TradingView is a fantastic platform for charting and trading.

…and yes, you can trade on the TradingView mobile app. 

However, it can be a little confusing to figure out how to enter a trade on the mobile app.

It took me some time to figure it out, so I want to save you the headache and give you the answer right now.

The great thing about the mobile version of TradingView is that it is almost the same as the desktop version.

That means you have access to the same features that you get on your desktop computer.

Alright, here's how to place your first trade.

If you prefer the text version, it's provided below.

Download the App

First download the app from you favorite app store. It's available for both Android and iOS.

Then login to the app and purchase a paid plan.

Technically, you can trade on the free plan, at the time that this is being written.

But you don't get priority support and you'll always see ads on your charts.

If you're serious about trading, then you want the fastest support possible and ads will distract you from trading. 

So I feel that a paid account is mandatory.

Login to Your Broker

If you want to try this, you can create a demo account in TradingView.

Otherwise, if you have a broker that works with TradingView, follow these steps.

Once you're logged in, go to:

1. Menu in upper left corner (3 lines)
2. Products
3. Supercharts
4. Icon in upper left corner
5. Connect to Broker

Select your broker, then login.

You're now ready to trade.

Place Your First Trade

When you go back to your charts, there will now be buttons on the chart that allow you to place buy and sell trades.

Tap the button for the trade that you want to make.

The order entry screen will pop up and you can enter a trade. 

Be sure to scroll down a bit to make sure that you've entered all of the important information for your trade. 

You should also see information about the trade like margin used, trade value and more. 

The information you see and the options you have will depend a lot on your broker and the version of TradingView you're using. 

So use the screenshot below as more of a guideline and contact TradingView support if you have any questions. 

Once everything looks good, tap the Buy or Sell button at the bottom of the screen. 

You have now placed your first trade. 

To get more details on entering trades, be sure to watch the video at the top of this page. 

Final Tips

Remember that technology can change quickly.

I will do my best to update this tutorial periodically, but the way TradingView mobile works can change over time.

However, I have found that the basic idea is usually the same with newer versions, just the position of the buttons change.

But TradingView is the best charting and trading platform for so many reasons that I go over here.

The most useful feature is that you get the same charts on your mobile and desktop.

Have fun!

The post How to Trade on TradingView Mobile appeared first on Trading Heroes.

The Engulfing Candle is one of the simplest and possibly most underrated chart patterns in trading.

In this tutorial, I'll show you how to identify the pattern, what it tells us as traders and I'll give you some trading strategies that use this pattern.

Many people over-complicate this pattern, but it's very simple.

There are basically 2 types of Engulfing Candles.

Here's how to identify them. 

Bullish Engulfing Candle

A Bullish Engulfing candlestick pattern signals a potential reversal from a downtrend to an uptrend.

Here's what to look for:

• 2-candle formation
• First candle is smaller than the second candle and the close is lower than the open
• Second candle has the largest candle body that has been seen in awhile and the close is higher than the open
• The high of the second candle is higher than the high of the first candle
• The low of the second candle is lower than the low of the first candle
• The second candle closes near the high of its range
• This pattern has to print on a support or resistance level

Examples

Here is an example of a Bullish Engulfing pattern on a Bitcoin chart. The blue arrow shows the Engulfing Candle. 

Notice how this was a dramatic turning point on the chart.

This obviously won't happen all the time, but it does happen frequently enough that you should pay attention.

Here's a second example on the USDCHF Forex pair.

This one rallied hard after the pattern printed on a previous support level.

So those are just a couple of examples of when a Bullish Engulfing Candle can signal an upward move in a market.

Now let's take a look at the opposite of this pattern.

Bearish Engulfing Candle

A Bearish Engulfing candlestick pattern signals a potential reversal from a downtrend to an uptrend.

Here's what to look for:

• 2-candle formation
• First candle is smaller than the second candle and the close is higher than the open
• Second candle has the largest candle body that has been seen in awhile and the close is lower than the open
• The high of the second candle is higher than the high of the first candle
• The low of the second candle is lower than the low of the first candle
• The second candle closes near the low of its range
• This pattern has to print on a support or resistance level

Examples

This example on the AUDNZD chart shows how fast price can move after a Bearish Engulfing candle pattern.

Notice how it prints on a previous level of resistance.

Now here's an example on the NZDCAD chart.

Again there was a sharp move after the engulfing candle prints on the resistance zone.

Take any chart and start looking for this pattern.

You'll notice that it happens more often than you might expect.

But don't stop there.

Be sure to test this pattern out before risking real money.

My Favorite Engulfing Candle Resources

Here are resources for Engulfing Candle trading strategies that I've found super useful.

You can use them to help you create, test and trade Engulfing Candle trading strategies.

• Naked Forex: High-Probability Techniques for Trading Without Indicators – This book teaches a trading strategy called The Big Shadow that uses Engulfing Candles.
• Naked-Markets Backtesting Software – This software will identify Engulfing Candles and can pause the backtest so you can manually enter a trade, or automatically enter a trade that you have an automated entry created. Saves a ton of time when backtesting.
• Engulfing Bar Alert Indicator for MT4 – Get alerts on your screen or mobile app when an Engulfing Candle prints.
• TradingView – Setup alerts for Engulfing Candles by using the built-in indicators.

How to Prove Engulfing Candles Actually Work

At this point, you're probably wondering: Does this actually work?

That's a perfectly natural question and the only one that matters, quite frankly.

So here's the truth about trading Engulfing Candles…

Just like with any other trading method, the success of the chart pattern will be determined by the specific trading plan.

There are many ways to enter and exit trades with this pattern, so you need to define these parameters in order to have a real trading strategy.

I'll provide specific trading strategy plans in the next section. 

But here's where most traders get tripped up…

Remember, there are only 2 types of trading strategies, discretionary and fully automated.

Most Engulfing Candle strategies are discretionary.

Therefore, the results can vary greatly between traders.

So it is essential that you backtest it for yourself to find out how good you are at identifying the setups in your trading strategy plan.

Practice can also improve your skills, so don't be afraid to keep running through simulations until you feel you've maxed out your potential.

Now it might be possible to automate an Engulfing Candle strategy. If so, then the results are usually reproducible between traders.

Even then, you still have to create an automated strategy and test it on every market/timeframe you trade.

Always verify, never take another person's word for it.

Remember, profitable trading strategies usually start out as very unprofitable ideas.

So start experimenting and don't be afraid to test your own ideas.

You just might discover something amazing.

Trading Strategies That Use Engulfing Candles

Here are some trading strategies that you can review and start testing for yourself.

I've also included my own backtesting results so you can compare notes and make improvements on these strategies.

• Coming soon

Final Thoughts

This super simple candlestick pattern could be the basis for your next grail trading strategy.

It is easy to identify and can be programmed into most trading platforms.

But it's up to you to test it out and find out if it will work.

Remember, the most profitable strategy in the world is the one that fits YOU best.

Now get to work. 

The post Beginner’s Guide to the Engulfing Candle Chart Pattern appeared first on Trading Heroes.

Do Holy Grail trading strategies exist?

Yes, they do.

But…

It all depends on how we define a grail strategy.

So in this article, I'll get into what a Holy Grail trading strategy is, and more importantly, how you can discover your own Holy Grail.

The Definition of Holy Grail

There's no agreed upon definition of a Holy Grail trading strategy, so I'll give you my definition.

Other people will have their own definitions and that's great.

But for the sake of what I'm going to talk about here, I need to define a Holy Grail:

A single trading strategy or portfolio of strategies that a trader feels is worth trading because it gives him the long-term return he is looking for.

That's it, super simple.

Ultimately, that's why we trade.

Therefore, I believe that there are grail strategies, but they are not what most people might think.

Holy Grail Trading Strategy Misconceptions

Many new traders think that a Holy Grail trading strategy is one specific strategy that they haven't discovered yet and it will provide them with unlimited profits forever.

That's obviously a myth.

A few trading educators have also named their trading strategy “The Holy Grail.”

Sometimes they actually believe it, sometimes they are just being sarcastic.

Whatever the case, be sure to steer clear of anyone who claims to have a trading strategy that cannot fail.

All trading strategies can fail, even if the most successful trader in the world uses it.

Here's why…

The Most Profitable Trading Strategies are the Ones That Match YOU

Now obviously there are plenty of profitable trading strategies out there.

