• Sat. Jun 15th, 2024

Presenting Seagull EA: Fully automated trading system

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Forex EA (Expert Advisor) specifically refers to automated trading systems that run on MT4/5 terminals. EA can automatically monitor the market and execute orders 24 hours a day, effectively avoiding the impact of time, physical strength, emotions and other factors on manual trading. For more details, please see the Appendix at the end of the article.

I created Seagull EA in early 2021 trading NZDCAD only. The key logic is to follow the major trend and/or the divergence of higher timeframes and look to entry on the lower time frames.  If the market is still moving forward, Seagull EA will look to add some limited positions in the same direction.  (To see Seagull Algorithmic System in detail)

From 2002 to now, NZDCAD trades in a broad 0.6154 to 0.9926 range. From February 2009 to  November 2016, NZDCAD was in a strong uptrend. After 2016, the range is more tight and shows  strong properties of mean reversion. The pair can well hedge the risk of USD.

Chart 1 NZD/CAD Monthly Chart 

1. Seagull EA can work on both fixed lot or automated lot sizes according to the balance.  No news filter is involved, due to it can not be backtested. As well as, not all news would generate the opposite moving of the market to the EA.

 

Chart 2 Tickdata Backtest of Seagull EA (Fixed 0.01 Lot per trade) 

Chart 3 Tickdata Backtest of Seagull EA (Auto Lot Sizes)

2. In the fixed lot Tickdata backtest, the Expected payoff is 6.0 pips, the spread in the backtest is  3.0 pips. There is total 9.0 pips’ tolerance in the trading cost, ideally it can work on most of the  Brokers.

Chart 4 Expected Payoff in the Fixed Lot Tickdata Backtest

3. The Tickdata backtest is from 2006 due to no more data being available before that.  Seagull EA runs pretty well from 2009 to 2016, when NZDCAD in a strong uptrend.  Please see Chart 1, Chart 2, Chart 3.

4. Seagull EA is not a night scalper, the orders are almost averaged within 24 hours.

Chart5 Trading Hours of Seagull EA 

5. We adjusted the timing of the Tickdata, the backtest result is almost the same.

Chart 6 Tickdata Backtest of Seagull EA from 1979

6. No over-optimization in Seagull EA: although it was created in 2021, the track record of the live  account is solid to now.

Chart 7 Seagull EA on Live Account from 2021 to Now

Conclusion

1. Seagull EA has had compelling performance in the Tickdata backtest from 2006 and live trading from  2021 to now.

2. Assuming that NZDCAD remains range-bound without a clear range break out in the coming years,  we have every reason to believe Seagull EA can at least maintain the current performance.

Appendix

Forex EA (Expert Advisor) specifically refers to automated trading systems that run on MT4/5 terminals. In general,  EA is based on proven manual trading methods and experience, built with various technical indicators and coded in MQL language. EA can automatically monitor the market and execute orders 24 hours a day, effectively avoiding the impact of time, physical strength, emotions and other factors on manual trading. EA is one of the most important trading tools for both professional and retail traders.

In addition, through rigorous and scientific backtesting, we can not only test whether the key logic of the EA is feasible, but also have a reasonable expectation of the risk and reward of trading performance in the future.

However, MT4/5 EA is not omnipotent. the MQL language is similar to the C language, the function is relatively simple. Some complex and/or advanced trading logic cannot be expressed well. Then we need to use Java Script and other languages in eSignal, Reuters Eikon, CQG or other professional platforms to build the trading system.

The series of articles “Commercial EA Review by LinoCapital” aims to provide readers with some principled guidance in selecting and backtesting an EA through our knowledge and experience. Welcome to all kinds of feedback and discussion.

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