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Daily HA Trend Trading - Can an EA be made?

  • #1
  • First Post: Sep 8, 2010 9:57am Sep 8, 2010 9:57am
THE FOLLOWING IS NOT MY TRADING SYSTEM!

I just wish that members at FF can test drive the system and someone may possibly come out with an EA if the system is viable. It is claimed that this trading system is mechanical and currently employed by hedge funds as the trading is based on DAILY time frame. Less noise compared to intra day trading methods. It is claimed that this daily trading system net about 600 to 1,000 pips per month while keeping exposure under control.

Just hope that this thread will have future.

THIS MECHANICAL TRADING SYSTEM IS TO BE TRADED WITH DAILY CHART ONLY!

Currency pairs to trade: GBPUSD, EURUSD, USDCHF, USDCAD, GBPJPY AND GBPCHF

What i am going to share with below is optimum settings. Deviate from it will have different results.

PLEASE DO NO TRY TO IMPROVE OR TWEAK THE SYSTEM AS I KNOW MANY WILL BE TEMPTED WITH!

I WOULD LIKE THE SYSTEM TO REMAIN AS IT IS OUTLINED HERE BY KEEPING IT AS SIMPLE AS POSSIBLE.

Note:

Since this is a Daily trading system, we are going to rely a lot on the close of the Daily bar. However, since all of us do not use the same broker, we will have different Daily bar as brokers apply time differently on Daily close bar. To make things simple, use the close of New York session as the close of a Daily bar. Please adjust accordingly.

Tools:

1. EMA 14 (apply to Close)
2. Heiken Ashis (default settings that come with MT4 platform by your broker)

That's it. As simple as it is.

For reference:

Current Daily Bar = D
Yesterday's Daily Bar = D-1
The day before yesterday's Daily Bar = D-2


Entry rules for Short Trades:

1. EMA 14 is pointing DOWN
2. Daily HA for D-2 was RED
3. Daily HA for D-1 was RED (HA bar must be closed below EMA14)
4. Enter Short trade when D breaches the Low of D-1.
5. Stop Loss at 100 pips
6. Take Profit at 200 pips


Entry rules for Long Trades:

1. EMA 14 is pointing UP
2. Daily HA for D-2 was WHITE
3. Daily HA for D-1 was WHITE (HA bar must be closed above EMA14)
4. Enter Long trade when D breaches the High of D-1.
5. Stop Loss at 100 pips
6. Take Profit at 200 pips

Done!

Many pips to all!

Peace to all!

福 子 Victor V
  • #2
  • Sep 9, 2010 10:28am Sep 9, 2010 10:28am
Do you have any back test results ?
Why were these pairs you have listed choose
Do you enter all pairs, any pair that meets the requirement every day,
I am asking because some of your pairs are highly correlated



Quoting camvcvoo
THE FOLLOWING IS NOT MY TRADING SYSTEM!

I just wish that members at FF can test drive the system and someone may possibly come out with an EA if the system is viable. It is claimed that this trading system is mechanical and currently employed by hedge funds as the trading is based on DAILY time frame. Less noise compared to intra day trading methods. It is claimed that this daily trading system net about 600 to 1,000 pips per month while keeping exposure under control.

Just hope that this thread will have future.

[b][i]THIS...
  • #3
  • Sep 9, 2010 8:11pm Sep 9, 2010 8:11pm
Quoting toddanderson
Do you have any back test results ?
Sorry to say, i have none. I was exposed to this trading method and was told that it has been one of the tools of hedge fund's trading on the forex market.

Quoting toddanderson
Why were these pairs you have listed choose
Honestly, i do not know. I was told that these are the pairs being traded.

Quoting toddanderson
Do you enter all pairs, any pair that meets the requirement every day,
I am asking because some of your pairs are highly correlated
However, if you go backwards in the Daily chart, you will find that you almost never find trade trigger ( i mean in the same direction) for all the pairs listed in a single trading day, although some of them are highly correlated.
福 子 Victor V
  • #4
  • Sep 9, 2010 8:55pm Sep 9, 2010 8:55pm
If I understand this method correctly....you are looking to trade the breach of a three day high/low...using the EMA for short term trend.
  • #5
  • Sep 9, 2010 9:11pm Sep 9, 2010 9:11pm
Quoting calstock
If I understand this method correctly....you are looking to trade the breach of a three day high/low...using the EMA for short term trend.
Bingo!