Hedge Funds wouldn't be a thing if their strategies didn't work.

However, many retail traders get caught up in chasing the wrong Holy Grail.

This is very important, so pay attention. 

Your Holy Grail trading strategy will be different from almost every other trader in the world.

I've seen traders do well day trading just one strategy.

Other traders prefer trading a portfolio of swing trading strategies.

Some traders trade multiple markets, while others prefer just one.

You get the point.

The bottom line is that you have to trade a strategy that works well for YOU.

Most of the time, that means you'll have to tweak existing strategies to find something you like.

So the faster you can internalize this fact, the faster you'll be able to find a trading strategy that is profitable over a long period of time.

The Grail is Already Within You

Now I'm going to get a little philosophical for a moment.

Another reason that I believe that there are grail trading strategies is because I feel that the mythic “Grail” of ancient lore is actually much closer to home.

In the Indiana Jones movie, they go searching for a cup.

But what if the cup is simply a metaphor for what's already inside you?

And what if a Holy Grail trading strategy is simply another metaphor for trading based on your innate personality?

Believe what you want, but that might be something to consider.

Final Thoughts

When I first started this website, I believed that there is no Holy Grail trading strategy.

But I changed my mind.

After a lot of experience and live trading, there are undoubtedly methods that successful traders use over a long period of time.

That's a grail to me. 

Successful traders also have techniques for developing new trading strategies and that could be considered a grail system as well.

So if you want to find the best long-term trading strategy for you, stop chasing the latest trendy strategy on TradingView.

Start reviewing your trading personality, and developing strategies that make sense to you.

Backtest your strategies to find out if they have an edge or not.

That's how you find a grail strategy.

Yes, it takes work, but the rewards can be tremendous.

The post Holy Grail Trading Strategies: Fact or Fiction? appeared first on Trading Heroes.

I started using MetaTrader back in about 2008.

Unfortunately, it hasn't changed much, even with the launch of MT5.

That means it still doesn't have the “One Cancels the Other” order function. Some people, including myself, prefer to call this “Order Cancels Order.”

Whatever you call it, now we can now easily add this order type to MT5 with the help of AI.

You don't need to know how to code. 

In this tutorial, I'll show why OCO is so useful and how to use ChatGPT to easily create your own OCO EA for MetaTrader 5.

How OCO Works

“One Cancels the Other” (OCO) trading orders are a type of conditional order where two pending orders are placed simultaneously, but only one can be executed.

When one of the orders is triggered and filled, the other is automatically canceled.

This can be very useful for taking advantage of different trading opportunities.

OCO Example

Here's an example where you can use an OCO order to take advantage of a potentially profitable situation.

This Pin Bar is also an Engulfing Bar, which could signal a top.

The previous bar had very high volume, showing that this trend could be coming to an end because traders appear to be bailing out.

Now I could enter this trade now, but there is no guarantee that price will drop as expected.

So I can set up 2 pending orders, one sell limit above the current price (higher blue line) and a sell stop below the current price (lower blue line).

The first thing that could happen is price could retrace before moving back down.

If price does retrace, I will enter the trade at a slightly better price and make a little more money. The second trade will be cancelled and I won't take a duplicate trade.

Even if price retraces and hits a stop loss above the candle, the loss will be smaller than if I entered at the close of the current candle.

Another thing that could happen is price could just head straight down, as expected. In this case, the sell stop (lower blue line) will be hit and the retracement trade will be cancelled.

This pending order will get me into the market if goes in the direction that I expect, but doesn't retrace. It's the best of both worlds.

If price doesn't go as I planned, I'll lose less money because the sell limit will get hit instead of this sell stop.

As you can see, using a OCO order can be extremely useful.

The amount of money I save by doing this can really add up over time.

MT5 EA Design

Before we talk to ChatGPT, we have to put a little thought into how we will design this MT5 EA.

There are only 2 things that we have to account for.

First, there might be other pending trades in the same market, so we would have to account for that and only cancel orders that we mark for cancellation, and not any others.

Second, we only want to cancel trades in the same market of the chart that the EA is attached to.

This will rule out any trades in other markets that happen to have the same marker.

In MetaTrader 5, we can use the comment field to easily mark trades that we want to apply the OCO logic to.

It takes a little getting used to because in order to use the comment field, the order has to be entered via the right-click menu and not the one-click button.

But it's not a big deal.

The ChatGPT Prompt to Get OCO in MT5

So for this EA, I'm going to prompt ChatGPT with the following:

Please create an EA for MetaTrader 5 that looks for open orders with a comment in the market of the chart that the EA is attached to. When an open order with a comment is found, cancel all pending orders with a matching comment, in the same market on the next tick. Do not provide any inputs, everything should be done without user input. Automatically match the comment fields.

Feel free to copy and paste that prompt and use it for yourself.

But remember that I'm NOT liable for whatever happens if you choose to use that prompt. 

ChatGPT or another AI might give you a different result than what I got, depending on which model you use, so you always have to test an EA thoroughly before using it in a live account. 

Keep reading to learn how to test it.

Create the Expert Advisor in MT5

Once you get the code from ChatGPT, simply hit the Copy link in the upper right corner of the code window to copy the code.

Then open MT5 and click on the IDE button at the top.

This will open the MQL5 Editor.

Click on the New button in the upper left corner of the screen.

A window will come up with a wizard.

• On the first screen, select: Expert Advisor (template)
• Click Next
• Give the EA a name
• Keep clicking Next until you get to the end of the wizard

The rest of the settings don't matter because you're just going to copy in the code from ChatGPT anyway.

When you see the EA template that MT5 created for you, click anywhere on the screen and it Control+A to select all the text.

Then hit Backspace or Delete on your keyboard to delete everything.

Now hit Control+V to paste the ChatGPT code into the blank area.

Finally, click on the Compile button on the top of the screen to check the code.

If it compiles without errors, congratulations!

Skip down to the installation section below.

Otherwise, use the next section to fix the errors.

Troubleshooting

ChatGPT might not get it right the first time.

When you compile the code, there's a good chance that you'll get some errors or warnings like this.

When that happens, simply highlight all of the error messages in MT5, by using Shift+left mouse click and right-click > copy to copy them.

Then go over to ChatGPT and ask it to fix it.

For example:

You might have to do this a few times, but it usually figures it out eventually.

Remember that is only a syntax test.

Now you have to check the logic of the program.

Put it into a demo account and test until you're confident in the results.

If you're having problems that you cannot correct, check to see that you're using MT5.

The code for MT4 and MT5 are different, so you cannot use this EA in MT4.

How to Install the EA

Once the code compiles, go back to the main MT5 window and look in the Navigator window.

If the Navigator section is not available, then go to: View > Navigator to open the window.

Go to the Expert Advisors section and click and drag the EA you created onto the chart.

Once it is on the chart, you'll see the name of the EA in the upper right corner of the chart.

The hat icon should be blue to show that it's running.

If it's not blue, then click the Algo Trading button at the top of the screen to make sure that the EA is activated.

Test the EA

Now it's time to test your new EA.

Be sure to test this in a DEMO account, just in case something goes wrong. 

To take a trade, right click on the chart you want to trade on.

Go to: Trading > New Order

In the comment field, enter anything you want to identify the order.

It could be something like “999” or whatever is easy to remember.

Enter the details for the pending order, then open a new pending order and enter the same comment text in the comment field.

To test this quickly, set 2 orders that are very close to the current price, so one of them gets executed right away.

You can also see how the EA treats multiple pending orders with the same comment.

Try every kind of weird situation you can think of to be sure that the EA is working as expected.

Test it until you are 100% confident that it's working correctly.

More Troubleshooting

If there are issues with the logic of the EA, then go back to ChatGPT to work them out.

At some point, you'll have to start understanding the code, so now is a good time to start.

You don't have to know how to code, but you should know how each part of the code works.

Luckily, you can get ChatGPT to explain it to you.

It's actually quite good at explaining.

Keep asking it questions until you understand how the program works.

Remember that ChatGPT might sound all professional, but it doesn't know as much as you think.

Tell it exactly what you want and don't let it insert logic that it thinks is good, but isn't in line with what you want. 

Like any other skill, building with ChatGPT can be a little frustrating in the beginning.

But once you get the hang of it, it's extremely powerful and help you build all the trading tools that you've always wanted.

Final Thoughts

So that's how to create an OCO EA for MT5.

But this is just the beginning.

