We’re going to build a strategy in TRAIDE, then export it to MetaTrader 4, using a normalizerd average true range (NATR) indicator for volatility- only trading in high volatility- and a Commodity Channel Index (CCI), Balance of Power (BOP), Exponential Moving Average (EMA) and price difference, and a Relative Strength Index (RSI) to time our entry.

Strategy Summary

Click here to see, play with and download the strategy as an MetaTrader 4 Expert Advisor (EA).

• Currency pair: GBP/USD
• Timeframe: 4-hour
• Indicators:
  • Balance of Power
    • BOP
      • No user settings.
  • Normalized Average True Range
    • NATR
      • period: 5
  • Commodity Channel Index
    • CCI
      • Period: 10
  • Price minus Exponential Moving Average
    • Price_MINUS_EMA
      • period: 5
  • Relative Strength Index
    • RSI
      • period: 5
• Historical data used to build: January 1st, 2013 - January 1st, 2015
• Historical data used for testing: January 1st, 2015, 2015 to October 5th, 2015
• Strategy rules:

Final Strategy Results - Unseen Data

The strategy was tested on unseen, or out-of-sample, data in MetaTrader 4 to see how it would have performed on new data. Click here to see the full report.

• Net profit: 36.7%
• Drawdown: 8.76%
• Date range: January 1, 2015 to October 5th, 2015
• Number of trades: 106
• Trading costs: 1 pip (Set to 10 in MT4 for 5-digit brokers)
• Risk-to-reward ratio: 2:1 (125 pip take profit and 75 pip stop loss)
• Average win: $128
• Average loss: $114

Building Our Strategy

While the final results above are from out-of-sample, or unseen, data, we need to build the strategy on historical data. TRAIDE is a powerful analytics tool designed to uncover patterns in complex financial data. We’ll use TRAIDE to build our strategy’s rules for going long and short. I love TRAIDE because you can test your ideas so quickly!

Building This Strategy in TRAIDE

This strategy was built in TRAIDE in a couple of steps:

• Login to TRAIDE here or create a new account with us here. You can use TRAIDE’s full functionality for free by signing up with our partner BBFX here.

• Select the “New Strategy” tile on the Home Page.

• On the Create Strategy page, select the data to build your strategy:
  • Currency Pair: GBP/USD
  • Timeframe: 4 Hour
  • Date Range:
    • Start: Jan 1, 2013
    • End: Jan 1, 2015

Then select your indicators:

• Balance of Power
  • BOP
    • No user settings.
• Normalized Average True Range
  • NATR
    • period: 5
• Commodity Channel Index
  • CCI
    • Period: 10
• Price minus Exponential Moving Average
  • Price_MINUS_EMA
    • period: 5
• Relative Strength Index
  • RSI
    • period: 5

Click on "run". You can then select the rules in the rules table below by clicking on a histogram bar for long or short.

Summary

We selected the data we wanted TRAIDE to analyze; the indicators, currency pair, timeframe, and date range. We then had TRAIDE’s machine-learning algorithms analyze the relationships in our data by clicking “Run”. We are then presented with the information TRAIDE uncovered and we selected the rules where we wanted to go long or short by selected histogram bins. After creating our rules, we exported our strategy to MetaTrader 4 where we tested our strategy on out-of-sample data. The strategy performed well and we were able to enhance it by adding a take profit and stop loss. Now that we are confident in our strategy and testing method, we can now trade this strategy on live rates.

Click here to see, play with and download the strategy as an MetaTrader 4 Expert Advisor (EA).