Description
The cBot uses various moving averages, ADX, and an extrapolated least squares regression trend line to identify a trend.
Orders are placed in the same direction as the trend, and are closed when the trend weakens or begins to turn.
The cBot is effective in trending markets, and will not perform optimally in range bound or choppy markets.
If a retractment occurs in the trend and an active trade is in a loss, grid orders are placed. Grid orders are placed at intervals equal to the average daily range of the active symbol.
If a reversal in the trend is identified and an active trade is in a loss, a hedging order is placed.
A timeframe of 1 hour is recommended, however the cBot can also run on 30 minute, 2 hour, or 4 hour timeframes.
Parameters
Trade Risk % : The estimated percentage of the account equity used to calculate the order volume. The calculation determines the volume that would result in the specified percentage loss for a trade at a loss equal to the average daily range of the active symbol, or the grid interval. The percentage in entered as a decimal, ie: 0.01 = 1%.
Due to grid and hedging trades, this does not equate to the maximum possible loss for a trade group. The maximum possible loss is generally limited to 10 to 15 times and given Trade Risk %.
Recommended value: 0.01
MA1 Period: The period parameter for the first moving average.
Recommended value: 9
MA2 Period: The period parameter for the second moving average.
Recommended value: 14
MA3 Period: The period parameter for the third moving average.
Recommended value: 50
MA4 Period: The period parameter for the forth moving average.
Recommended value: 100
MA5 Period: The period parameter for the fifth moving average.
Recommended value: 200
The periods of the moving averages must be entered in order, from smallest to largest.
Least Squares Trend Period: The period over which the least squares trend line is calculated, in bars.
Recommended value: 120
Least Squares Trend Threshold High: The upper value for the slope of the trend line, above which a trend is deemed to be too volatile and not suitable for trading.
Recommended value: Dependent on active symbol (EURUSD: 2-2.5).
Least Squares Trend Threshold Low: The lower value for the slope of the trend line, below which a market is deemed to be range bound, or otherwise not trending.
Recommended value: Dependent on active symbol (EURUSD: 1).
Hedge?: A Boolean value (yes or no) to dictate whether the cBot should hedge an active trade, in a loss, if a reversal in the trend is identified.
Grid?: A Boolean value (yes or no) to dictate whether the cBot should place grid orders if a trade is active, and in a loss, and a retractment in the trend occurs.
Summary
Key features include grid trading and hedging mechanisms: if a trade is losing during a trend retracement, grid orders are placed at intervals based on the average daily range of the symbol. If a trend reversal is detected while a trade is at a loss, a hedging order can be initiated. The bot’s parameters allow customization of trade risk (expressed as a percentage of account equity), moving average periods (recommended: 9, 14, 50, 100, 200), least squares trend period (recommended 120 bars), and thresholds for trend slope to filter unsuitable market conditions.
DistEMATrendBot1.1 is optimized for trending markets and may not perform optimally in range-bound or choppy conditions. It supports symbols such as EURUSD and incorporates grid and hedging strategies to manage trades during adverse price movements.