What else can you make?

Use your creativity and let your imagination run wild.

You might just create something amazing…and super profitable.

The post How to Get MT5 One-Cancels-the-Other (OCO) Orders appeared first on Trading Heroes.

However, one area that I have found it tremendously useful is in the area of creating automated trading robots for trading platforms like MetaTrader 4.

So in this tutorial, I'll show you how I'm using ChatGPT to create custom MT4 EAs. This process can be very fast and for simple EAs, you don't even know how to code.

If you prefer the text version, it's provided below the video.

Tutorial Video

How to Create an EA with ChatGPT

All of these steps should be done in a demo account. 

Never use an EA with real money until you're absolutely sure that it's working properly. 

Step 1: Have a Trading Strategy

You can get a trading strategy from almost anywhere…books, websites, YouTube or something you just made up.

Ideally, you should have a trading strategy that you've already backtested.

But if you just want to go through the process to see how it works, then just use the example code in the section below.

Step 2: Describe it to ChatGPT

Ask it to create an EA for MT4.

Then explain the rules as clearly as you can to ChatGPT. Write as if you were writing to a friend.

It will generate the code that you need for MT4.

Copy this code from ChatGPT

Step 3: Copy and Paste the Code into MT4

Then open the MetaQuotes Language Editor via the tool bar at the top.

Click the New button to create a new EA.

Select Expert Advisor, give it a name, then leave the rest of the settings blank. Keep hitting the Next button until you get to the end of the wizard.

That will give you a blank EA template.

Click anywhere in the code, then use Control + A to select all of the text. Then hit Backspace to delete all of the default code, then Control + V on your keyboard to paste in the ChatGPT code.

Click on the Compile button to generate the EA.

Step 4: Check for Errors

If there are any errors or warnings in the code, go back and ask ChatGPT to fix them.

It will generate new code.

Repeat step 3 above to start using the new code.

Step 5: Add the EA to a Chart and Start Testing

Once all the errors and warnings are gone, then you're ready to start using the EA.

Go to the main MT4 screen and look for the EA in the Navigator window.

Click and drag your new EA onto the chart.

There should be the name of your EA in the upper right corner of the chart you added it to, next to a happy face.

If the face is sad, click on the AutoTrading button at the top to activate the EA. The happy face shows that the EA is activated.

Now test the EA to see if it's working properly.

Test all of the regular features AND try to “break” the EA by doing things that it might not expect. This will show you how robust it is and will give you confidence in it.

If you have any issues, go back to ChatGPT and work on fixing them.

This may take several tries, but keep at it.

Example Code

If you want to give this a try, here's the example code. Simply copy and paste this prompt into ChatGPT and it will generate the code for this EA.

Important: This is for educational purposes only and should NOT be used in live trading. It's only provided to help you understand how to EA creation process works. There's a very high probability that this strategy will lose money.

“Please create an Expert Advisor for MetaTrader 4 that executes these rules:

1. Indicators

   • Short SMA: 2?period simple moving average of Close

   • Long SMA: 36?period simple moving average of Close

2. Long Entry

   • Condition: Short SMA (2) > Long SMA (36)

   • AND price closes below the Short SMA

   • Action: Open a buy at the close of that bar

3. Long Exit

   • Condition: price closes above the Short SMA

   • Action: Close the long

4. Short Entry

   • Condition: Short SMA (2) < Long SMA (36)

   • AND price closes above the Short SMA

   • Action: Open a sell at the close of that bar

5. Short Exit

   • Condition: price closes below the Short SMA

   • Action: Close the short

6. Position Sizing & Settings

   • Fixed size: 0.1 lots per trade

   • No stop?loss, no take?profit, no trailing stops”

Words of Warning

Remember that this is just step 1 in the process of creating a fully or partially automated trading strategy.

If you backtested with AI, you really, really have to double check the results.

Even if you didn't, you still have to check that the code is doing what you expected.

AI can hallucinate, so you have to be extra sure that the EA is doing what you expected before you risk real money.

Never trade the EA live until you're absolutely sure that it's working properly. 

Final Tips

I hope that this tutorial will help you create you own tools that improve your trading results.

At the time that this is being written, backtesting with AI is not mature yet.

However, creating EAs for MT4 is very usable, so I would highly recommend learning how to do it.

If you want an awesome example that you can start using right now, check out this EA tutorial.

Even if you never build an EA, you can also build very useful custom indicators that can help you spot trading opportunities and manage parts of your trades.

Have fun!

The post How to Build No-Code MT4 Expert Advisors with ChatGPT appeared first on Trading Heroes.

Hedging is possibly the most misunderstood trading method in the world.

It's also technically not allowed in U.S.-based accounts, so many traders think that there's something wrong with this trading method.

But if you take a closer look, there are many benefits to Forex hedging that I'll go over in this article. 

You might just change your mind. 

Even though there are a lot of benefits to hedging, remember that there are no magic trading strategies that are guaranteed to make money.

The trading strategy you use must match your trading personality and be practiced extensively to achieve mastery.

With that said, let's get into it.

1. Less or No Margin Required

Depending on the broker you use, a fully hedged position can require half the amount of margin, or even no margin at all.

For example, let's say that you're long 1 standard lot of EURUSD, and short 1 standard lot, at the same time.

If the margin for 1 standard lot is $250, you might only have to put up $250 for BOTH positions, which would ordinarily cost you $500.

At some brokers, you don't need any margin at all if you have a fully hedged (1:1) position.

This is a big advantage because you can basically have double the opportunities to profit, at half the cost.

Of course, there is also twice the opportunity to have a loss.

But if you know what you're doing and have practiced your hedging strategy, using less margin is generally a very good thing.

It gives you more opportunity to get out of losing trades.

Unfortunately, this does not apply if you hedge in a U.S.-based account. But it's still possible to hedge in an account based in the U.S.

More on that in a bit.

2. Potential to Make Money in Both Directions

Almost all trading strategies require that you to pick the direction that you think the market will go.

It's either up or down.

But with hedging, I can potentially make money in both directions.

I've even done demonstrations where I have opened a long and a short trade at the same time and made a net profit on both trades.

In this way, it's unlike any other trading method out there.

Now in all fairness, this can lead to overtrading, so it's important to learn hedging in a demo or simulation account before ever risking real money.

However, hedging gives me more opportunities, and that makes my job easier.

If you want to learn more about hedging, be sure to read my Hedging Guide for Beginners.

3. The Ability to Wait for More Information

This is a big one.

Have you ever thought that price would move in one direction, but as you saw more candles, it was pretty obvious that you were wrong about your initial prediction?

Of course, that happens all the time in trading.

The beauty of hedging is that I can take positions in both directions and wait until the market gives me solid clues that it will go in one direction or the other.

This can be a huge advantage because many times the markets will throw a “fake out” before making a big move in the opposite direction.

Even though I might be very sure about the initial position, that picture can change quickly and hedging gives me the ability to adjust.

4. Lower Stress

Sometimes I don't feel like trading.

When that happens, I can simply hedge my positions and get back to them when I feel like it.

Sure, I'll lose a bit of money on the swap.

But the ability to take a break is priceless.

Try doing that with any other trading method out there.

On top of that, I never have the stress of worrying if I'll get stopped out of a trade…even during rollover. 

If you've been trading for any length of time, you know that sinking feeling when you go to check your charts and you've just been stopped out…again.

Not the best way to start the day.

Get stopped out multiple times in a row and that can start to mess with your confidence.

With hedging, there are no stop losses, so I never have to worry about getting stopped out.

I simply hedge the losing position and move on.

A hedge still limits my risk, while giving me the opportunity to profit in either direction.

5. Potential to Make Passive Income

There was a period of time when the Japanese Yen was a popular currency to trade because the interest rate differential between the Yen and the US dollar was so high that traders could simply profit from the interest.

Traders were making big money by just holding their positions.

It was rumored that even Japanese housewives were trading this method because it was so easy and reliable.

I know a trader who did this full time as her only strategy.

But all good things come to an end and the trade eventually stopped working.

Some traders lost their entire accounts.

However, if you use hedging to target high interest rate differential trades, it's possible to still take advantage of this method on a shorter term basis, while limiting your risk.

6. Massive Liquidity and Lower Fees

One of the reasons why I prefer Forex hedging is because the market is massive.

Forex is the largest trading market in the world.