However, merely trading breach of High/Low is not enough. It must be two consecutive of same coloured Heiken Ashi bars. This is the "secret" as HA bars are more stable and so call "no repaint" in the Daily time frame.

EDIT:

So looking at Daily EURUSD, today has got valid signal.
福 子 Victor V
  • #6
  • Sep 9, 2010 9:19pm Sep 9, 2010 9:19pm
Quoting camvcvoo
Bingo!

However, merely trading breach of High/Low is not enough. It must be two consecutive of same coloured Heiken Ashi bars. This is the "secret" as HA bars are more stable and so call "no repaint" in the Daily time frame.

Therefore if the first candle was a fractal the thrid candle would be the entry point, in this case your SL would be just above the fractal and your 1st TP would be the previous high/low with a second TP set beyond the break of the high/low...
In that instance you would entering at the possible start of a trend or if the pair bounced of the high/low you would have the room to lock in a stop loss..

Yes I have entered the Euro based on this method...so far +20
  • #7
  • Sep 9, 2010 9:39pm Sep 9, 2010 9:39pm
Quoting calstock
Therefore if the first candle was a fractal the thrid candle would be the entry point, in this case your SL would be just above the fractal and your 1st TP would be the previous high/low with a second TP set beyond the break of the high/low...
In that instance you would entering at the possible start of a trend or if the pair bounced of the high/low you would have the room to lock in a stop loss..

Yes I have entered the Euro based on this method...so far +20
I'm not surprised seeing this method coincide with other indicators like fractal for entry point. One is free to adjust accordingly to one's preference. I always say "there's no right or wrong, it's just a matter of personal preference".

However, i would like to keep things simple and mechanical by not introducing other methods or indicators to help determine SL and TP level. I will stick to SL @ 100 pips and TP @ 200 pips. Since the risk reward is 1:2, i only need to be "lucky" half of the time to breakeven. I'm comfortable with that.

Glenn, please do not see this as debate or starting of a "fight". I'm just letting my thoughts flow. Also, although i'm the quiet type, i do always value your contributions as you always have in Geoff's thread.

Oh, most importantly, thank you for responding!

福 子 Victor V
  • #8
  • Sep 9, 2010 9:47pm Sep 9, 2010 9:47pm
Quoting camvcvoo
I'm not surprised seeing this method coincide with other indicators like fractal for entry point. One is free to adjust accordingly to one's preference. I always say "there's no right or wrong, it's just a matter of personal preference".

However, i would like to keep things simple and mechanical by not introducing other methods or indicators to help determine SL and TP level. I will stick to SL @ 100 pips and TP @ 200 pips. Since the risk reward is 1:2, i only need to be "lucky" half of the time to breakeven. I'm comfortable with that.

Glenn,...
No worries, Iam just throwing some thoughts around......I have been at this game to long and I always like to calculate " risk, profit" etc before I enter a trade...
I understand your idea and your wishes to keep it as you intented, I have no wish to hi-jack a thread...
So i will trade it as you have instructed on one account....

  • #9
  • Edited 4:30am Sep 10, 2010 4:14am | Edited 4:30am
Quoting calstock
No worries, Iam just throwing some thoughts around......I have been at this game to long and I always like to calculate " risk, profit" etc before I enter a trade...
I understand your idea and your wishes to keep it as you intented, I have no wish to hi-jack a thread...
So i will trade it as you have instructed on one account....

NO NO NO!

You didn't "hijack" at all!

I love your company!

Anyway, looks like we are the only two in this party

Also, looks like today's short on EURUSD is going to hit SL. No worries, SL or TP is just part and parcel for the game of forex trading. Move on to the next opportunity!

Cheers.

福 子 Victor V
  • #10
  • Edited 11:46am Feb 12, 2011 11:24am | Edited 11:46am
Glenn,

Have you been looking into this method?

