Fundamental Trader DailyFX MQL4

On www.dailyfx.com/calendar, actual data is released at specific times for the scheduled news events, this actual data could be used for making trading decisions with high probability. The trading system has to download the CSV data from dailyfx.com, which is updated when the news events are released.

For example, we have a news event ABC, that will be released at 1:30PM for AUD, with a HIGH Impact, and the forecast data is 4.9%

The EA will wait for 15min(or longer) after 1:30PM, and while waiting, the EA will download the CSV news data from dailyfx.com on a minute-by-minute basis, and determine if the actual data has been released. Once the data has been released and the actual data is 1.2%. The EA will know that the actual data is lower than the forecast data, which means weaker AUD. Since the news came out for AUD, the EA will trade AUDUSD, and since the data for the event shows that the AUD is going to weaken, the EA shorts AUDUSD.

The same process would happen if the actual data released, was greater than than the forecast data, and the EA would long AUDUSD, since AUD is expected to strengthen.

The risk/reward ratio will be 1:3, if the EA risks 20 PIP, it would expect to gain 60 PIP.

The EA would also have variable lot sizes, by comparing actual released data to the forecast data, and determining the percent difference. If the difference is large, the EA would open more lots, and if the difference between actual data and forecast data is small, the EA would risk a minimal lot size.

Would an EA of this type make sense in trading? Would it be difficult to develop something that would use this logic in trading the news?

c0d3,

An EA based solely on news projections, as a concept, is not a good idea. The reason new people are told to stay away from news is because it can be a lot of chaos. Take a look at the previous week's news releases, they had the opposite effect on the market.

Hanover has had one of the best uses of news data in his thread. If taken as an input like that, could be used in a somewhat sensible EA.

Cod3, news trading might look simple enough when you view the effects on the charts retrospectively, but in real time it's not necessarily so, at least for the small retail trader.

Firstly, with most brokers, expect wider spreads, slower fills and/or requotes around news event times. No broker is going to allow you to make easy money if it's at his expense!

Secondly, where the 'actual' and 'forecast' values differ significantly with a high impact event, the price will often gap or spike within the first few seconds after the announcement, and it's not only a case of whose analysis is best, but who has the fastest news reception facility, and can get the trade down with their broker before the spike occurs.

Thirdly, often the big and/or experienced players have a good idea as to what extent these values might differ, and/or for whatever other reason (economic trends etc), much of the impact has been factored into the price before the announcement. There may also be 'fakeouts' just prior to the announcement as bigger players take out straggling orders, and/or compete to get the best possible price.

Of course there are situations where price changes appear to be 'phased in' following the announcement, but its takes skill and experience to recognize when this is likely to happen.

There are folk out there who trade news successfully, but it's not as easy as it might appear. To take this one step further, by building enough intelligence into an EA to do likewise, would be a significant feat.

Re the thread that Codobro refers to, I wrote the indicator initially as a news avoidance warning system, to protect my technical trades from potentially convulsive price action.

David