Since there are more traders to take the other side of your trade, you are more likely to get the price on your screen and suffer less slippage.

Other markets like futures, options and crypto have much less liquidity, which means that you might not get the price you want or you may not even be able to enter a trade at all.

On top of that, Forex generally has lower transaction costs than other markets, especially at smaller trade sizes.

So it's perfect for a wide range of traders, from beginner to professional.

7. Maximum Flexibility

Pairing hedging with scaling is powerful.

Scaling is opening and closing trades in parts instead of taking the whole trade in one big chunk.

For example let's say that I want to take a full-sized trade of 3 standard lots.

Instead of opening the trade with all 3 lots at once, I might take 1 lot to start, then see what the market does.

If price doesn't do what I expected, I can just hedge the 1 lot, instead of having to hedge 3 lots.

Scaling into a trade can also help me get a better average price than entering all at once.

I can enter 1 lot to start, then see what price does. If price action is still favorable, but moves slightly against me, I can enter trades 2 and 3, but at a lower cost than the first trade.

The same thing goes for my exits.

I can set 3 profit targets to capture a small, medium and large profit.

If my last profit target doesn't get hit and it looks like price will return to my entry, I can simply close out the trade at a smaller than expected profit.

Now double this potential on both the long and short sides.

As you can see, when I use hedging and scaling together, it gives me maximum flexibility to go with the flow of the markets.

8. Can be Added to Other Trading Strategies

Hedging can be a trading strategy in itself.

However, if you couple it with other trading strategies, it can be a powerful way to get out of trades that don't work out.

This is especially useful if you have a trading strategy that has a high win rate, but you want to boost the overall return of the method.

If a trade doesn't work out according to the rules of your strategy, you can work your way out of it with a hedge.

Again, you have to master your hedging “escape” method before you ever take a trade.

But it can be a nice addition to an already profitable strategy.

9. More Consistent Returns

I have personally found that hedging creates more consistent returns than most other trading strategies.

Individual results will obviously vary, depending on skill level. 

I'm not saying that you are guaranteed have more consistent returns, but in my experience, it's certainly possible.

Couple this with lower stress and more flexibility, and that's why I enjoy hedging.

10. Can be Done in a U.S.-Based Forex Account

Contrary to popular belief, you CAN legally hedge in a U.S. Forex account. 

It's not hedging in a traditional sense, but it's effectively the same thing.

Hedging in the U.S. is not as easy and it does take more patience, but it can be done.

I DO NOT recommended it, but if you insist on using a broker in the United States, then just know that it is possible.

Final Thoughts

Just like with any other trading method, there are benefits and downsides to Forex Hedging.

It's not for everyone.

But if this list of benefits appeals to you, then read my free Forex Hedging Guide to get started with this underrated trading method further.

As always, remember to start in a demo account and use play money to perfect your skills before ever risking real money.

The post 10 Benefits of Forex Hedging Most Traders Don’t Know About appeared first on Trading Heroes.

In this tutorial, I'll show you how to use the backtesting function in TradingView and give you the benefits and downsides of this platform, based on my personal experience.

This powerful tool allows traders to test the effectiveness of any trading strategy, whether it's one they have developed themselves, or one created by a member of the TradingView Community.

Key Takeaways

• TradingView's backtesting function allows traders to quickly test a wide selection of trading strategies across a huge collection of worldwide trading markets.
• The platform offers a variety of strategies created by Community members, as well as the ability to create your own.
• While there can be limitations to TradingView's backtesting platform, there are also solutions.

Benefits of TradingView Backtesting

Here are some of the benefits of using TradingView's backtesting platform:

• Fast results: The backtesting system is fast, and you can see the results right away. This allows you to iterate quickly and adjust your strategy accordingly.
• Community scripts: You can use other traders' strategies that are available in the Community. This saves you time and effort in developing your own strategy.
• Historical Data: TradingView has a Deep Backtesting feature that provides all the historical data you need to conduct a thorough backtest.
• Easy to use: The backtesting function is simple, no complex setups required.
• Access tons of worldwide markets: TradingView gives traders access to a wide range of markets from around the world. It could be the largest collection of publicly available data feeds in the world.
• Browser based: Available on almost any operating system.
• Create your own strategies: Make and test your own strategies quickly with Pine Script.

Now that you know a little about the platform, here's how to start using it.

How to Access Strategy Tester on TradingView

First make sure that you're logged into a paid account.

To access the backtesting function, first click the Strategy Tester tab at the bottom of the screen.

From there, click on the Load Your Strategy button.

This can either be a strategy that you've created or one that's been developed by a Community member within TradingView.

To find a strategy, search by name or browse through the available community scripts.

Be sure to use the menu on the left of the window to see other types of strategies.

Select Personal to see the strategies you've created.

Yeah, there are a TON of strategies available and it can be a little overwhelming.

So start with something that you understand and test all the related strategies.

For example, when I search for a Bollinger Bands trading strategy, here's what comes up.

The number on the right of each strategy indicates the number of people currently using it.

Usually, the most popular ones are at the top.

But not always.

So scroll through the strategies to see them all.

Once I click on a strategy, TradingView will add it to my chart, run the backtest on the current market/timeframe and give me the results.

You can see the trades it took and get a performance summary report below the chart.

Pretty slick!

How to Run the Backtest on Other Markets and Timeframes

Once you've selected a strategy to backtest, it's super easy to run the test on any market and timeframe available on TradingView.

To run the test on another timeframe, simply click one of the available timeframes on the top of the current chart.

You can even set your own custom timeframe by clicking on the down arrow and selecting “Add custom interval”.

The results of the backtest on that timeframe will appear on the bottom of your screen, just like with the first backtest.

You'll see the results almost instantly, making this a very efficient way to backtest.

To test the strategy on other markets, click on the watchlist icon in the upper right corner, then click on the market you want to backtest.

You can also click on the current market ticker in the upper left corner of the screen and search for a new market to test.

Again, as soon as you select the market, you'll see the backtesting results in the bottom panel.

Remove a Trading Strategy

To remove a strategy from your chart, click on the Object Tree icon on right side of the screen, then click the Delete icon next to the trading strategy.

Once you've deleted a strategy, you can a new one, or go back to using TradingView as just a charting platform.

Evaluating Backtesting Results

Now it's important to talk about what a “good” backtesting result is.

Many new traders think that they need to have a fantastic result on the first try, or the backtest is a failure.

That's not how it works.

In reality, it's best to look for strategies that have potential.

So here are some things to look for:

• The strategy is near breakeven: The strategy could be optimized
• There are huge winners, which get slowly get taken out by small losers: The number of losers could possibly be reduced
• Conversely, there are consistent small winners, but a few big losers: The size of the losing trades could be reduced
• Strategies that perform well in some markets but not others: Only trade it in markets where it performs well

But that's just the tip of the iceberg.

To get a complete guide on how to judge and potentially improve backtesting results, read my article on good backtesting results.

Selecting a Trading Strategy the Smart Way

When it comes to selecting strategies to test, there are a couple of ways to approach it.

First, you can browse the available strategies that you can use for free, as I mentioned above.

Sort the strategies by popularity and backtest each one.

This is a decent method if you don't know where to start.

But you'll quickly learn that most of the free strategies don't work.

Yeah, you generally get what you pay for.

And there are so many strategies out there that it would take forever to test them all.

So once you get tired of looking for random ass strategies, it's time to get smarter.

A better way to approach this proess is to start by asking yourself what type of strategy you're looking for:

• Do you prefer trend strategies?
• Do you want to trade a RSI strategy?
• Do you want to day trade?

Then take a look at all of the strategies that fall into your chosen category.

Search keywords related to the type of strategy you want to find. 

Backtest them and see how they perform.

Again, chances are very good that they won't work.

But they might.

Worst case scenario, they will give you a good starting point and ideas for your own strategy.

This is a huge benefit of the TradingView Community.

How to Create Your Own Strategy

Since many of the trading strategies on TradingView are free and open source, you can use them to help build your own strategy quickly.

First find a free strategy that you want to build on.

Then create your own Pine Script project by clicking on the Pine Editor tab at the bottom of the screen.

Copy and paste an existing strategy into the Pine Script tab and start making adjustments.

Save the strategy, then run a backtest.

Yes, you need to learn Pine Script.

But most programming tutorials can be very boring.

When you know what you want and you have a starting template to get there, learning becomes much more fun and you'll usually see results faster.