I found that it would be more profitable if you place two trades, with TSL of 100(0) pips.

If TP target is not yet hit but when the opposite colour of the HA appears, i will close the positions, whether loss or profit.

I'm using this method for EURUSD, GBPUSD, EURJPY, GBPJPY.

So far, for me, looking good.

Cheers.

福 子 Victor V
  • #11
  • Feb 14, 2011 2:48am Feb 14, 2011 2:48am
Short EURUSD @ 1.3495 SL 1.3595 TP 1.3295
福 子 Victor V
  • #12
  • Feb 14, 2011 2:52am Feb 14, 2011 2:52am
Short EURGBP @ 0.8420 SL @ 0.8460 TP @ 0.8320
福 子 Victor V
  • #13
  • Feb 14, 2011 3:06am Feb 14, 2011 3:06am
GBPUSD Sell Stop @ 1.5960 SL 1.6060 TP 1.5760
福 子 Victor V
  • #14
  • Edited Feb 21, 2011 1:23am Feb 20, 2011 11:23pm | Edited Feb 21, 2011 1:23am
Hey there,

I thought this strategy looked interesting, so I coded a rough EA for it. Not sure if anyone's still trading this method, but the backtest (Feb. '10 - Feb. '11) wasn't so great.

See attached image.

PF of 1.08... Then again, the modelling quality sucks pretty hard. I'd get a test with 90% quality, but MT4 doesn't seem to want to import M1 data tonight. Strange. Anyways, this system has promise but probably needs more filtering, or at the very least some slightly-more-sophisticated MM.

I'm a beginner coder, so another distinct possibility is that my EA is bad, but I checked and it *seems* to do what this strategy says it should.

Anyone else want to test it/modify the code?

UPDATE:: A bit of optimization on the SL/TP levels can push the profit factor up to about 1.3 or so... however the equity curve is still not smooth.
Attached Image (click to enlarge)
Click to Enlarge Name: HA Daily Trend Tester.jpg Size: 45 KB
Attached File(s)
File Type: mq4 D3 HighLow HA Breakout.mq4   7 KB | 506 downloads
  • #15
  • Feb 21, 2011 2:03am Feb 21, 2011 2:03am
I didn't go so far as to create an EA. I did manual testing and found about the same results. I think what you will find if you examine the results closely is profitable trades during trending conditions and lots of small losses in choppy conditions. I don't think trade management will improve the results. Perhaps being more selective in choosing the trades would work, but it is very difficult to detect a trend until you are well into it and a lot of profit has been left on the table.

Hope you learned some good coding lessons, so that it wasn't a complete waste.
  • #16
  • Feb 21, 2011 2:08am Feb 21, 2011 2:08am
CodeMeister,

You're probably right... I have a overactive tendency to think strategies can pull through, even if they're on the weaker side to begin with.

As for learning coding lessons -- I actually joined this forum for the purpose of getting better at coding EAs. I'm a college student and I've been struggling with MQL4 at least 6-8 hours a day, coupled with course work. This stuff is hard with no programming experience... but I get better every time, I suppose.
  • #17
  • May 27, 2011 4:41pm May 27, 2011 4:41pm
I'm intrigued as to why you would use heiken ashi and then set a take profit. Why not just take the entry and code the ea to exit when a HA candle closed in the opposite direction? Surely that would be making the most of the trend?
  • #18
  • Aug 15, 2011 1:23am Aug 15, 2011 1:23am
Hey guys, just saw the thread and sparked my interest as I am using HA candles on another system. Thought I would take a look and see if it works. Working in DEMO right now to trial it and took a trade on the USDCAD.

Looking forward to working with you guys and seeing what we can get out of this method. Daily strategies are by far the lease stressful haha/
  • #19
  • Aug 16, 2011 3:50pm Aug 16, 2011 3:50pm
Also you must have a REALLY busy lifestyle if you need an EA to trade a DAILY system!
  • #20
  • Last Post: Aug 16, 2011 7:56pm Aug 16, 2011 7:56pm
Very true haha... I am not really looking to use the EA more to help out on the testing of the strategy.
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