Automated Trading

Example 1: the image below represents the implementation of the strategy with oscillation steps of 200 points; the graph is hourly. The 10th October the EURUSD cross oscillated often in the range 1.10030-1.10230. A sell position has been opened twice with success. The next day a third sell position has been opened, but without any profit, as the cross ramped up to 1.10600. A new level across 1.10270-1.10470 has been found, where two sell positions has been opened, one of them has been closed with profit the same day, the other one the next working day. After 1 day more, the remaining sell position still in open has been closed with profit.

Of course, this is a best scenario. If there is a trend, in whatever direction, the risk of failing increase as much as the trend is persistent.

Example 2: the image below is a continuation of the one above, this time with a 4H graph to have a wider view. After the oscillation range 1.10030-1.10230 has been left, the trade at 1.0230 the 15th October has been kept open for a while. The ranges 1.10270-1.10470 and 1.10570-1.10770 has been low productive as well, as the cross reached an higher value of 1.11700. The position then closed with a loss of about 700 points and the upper level ranges have continued to provide profits.

So the strategy provides low gains very often and sometimes some big loss. The narrower is the range, the more frequent are the trades, but the risk increases as more positions are opened during a trend. To mitigate the risk, the ranges are not tested in linear mode, but using a quadratic coefficient. As you can see in the example 2, the first 2 ranges are closer than the last 2.