Focus on the parts of the current script that you want to change and go from there.

To sign up for TradingView, go here.

Considerations of Historical Data Availability

When using the backtesting function in TradingView, it is important to understand how much historical data is being tested in each test.

Data availability will vary by market and timeframe.

Higher timeframe charts like the daily, weekly and monthly charts will usually have enough data to do valid tests.

But on lower timeframes, such as the 4-hour chart and below, the historical data is very limited.

You may only have access to two or three years of data, which is never sufficient to do a thorough backtest.

Be sure to read more about how to how many trades you need to have confidence in a trading strategy.

If you require the entire data set for a particular market, you'll need to subscribe to the Deep Backtesting feature, which is only available on the higher tier paid plans.

This is a big downside of the platform.

If you don't want to pay the higher TradingView monthly fee, there are other solutions such as Naked Markets, which usually provides much more historical data than TradingView and free ongoing data updates, for just a one-time investment.

Limitations and Downsides

Here are the limitations of TradingView to be aware of:

• The backtesting function is only available on TradingView paid plans.
• TradingView lacks sufficient historical trading data on the lower tier plans. It can be enough data on the higher timeframes, such as the daily chart. As you move down to lower time frames like the 4-hour or 1-hour chart, you may only get two or three years of data, which is not enough. You have to pay more for Deep Backtesting to get more comprehensive data.
• There's no way to upload your own historical data.
• You can only backtest one market, strategy and timeframe at a time. There is currently no way to backtest multiple variables simultaneously.
• No offline testing.
• The reporting metrics are decent, but still limited. I would like to see more detailed backtesting statistics.
• Although TradingView's backtesting function is useful, it is not a substitute for live trading. You should still exercise caution and not rely solely on backtesting results. Be sure to implement Forward Testing before risking real money on a strategy.

While TradingView's backtesting function has its limitations and costs, it can be a valuable tool for testing trading strategies quickly.

Conclusion

Based on my experience with the backtesting function in TradingView, it's not for everyone.

It only really makes sense if you can do 2 things:

1. Code in Pine Script
2. Subscribe to a paid plan that has Deep Backtesting capability

One big benefit of the backtesting feature is that you can test community-created trading strategies and scripts.

Unfortunately, most of them are useless. That's no different than any other platform.

But they can be an excellent starting point to give you ideas for your own strategy.

If you want to backtest manually, TradingView also has a Bar Replay function that will eliminate the need to learn Pine Script.

So at the end of the day, backtesting in TradingView can make sense for some traders, but it's not for everyone.

That said, I strongly feel that TradingView is the best charting platform available and I highly recommend it for that.

The post The Ultimate Guide to TradingView Backtesting appeared first on Trading Heroes.

So in this tutorial, I'll show you exactly how to do it.

The process is not hard and once you know how it works, you can take partial profits on your trades at any time.

First, let's take a look at why you might want to do this.

Why Traders Take Partial Profits

The biggest reason traders close part of their trades early is to take some of their profits off the table, while still allowing themselves up to potentially capture bigger profits later.

This can give you a huge psychological boost and allow you to stick with the rest of your trade longer.

When a trade is in profit, then comes back and ends up in a loss, that can give you a huge case of Fear of Missing Out (FOMO).

Many traders will then try to make it back on the next trades, leading to overtrading, revenge trading, or taking profits too early.

So taking partial profits can help you achieve a balance of taking profits while you have them and letting your profits run.

But it's not a magic bullet.

Be sure to backtest your profit taking method before implementing it.

Now let's get into how to actually do it.

How to Take Partial Profits on a Trade in MT4

There are 2 ways to take profits in MT4.

I highly recommend doing this in a demo account if you've never done it before because if you don't know what you're doing, you could mess up a good trade and lose money unnecessarily.

Obviously, you should have a trade open that's bigger than the 0.01 minimum lot size in MetaTrader, for this to work.

There are 2 ways to close part of a trade:

• Double-click the trade entry line on the chart
• Double-click the open trade in the Order window on the bottom of the screen

When you do either of these things, you'll see the Modify Order window.

Change the following:

• Type: Change to Market Execution
• Volume: Enter the number of lots you want to close
• Close Button: Once all of the settings are correct, click the yellow Close button

That's it!

Now you'll see that the Size of your trade will be reduced in the Order window at the bottom of your screen.

Demonstration Video

If you want to see this in action, this video will show you exactly how to do this in MT4.

Final Thoughts

So that's how to close part of your position in MetaTrader 4.

It's very useful for taking some profits off the table, while still giving yourself the ability to still capture big moves.

Again, be sure that you practice doing this in a demo account first.

Also backtest your method of taking partial profits to be sure that it actually gives you an edge.

To learn how to backtest, read this tutorial.

The post How to Partially Close a Trade in MetaTrader 4 appeared first on Trading Heroes.

“Well duh, a good backtesting results is when you make 1,000,000% return.”

That's what many new traders think and that's why over 90% of traders fail.

If you want to become a successful trader, you're going to have to learn how properly evaluate a trading strategy and adjust your perception of what is a good backtesting result. 

Spoiler alert: Most successful trading strategies start off as mediocre or even poor. 

But through continual testing and iteration, they are made into profitable strategies.

Just like successful traders are made, not born…successful strategies require an investment of time and effort.

Where to Start

The first thing to understand about backtesting is that almost all successful trading strategies didn't start out that way. 

A great trading strategy is just like any great invention.

It starts with an idea and the inventor wants to solve a problem.

Traders want to solve the problem of making money consistently in the markets.

You will probably have to refine your trading strategy idea to make it profitable.

Once you understand that trading strategies rarely start off as profitable, it then makes sense that breakeven backtesting or slightly profitable results can actually be a good thing. 

If a strategy is breakeven (or close to it), then you just might have to do a few tweaks to get it to profitable.

Many times, experimenting with money management or exits can make a strategy profitable.

With that in mind, here are more details on what to look for in your testing results.

Historical Data Used in Backtests

Before I get into analyzing your actual backtesting results, one important thing to consider is how much historical data was used in your backtests.

Many backtesting platforms only give you 1 or 2 years of backtesting data.

This is not nearly enough to figure out how a strategy will perform over different market conditions and cycles.

So when you're backtesting, get as much historical data as possible.

Define a Review Period

Once you have a lot of historical data to test with, be sure to define your review period for your strategies.

If you are creating a strategy on the daily chart, you might want to review the returns on a yearly basis.

Now if you're testing on the 1 hour chart, you should probably review your monthly results.

Then figure out your average return per your review time period.

You probably won't be profitable in every review period, but you want to see what type of drawdowns you'll have to endure and what to expect from the trading strategy.

This analysis will allow you to compare trading strategies in an objective manner and judge which strategies you may want to pursue and which ones to drop.

Set a Goal

Now it's time to figure out what matters to you.

A “good” trading strategy has to be good for you and nobody else.

It won't necessarily be the most profitable or the most consistent.

But if it meets your income needs, then that's all that matters.

A word of caution here…

Many traders (myself included) start out with unrealistic goals for their strategies.

So set a goal, but you might find yourself having to adjust what you expect out of one trading strategy.

You might have to trade several trading strategies or markets to get the results you're looking for.

Don't get discouraged however, if you keep working the results will come.

How to Identify Trading Strategies with Potential

There are 3 basic types of backtesting results:

1. Terrible
2. Breakeven
3. Profitable

Now I'll define each and show you what to look for in each.

A Terrible Backtesting Result

This one is obvious.

If the strategy loses 80% of the account or more, then you probably shouldn't spend any more time with it.

The strategy above lost 99.82% from 2009 to 2024.

That's as bad as it gets.

Trying to optimize a strategy with a terrible result is like polishing the brass on the Titanic.

It's best to move on and use your time and brain power to create a new strategy.

A Breakeven Backtesting Result

Here's where things get exciting. 

Most new traders will throw away a breakeven strategy, but not you because you're reading this article.

A breakeven strategy can potentially be optimized and made much more profitable.

It might just need a tweak or two to work well.

Here are some questions to ask when trying to improve a strategy:

• Can you eliminate the biggest losers easily?
• Do losing trades have a common characteristic? Maybe they go longer than 2 days or they are taken during a certain time of day.
• What happens if you set a bigger profit target?
• Can you increase your stop loss, while risking the same percentage of your account, so you don't get stopped out so often?
• Will using a trailing stop loss improve your results?
• How do your results change of you increase or decrease your risk per trade? It may be counterintuitive, but lowering your risk per trade can sometimes increase your total return.

