Category : Robots
Modern trading has evolved to such an extent that everyone who first learns it can choose an available trade algorithm and get to work. In fact, with the development of information technology, there are many techniques on the Internet that the traders are willing to share. Today we’ll look at several such methods.
I would like to highlight that the strategies listed below are ideal for trading on both the broker’s server as well as via the FIXAPI protocol.
1. Trading on the basis of a simple moving average.
Moving Average (MA) is a technical indicator that shows the average price value for n number of bars. For example, MA with a period of 50 will take into account the prices for 50 latest candles. The default setting in a FIXAPIMT4 trading terminal is a MA with the period of 14.
How to use MA? The basic principle of MA trading MA is to sell when the the currency pair quotes crossed the MA line from top to bottom, and buy when the price, on the contrary, crossed it from the bottom to up. Since the indicator is considered a trend one, finding currency pair quotations above the indicator values shows an uptrend, and vice versa. Everything is simple. Crossing MA is the signal by which the trading robot or the trader decides to open a short or long position.
2. Trading on the basis of several moving averages
Similarly, as in the first case, MA is utilised, but with a different period. 2 or 3 usually. Thus the signal for buying is not only when MA crosses the quotes, but the lines as well. For example, a FIXAPItrader establishes three MA with a period of 20, 50 and 100.
As in the case of price, line crossing enables to predict further market movement. MA with a longer period is a stronger signal. For example, when MA (20) crosses the line of MA (50) top-down, this is a signal for a sell deal opening. The situation is similar when MA (50) also crosses MA (100). Buy deals are made exactly the opposite way. There are also double signals, when, for example, MA (20) and MA (50) cross MA (100). This signal is stronger and more significant, and also shows the emergence of a new trend. Price crossing signals also remain valid.
It is worth to understand that the longer MA period is, the smoother the line will be. This is because the sample gets larger, that is, the number of quotations for the bar closing or opening (depending on the setting) grows, the average of which is differs only slightly. And if you take a period of 20, the average price will be expanded, which makes the indicator more “flexible”.
3. Trade on the MACD basis
MACD oscillator is so popular that it is used for trading by investment companies and major players in the market. The indicator can display signals based on divergence, crossing the balance line, as well as the signal line of the MACD histogram. And all this with a single indicator. More detailed instructions on the indicator may be looked up at the Investopedia website.
How do you use it? The MACD is presented in the form of a histogram with two lines. Where the lines intersect, it is a signal for opening positions. In analogy with MA, when the MACD line crosses the signal line top-down, it is a sell signal. If bottom-up, it is a buy signal. Histograms are confirming the signal and display possible divergence.
4. Trading on the basis of the oscillators
This implies trade using leading indicators. If MACD and MA are trend indicators, they are a bit “late” and confirm better an already formed trend. Oscillators though, can show the turning point. One of the popular indicators in this category is RSI. This indicator shows the “overbought” and “oversold” zones, after which a corrective turn should be expected. Thus, the buy signal will be the moment when the indicator is below the 30% range, and a signal to sell is finding indicator values above 70%. Everything is simple.
All examined Forex strategies are easy to understand and easy to use by FIX API brokers. Moreover, all of these simple strategies can be combined into one complex, because each of the above signals does not override the previous one, only confirms it.