a predetermined ‘Distance’ from the current market price.

A breakout is expected to trigger one of these orders, hopefully leading to a profitable trade.

Breakout EA2 settings

Start Time = 00:00 // Advisor start time and opening of market positions.

Buy = true; // Open or don’t open.

Buy Lots = 0.1;

TakeProfit Buy = 300;

StopLoss Buy = 200;

Sell = true;

Sell Lots = 0.1;

TakeProfit Sell = 300;

StopLoss Sell = 200;

Notes

This EA appears to be a more direct strategy, simply opening a Buy or Sell order at the current market price at a predetermined time.

It’s a simpler approach compared to the Breakout strategy but may be useful in situations where traders expect a sharp movement at a specific time but aren’t sure of the direction.
Both advisors, after setting orders or opening positions at a set time, automatically close themselves and are removed from the chart. That eliminates the possibility of accidental reopening after a day, and prevents running it in the tester for more than a day for the same news.

Comments

1. Flexibility: Both advisors offer a good degree of flexibility. They allow for the adjustment of lot size, take profit, and stop loss, ensuring that the trader can set them up in line with their risk appetite.

2. Importance of Distance: In the Breakout Advisor, the ‘Distance’ setting is crucial. It determines how far from the current price the pending orders are placed. Setting it too close might result in a premature triggering due to market noise, while setting it too far might mean missing the breakout.

3. Time-Dependent: Both advisors rely heavily on the ‘Start Time’ setting. This suggests that they are designed for traders who anticipate market moves at specific times, such as just before major economic announcements.

4. Risk Management: The ability to set StopLoss and TakeProfit for each trade ensures that the trader has predefined exit points for both profitable and unprofitable scenarios. This is a crucial feature for any trading strategy.

5. Four/Five Decimal Places: The mention of 4 or 5 decimal places in MT indicates that these EAs can be used for both major pairs (like EUR/USD, which typically has 5 decimal places) and pairs like USD/JPY (which traditionally has 4).

6. Potential Improvements: It would be helpful if these EAs also had settings to adjust to market volatility or incorporated some form of trailing stop. Furthermore, additional built-in risk management features, such as a maximum daily loss or maximum number of trades per day, could make these tools more robust.

In summary, the described Expert Advisors provide tools for traders who seek to automate specific strategies related to market breakouts or timed market moves. Proper setup and understanding of the platform and market conditions are essential to utilize these tools effectively.

Coding Expert Advisors for Enhanced Trading Efficiency

In the dynamic world of forex trading, Expert Advisors (EAs) have emerged as indispensable tools for traders seeking automation, precision, and consistency in their strategies. Essentially, EAs are algorithmic systems coded to execute trades based on specific criteria without the need for manual intervention. They are programmed primarily using the MQL4 language for the MT4 platform and MQL5 for MT5, languages specifically tailored for trading operations and market data analysis.

Coding an EA requires a blend of trading knowledge and programming skills. The process involves translating a trading strategy into a series of algorithmic instructions. For instance, a simple moving average crossover strategy would involve coding the EA to monitor two moving averages and execute a buy order when the short-term average crosses above the long-term average, and vice-versa for sell orders.

What makes EAs so compelling is their ability to tirelessly monitor markets around the clock, reacting in real-time to changing conditions and executing trades at speeds unimaginable to a human trader. Moreover, they eliminate emotional decision-making, a common pitfall in trading. However, it’s worth noting that while EAs can be incredibly effective, they are as good as the strategy they are based on. Periodic reviews, back-testing, and fine-tuning of the code are essential to ensure that the EA remains relevant and adapts to evolving market dynamics. For traders not versed in coding, numerous platforms offer customizable EAs, though the truly ambitious often opt to learn MQL4 or MQL5 or collaborate with expert coders to craft their personalized trading bot.

If you do not know how to cope with programming languages, you may always find a reliable partner to code your algorithmic strategies, custom indicators, and Expert Advisors. We asked our partners – 4xDev.com – to code the Advisors mentioned above.

Backtesting Results

We have backtested the Breakout EA1 advisor and received the following results:

Forex Tester allows testing Automatic Strategies (Expert Advisors)

Here`s some of the advantages:

1. You can backtest strategies based on multiple currency pairs and time frames
2. You can see how exactly your strategy performs in real time. In other programs charts cannot be opened before the test is finished. Forex Tester allows opening many charts while your strategy is working (in any time frame, with applied indicators, graphical objects, etc.).
3. Forex Tester allows you to test strategies with real tick data that includes floating spread. So now you can even test scalping EAs.
4. You can adjust strategy parameters while the test is running (indicators, market conditions and so on). Other software only performs backtests with fixed parameters. This is a real time saver in the experimenting stage.
5. You can pause testing and analyze the market situation. Or you may “rewind” and “re-play” interesting moments to analyze the behavior of the strategy.
6. In Forex Tester it is possible to simultaneously test more than 1 EA as well as many instances of the same EA (on several currency pairs for example).
7. Leverage, spread and swaps can be defined by the user for all individual currency pairs in Forex Tester to simulate conditions close to the real market. This is another important factor that makes results with Forex Tester way more accurate than with other software.

In case you need your indicator/EA urgently or if you need to code them from scratch, our partners from 4xdev company can help you for a moderate fee. The 4xdev development team has a wide range of expertise: from developing products for Forex market (indicators/EAs/scripts/tools) to Machine Learning products and much more. You can contact them via support@4xdev.com.

Conclusion

Navigating the fast-paced realm of news-based Forex trading can be challenging. Yet, with tools like automated trading advisors, traders are empowered to harness these challenges, turning potential pitfalls into profitable ventures. As global events continue to influence the markets, equipped with the right strategies and tools, traders can indeed ride the waves to success.

The realm of forex trading is evolving rapidly, with technologies like Expert Advisors enabling traders to make informed and timely decisions. The precise and emotion-free trading they offer can indeed be a game-changer. But remember, the effectiveness of any EA lies in the strategy it’s built upon.

For those keen on refining their strategies and EAs, tools like the Forex Tester are indispensable. It allows you to back-test your strategies against historical data, ensuring they stand up to real-world market conditions.

If you’re serious about enhancing your trading prowess and ensuring your EAs operate optimally, invest in Forex Tester today. Harness the power of rigorous back-testing and step into the trading arena with newfound confidence and clarity.