Those are the major things to consider when trying to improve the performance of a strategy.

But don't stop there, what else can you think of?

A Profitable Backtesting Result

Now we get to the result that everyone is looking for, a profitable result on the first try.

It doesn't happen often, but it is possible.

I've only had a hugely profitable result on the first try…twice.

But even if your results were profitable, you can't stop there. 

You need to double check your results.

Real world trading could vary dramatically from backtesting results if you don't account for everything.

Consider the following:

• Did you properly account for commissions, spread, slippage and fees?
• Will you be awake to take trades when they setup?
• Did you follow the trading plan?
• Did you run a Monte Carlo simulation to see your maximum potential drawdown?

Once you've verified that your results are good in a program like NakedMarkets, Forex Tester or FX Replay, congratulations, you now have a profitable trading strategy.

Now it's time to move on to Forward Testing to be sure it works.

This is a key step to making absolutely sure that your strategy works before risking your full trading capital.

But don't stop there.

Continue to test ways to potentially make your strategy better.

See if you can increase the return or decrease the drawdowns.

Pick the one that's more important to you.

Consider trading 2 or 3 versions of your strategy at the same time to diversify your risk.

Once you're trading your strategy with your full-sized account, then you can repeat the process to find another profitable strategy.

Final Thoughts

Again, you probably won't get a super profitable backtesting result on your first try.

The key is to be able to spot the diamonds in the rough.

From there, you can work on developing each strategy to its maximum potential.

It's also important to be able to figure out which strategies will never work and stop trying to improve them right away.

Remember that trading strategies usually tend to perform a little worse in real life.

So account for that and don't get too excited about a huge return.

Before I go, I'll leave you with a conversation that we had about this topic on the Think Profit Podcast.

It will give you more ideas on what to look for when you're backtesting.

The post What is a Good Backtesting Result? appeared first on Trading Heroes.

The short version is that you'll save time and you can test based on market correlations.

This process will be similar to backtesting multiple timeframes at the same time, but will require a couple of additional setups.

Backtesting multiple markets is easy with an automated strategy.

Just run the trading program against data from different markets.

But viewing multiple markets at the same time is not as easy with manual testing.

In this quick tutorial I'll give you the benefits and downsides of manual multiple market backtesting and exactly how to do it.

Benefits of Backtesting Multiple Markets Simultaneously

If you already know about the benefits of backtesting multiple markets, skip down to the section on setups.

But if you aren't sure why you should do it, here are the top 2 reasons.

Save Time

First, testing multiple markets can save you a ton of time.

Let's say that you want to manually backtest a trading strategy on the EURUSD and the S&P500 at the same time.

Furthermore, let's say that testing each market individually will take you 2 days.

If you run both charts at the same time and take trades on both charts, it might only take 2.5 days to do your test instead of 4 days.

This is a huge benefit.

See Market Correlations

The other reason to backtest multiple markets at the same time is to see market correlations.

For example, a frequently talked about correlation is between the CADJPY and Oil.

Since Canada is a major oil exporter and Japan imports all of its oil, the price of oil can effect each economy accordingly.

As always, don't take my word for it, backtest it yourself.

There are many other market dynamics at play with regard to currency prices, so the price of oil isn't always going to be the biggest influence.

But if you want to test this, it can be tough to see the correlation (or lack thereof) if you are only backtesting one market at a time.

Having both charts side by side makes this easy.

Downsides of Backtesting Multiple Markets Simultaneously

Multiple market backtesting is not all sunshine and unicorns though.

Here's what you should be aware of if you're going to do this.

Loss of Focus

One potential downside is that you could miss some signals, if you have too many markets open at the same time.

So if you want to test on multiple markets, you have to be super focused.

It's really easy to miss trades when you have several charts going at the same time.

I would suggest not testing more than 3 markets at the same time…max.

Two markets is ideal.

Computer Slow Down

If you have too many markets open at the same time, this can also slow down your computer.

Your trading program will have to update the data for each chart and also calculate your indicators (if you're using any).

Depending on how powerful your computer is, and which backtesting software you're using, this might slow things down.

So be sure that you have a decent computer and software that can handle this.

The most important spec on a computer is going to be the amount of RAM you have.

Processor speed does contribute to the overall speed, but as long as you have a processor made in the last 5 years, you'll see way more gains from RAM.

At least 16GB is recommended, but 32 GB or more is ideal.

How to Setup a Backtest in Multiple Markets

Alright, now that you have some background on multi-market manual backtesting let's get into actually how to do this.

I've personally done this with NakedMarkets and Forex Tester, but this will work in a similar way in other programs.

It's not possible to do this in something like MetaTrader.

If your software cannot do this, I would highly suggest switching to NakedMarkets.

This software is much more optimized for multiple market backtesting than Forex Tester.

I'll use NakedMarkets for the rest of this tutorial because that's what I use.

Step 1: Download Historical Data

You're going to need some data to test with, so the first step is to go to: Tools > Data Center and download historical data for the markets you want to test.

NakedMarkets provides updated historical data for free, no subscription needed.

Step 3: Setup the Backtest

Once the data is loaded, it's time to add your charts and set them up.

Go to: File > New Backtest

Name your backtest and the starting balance for the account.

Then click Next.

The choose the markets you want to backtest. Be sure to select more than one market on this screen.

Click on Next.

Use the default settings on the last screen and click on Finish.

Now a window for each market will open.

Resize the windows to your liking.

If you need to add more windows, click on: File > Add New Chart and select the chart you want to add.

You'll only be able to add markets that you selected when you created the backtest.

Keep in mind that you can also have multiple timeframes for each market.

Simply add another chart for each market, then change the timeframe of the second chart.

You can also change the timeframe of each chart by clicking on the chart you want to change, then clicking on the timeframe buttons in the upper left corner of the screen.

Once all of your charts are setup, it's time to start backtesting!

Step 4: Press Play and Start Taking Trades

The hard part is done, now it's time to start testing.

Press the play button in your software and it will advance all of your charts at the same speed.

Take trades according to your trading plan.

Step 5: Review Your Results

Once you've completed a full round of backtesting, it's time to see how well you did.

A common mistake is to judge a trading strategy purely on its total return.

Professionals examine at all aspects of a strategy to identify its potential because most strategies won't have good results on the first try. 

There are 3 main questions that you should ask yourself when reviewing your backtesting results:

• Can I possibly improve this strategy? This is usually possible when a strategy is near breakeven. Consider experimenting with your risk management or exits.
• Can I potentially trade this on different timeframes or in multiple markets at the same time? This can give you more trades, if lack of trades is your problem.
• Is the overall trend of account balance good? If your strategy wins consistently, but has a low overall return, then you might simply need to increase your risk.

Read more about how to optimize your strategies in this article.

Be willing to experiment with your strategy until you find something that works.

That's the beauty of backtesting.

You'll get a good idea of what works BEFORE you actually risk real money.

There is also a creative element, which makes it fun to try out new ideas that you come up with.

Conclusion

So that's why and how to manually backtest your trading strategies in multiple markets at the same time.

If you've been testing one market at a time, this can be a game changer.

It will allow you to find profitable trading strategies and eliminate losers faster.

Happy testing!

The post How to Manually Backtest Multiple Markets at the Same Time appeared first on Trading Heroes.

So it's perfect if you're just getting started with trading strategy development.

Many trading websites will give you what they say is the “best” 50-200 crossover strategy.

Interestingly, most of them don't give you any data to back up that claim.

I'm going to give you information that's much more useful.

In this tutorial, I'm going to show you how to backtest any Moving Average Crossover trading strategy on the internet to find out for yourself, if it really works or not.

Using this method will also allow you to test your own optimizations to see if you can improve on the strategy.

The best part is that you can use this method to backtest strategies very quickly because the backtests will be 100% automated.

You don't need to know how to write code to do this, it's all drag and drop.

I'll also show you some of my own backtesting results so you know good places to start with building your own strategy, and what to avoid.

Alright, let's get into it…

What is the 50-200 Moving Average Crossover Strategy?

This trading strategy is also known as a Golden Cross and Death Cross.

That's way too much drama for me, so I'm just going to call it the 50-200 Moving Average Crossover trading strategy.

As the name suggests, this strategy uses the 50 and 200 Simple Moving Averages (SMA).

Here's what that looks like on a chart.

The 50 SMA is considered the “fast” SMA because it reacts faster to price changes.

So naturally, the 200 SMA is the “slow” moving average because it takes awhile to react to price.

Basically, traders who use this method buy when the 50 crosses above the 200 and sell when the 50 crosses below the 200.

Sounds pretty easy right?

Well, not quite.

There are a few more things that have to be defined to make this a complete trading plan.

First, I'll create the trading plan, then I'll show you how to do an automated backtest of the plan, without writing a single line of code.

The 50-200 Crossover Strategy Trading Plan

Here are the rules for this plan:

• Buy
  • Buy on the close of the candle when the 50 SMA crosses above the 200 SMA
  • Stop Loss at last swing low
  • Risk 1% per trade
  • Take profit at 1R (1 times risk)
• Sell
  • Sell on the close of the candle when the 50 SMA crosses below the 200 SMA
  • Stop Loss at last swing high
  • Risk 1% per trade
  • Take profit at 1R (1 times risk)

Remember that this is just a starting point.

Any of these settings can be changed and retested. 

So do a couple of tests with these settings, then feel free to experiment with your own settings.

Get creative.

You never know, you might just develop a super profitable moving average crossover trading strategy.

How to Build the Automated Strategy

Now let's get to work.

For this backtest, I'm going to use NakedMarkets.

It's the easiest way to build automated trading strategies with no-code.

Once you complete these initial setups, you'll be able to test all of your 50-200 moving average crossover trading strategy ideas easily.

Create the Core Rules

The first step is to create the Core Rules.

This is what will tell NakedMarkets how to identify the initial setup conditions for a trade.

You have to create one Rule for long trades and one for short trades.

This will also be true for most of the other types of Rules.

Here's how to setup your first Core Rule:

1. Open NakedMarkets and go to: Rules > Rule Manager
2. Click the New Rule button in the lower left corner of the window
3. Name the Rule in this format: [strategy name] Core [long or short]
4. Select Core as the Rule type
5. Click OK

Now it's time to add conditions to your new Rule.

Long Trade 

Let's setup a long trade.

To add a criteria, click the (+) symbol in the upper right corner of the screen.

From there, drag the conditions you want to use from the list on the right.

These are the settings for each of the boxes, from left to right:

1. Moving average: Period (50), MA Type (SMA)
2. Greater than
3. Moving average: Period (200), MA Type (SMA)
4. And
5. Moving average: Period (50), MA Type (SMA), Previous Bar (1)
6. Less than
7. Moving average: Period (200), MA Type (SMA), Previous Bar (1)

The reason that I'm putting 2 moving average comparisons in there is because I want to evaluate the position of the 50 SMA relative to the 200 SMA for the current candle and the previous candle.

I want to see the previous candle have the 50 below the 200 and the current candle have the 50 above the 200.

This will give me every situation where the 50 has just crossed above the 200.

If I don't do this, I will get a signal every time the 50 closes above the 200 and that would not work.

This is what your screen should look like after you're done.

Click on the Save Rule button in the lower left corner to save your Rule.

Now I'm going to do the same thing for the short side.

Short Trade 

Here's how to setup the Core Rule for a short trade.

The easiest way to create a new Rule is to clone the long trade and just change the settings that apply to a short trade.

To clone a Rule, right-click on the long Rule in the list on the right side of the screen and select Clone Rule.

Then right-click the cloned Rule and rename it.

Change “long” to “short” in the name.

So in this example, the new name of your short trade will be: “MA Cross Core Short”.

Now it's time to change the settings of this Rule to look for short trades.

This is what the short Rule looks like:

Here are the settings for each of the boxes, from left to right:

1. Moving average: Period (50), MA Type (SMA)
2. Less than
3. Moving average: Period (200), MA Type (SMA)
4. And
5. Moving average: Period (50), MA Type (SMA), Previous Bar (1)
6. Greater than
7. Moving average: Period (200), MA Type (SMA), Previous Bar (1)

Click on Save Rule in the lower left corner to save your Rule.

Great work, you just completed the hardest part of this tutorial!

There are 2 more steps that you have to complete before you can start testing this strategy, so let's keep going.

Create the Entry Rules

Now that you have the Core Rules that will identify the basic criteria of the entry, it's time to create the Entry Rule that will determine the details of each entry, such as the entry type, stop loss, risk per trade and stop loss.

To do this, go back into the Rule Manager and click the New Rule button in the lower left corner of the screen.

Again, we will start with the long Rule, then clone it to make the short Rule.

Long Rule

Name your long Rule: “MA Cross Entry Long”.

Here's what your long Entry Rule will look like:

For the order type and lot size, double click on the box to change the settings.

With the other boxes, drag the appropriate Default Rule from the upper box on the right side into the stop loss and take profit boxes.

Here's how to set that up:

• Instant Order: Buy
• Stop Loss: Last swing low
• Take Profit: 1R
• Lot Size: 1%

Click on the Save Rule button in the lower left corner to save your Rule.

Short Rule 

Now clone the long Rule and use these settings to create the short Rule:

• Instant Order: Sell
• Stop Loss: Last swing high
• Take Profit: 1R
• Lot Size: 1%

Click on the Save Rule button in the lower left corner to save your short Rule.

Create the Setup Rules

Alright, these are the final Rules!

Don't worry, this step is super easy.

A Setup Rule basically ties everything together and monitors your chart to see if the Core Rule criteria is present.

If it is, then it executes the Entry Rule.

Long Trade 

Go back into the Rule Manager and click the New Rule button in the lower left corner of the screen.

Create a new Setup Rule, then name it: “MA Crossover Setup Long”.

First, drag the Core Rule you created from the User Rules section into the top Setup Condition box.

Under Actions, drag the Entry Rule you created into the Actions box.

Now clone this long Rule and rename it to create the short Rule.

Short Trade

Replace the Setup Condition and Action with the short trade versions of your Rules.

That's it for Setup Rules!

Run the Backtest in Visual Mode

That was pretty easy right?

Now here's the fun part, you're going to actually backtest this strategy.

You should do this step first, before using Fast Backtest because it will allow you to see any errors that you made when creating your Rules. 

Close the Rule Manager and go back to the main NakedMarkets screen.

Start a backtest by going to File > New Backtest.

Name your backtest, then select your starting balance.

Click on Next.

Select the market(s) you want to include in the test, then click on Next.

On the next screen, you can select the timezone you want to use.

I usually use the default settings, so if you aren't sure about your timezone, just use the default settings.

Click on Next.

Now click and drag both the long and short Setup Rules that you created onto the chart.

You'll see these Rules that you're currently using in the upper left corner of the screen.

Select the right timeframe that you want to backtest on.

The timeframe shown above is the daily chart.

Then click on the Play button in the toolbar to start the backtest.

If you setup your Rules correctly, you'll see the trades automatically execute on your chart.

Watch the trades carefully to be sure that they are executing correctly.

Now if your trades are not executing correctly, see the section below on troubleshooting.

However, if they are working, then congratulations, you have just build your own automated 50-200 Moving Average Crossover trading strategy!

Once the backtest is completed, you can see the detailed stats by doing the following:

• Save the backtest by going to: File > Save Backtest
• Go to: Statistics > Statistics Center
• In Stat Center, go to: Source > Import from backtest
• Select the backtesting file you just saved

This will show you the stats on your backtest.

A word of caution here…

You probably won't have a super profitable strategy on the first try.

However, remember that this is a process and your results could be significantly better if you use different settings or run it on a different timeframe or market. 

You might get better results on the EURUSD 4-hour chart, or the SP&500 1-hour chart.

The return might be better if you use a different stop loss or change the moving average settings.

Again, don't get discouraged if your first test doesn't work out.

Remember that this will require some work and very rarely will even professional traders gets an awesome result on the first try. 

Therefore, be willing to experiment and treat this process like an inventor would.

Many times, inventors have to try many different prototypes before they get something that works well.

It's been said that Edison tried 10,000 ideas before he invented the light bulb.

Hopefully you won't have to try that many strategies before you find a good one, but you have to be willing to potentially stick it out for that long.

Regardless of the return on your first test, once your strategy is working in Visual Mode, now it's time to shift your backtesting into high gear.

Hit “Turbo Boost” and Run a Fast Backtest

Now that you're confident that everything is working correctly with your moving average crossover strategy, it's time to take your backtesting to the next level.

In this step, you're going to unleash “turbo mode” and use the Fast Backtest feature in NakedMarkets.

This will allow you to backtest multiple markets and timeframes, without having to setup each backtest individually.

To do this, go to: Tools > Fast Backtest

Then select the market(s) you want to backtest.

You can test as many as you want.

Click on Next.

Next, choose the timeframe(s) you want to backtest.

Again, you can select multiple timeframes.

Click on Next.

Now select the Setup Rules that you want to backtest.

Select the moving average crossover Rules that you created above, under Setup Rules.

Click on Next.

Then you'll see the list of Fast Backtests that will be run.

Click on Launch to start the backtest(s).

Once a backtest is finished, you'll see the basic statistics in this window.

There is also a link to the detailed stats in the [Load stat] link.

Click on the link to open Statistics Center and you'll see the complete results of each backtest.

As you can see, this test on the daily chart didn't work well.

But at the same time, it wasn't completely terrible either.

At least it was profitable for a period of time.

Losing 4.25% from 2006 to 2024 is also essentially breakeven.

So this strategy could be improved by using different settings in the strategy.

Again, this is a process and don't get discouraged by poor results on your first tries. 

Troubleshooting Your Rules

Even with a simple trading strategy like this, it's possible to make mistakes in the Rule creation process.

This is especially true when cloning Rules.

I actually made couple of mistakes when creating this tutorial.

So if your strategy isn't working as you expected, don't worry.

Just go back through the steps above and double check your Rules.

The most common mistakes are:

• Not changing the greater-than or less-than criteria.
• Having the wrong trade direction (buy or sell)
• Using the wrong settings for an indicator

If you cannot see the error by just looking at the Rules, then there are 2 more things you can to do troubleshoot your strategy.

First, in your Setup Rules, change the Action to Pause Backtest, instead of using the Entry Rule as the Action.

This will take the Entry Rule out of the equation and allow you to only focus on the Core Rule.

Right-click on your chart and select: Detach all Rules.

Then drag your new Setup Rules onto your chart and run the backtest again in Visual Mode.

Every time the trade sets up, the chart will stop.

This will allow you to double check the logic of the Rule.

If your Core Rule is working correctly, then the mistake should be in your Entry Rule.

To test this, simply use the Entry Rule by itself by dragging the Rule from the list on the left of the screen onto the chart.

You can do this at any time, you don't necessarily have to wait for your entry criteria to be met.

This will open a trade and allow you to see if your Entry Rule is working as expected.

These methods will allow you to debug your trading strategy.

Stay calm and go through your Rules step-by-step.

If you cannot find the problem, head over to the NakedMarkets Forum and ask for help.

Potential Improvements

If you didn't get the results you were looking for in your backtests, here are a few ideas on how you can potentially improve your results:

• Change the period of the moving averages
• Use different types of moving averages, like an exponential moving average
• Test different timeframes
• Adjust the settings on the last swing high/low indicator
• Test different markets
• Use a different stop loss level
• Use a different take profit level
• Trail your stop loss
• Risk more per trade
• Risk less per trade
• Add another indicator to create a second entry criteria
• Use a strategy across multiple timeframes or markets at the same time to potentially increase profits and diversify risk

But don't stop there, what else can YOU think of?

Backtesting Results

All of this is great in theory, but how well does this strategy actually work?

That's what you're going to find out in the following links.

I'm going to backtest different ideas around this trading strategy, starting with the method described above.

The version above will be version 1 and I'll create a new version every time I make a change to the original strategy.

Rules for new versions will be available via the links below.

As I do new backtests I'll add them to the appropriate pages.

You'll see all of the stats for each backtest.

Even if a backtest doesn't do incredibly well, it can give you a starting point for creating a strategy of your own.

These tests also show you what to avoid and will save you time in the testing process.

Here are the versions that I've currently tested:

• Version 1 (listed above)

Conclusion

So that's an easy way to do a fully automated backtest of the 50-200 Moving Average Crossover strategy.

This is a great method to build a trading strategy around because it's so simple and provides many opportunties for optimization.

But remember that you must backtest every trading strategy yourself.

You cannot rely on my results or the results of anyone else.

To develop real confidence in a strategy, you must see hundreds or even thousands of trades, and test many different ideas.

Luckily, NakedMarkets speeds up this process dramatically.

I've given you the template…now get to work.

You can get a discount and some fantastic bonuses for NakedMarkets here.

If I missed something in this tutorial, let me know here.

The post How to Create a No-Code, Automated 50-200 MA Crossover Strategy appeared first on Trading Heroes.

Now I'm going to show you the backtesting results of that strategy for every market that I've tested.

I'll show you both the good and bad.

You have to backtest this strategy yourself to make sure that you're comfortable with it and that it actually works with your broker.

Even if a strategy doesn't work well, you can test ideas on how to improve it and make it much more profitable.

Now let's move on to the trading plan and the results for each market.

Remember: This is only a starting point for YOUR trading strategies. This is for informational purposes only and the results below will not guarantee successful trading. 

As I backtest new markets, I'll add the results to this page.

Bookmark this page and check back periodically if you want to get future updates.

The 50-200 Crossover Strategy Trading Plan

Here are the rules for this plan:

• Buy
  • Buy when the 50 SMA crosses above the 200 SMA
  • Stop Loss at last swing low
  • Risk 1% per trade
  • Take profit a 1R (1 times risk)
• Sell
  • Buy when the 50 SMA crosses below the 200 SMA
  • Stop Loss at last swing high
  • Risk 1% per trade
  • Take profit a 1R (1 times risk)

Be sure to read the full 50-200 Moving Average Crossover automated strategy tutorial to learn how I did these backtests in just a few minutes, without coding.

Backtests

EURUSD

Weekly Chart

On this timeframe, there isn't enough data to pursue this strategy.

With only 10 trades, you simply won't get enough trades to make this viable.

Daily Chart

This actually looks pretty good.

True…the return is very low, but the max drawdown is also low and the strategy stayed profitable throughout the entire test.

So this could be a good strategy to optimize, or trade in multiple markets, assuming that the results are favorable in those markets too.

No guarantees obviously, further testing would have to be done.

4-Hour Chart

This strategy was profitable for most of the testing period, so this could be a good timeframe to start experimenting with.

Yes, the return was breakeven.

But the graph is more promising than most of the others on this list.

It executed 209 trades, which is decent.

If this works in other markets, then the combined return could produce a significant return.

Again, backtest this for yourself.

This is only meant to be a starting point.

1-Hour Chart

The return on this strategy was breakeven, so there is potential to possibly optimize this timeframe.

On the upside, the strategy did execute quite a few trades.

30-Minute Chart

The results on this timeframe are not worth examining further, at least with this version of the strategy.

5-Minute Chart

The results are terrible on the 5-minute chart, so no further analysis is necessary.

AUDUSD

Weekly Chart

Not enough trades here to start using this timeframe.

Daily Chart

This could be tweaked because the results are breakeven. The biggest issue is that there aren't very many trades, so I wouldn't pursue this one.

4-Hour Chart

Another breakeven result, so it might be something worth tweaking.

1-Hour Chart

Breakeven again. Maybe it's worth a few tweaks, but I wouldn't spend a lot of time on it.

30-Minute Chart

Pretty terrible results, so probably not worth messing with. Move on.

5-Minute Chart

Just like with the EURUSD, the 5-minute chart is completely useless, so this is not worth exploring.

It pretty much blew out the account.

Notes and Observations About this Strategy

So far, the lower timeframes are showing much worse results.

Therefore, it might be better to stick to the daily and 4-hour charts.

Also, the stop loss on this strategy may not be ideal.

Sometimes the stop ends up being too far away and it takes awhile for price to hit the target.

More testing and optimization would have to be done.

Learn how to build and tweak this strategy and test your own ideas and you might come out with better results than me.

Conclusion

So that's how this strategy stacks up in all of those markets.

I'll be adding new backtests as I do them, so be sure to bookmark this page and check back periodically to see if I have any new markets.

Remember that you should always backtest a strategy for yourself. 

Never rely on the results of others, including me. 

To learn exactly how I created an automated program to do the backtests above, WITHOUT coding, read this tutorial.

The post 50-200 Moving Average Crossover Strategy v1 Backtesting Results appeared first on Trading Heroes.