News Advisor
When reading smart books on technical analysis, you most often come across recommendations to stop trading during periods of important news.
Of course, as the practice of hundreds of traders has shown, it is at the moment of news release that the price becomes the most unpredictable.
However, if you analyze the movement of markets in recent years, you understand that their liquidity is weak, and all experienced players who remember the volatility that existed before have long been sitting on the fence out of boredom.
Due to weak intraday movement, scalping and pipsing tactics are becoming increasingly popular, as the risk of entering for a long period due to weak price movement is simply not worth it.
However, it is precisely during the period of news release that we can observe strong price movements, so if earlier they tried to skip the news, now every trader waits, down to the second, for that important surge in price to come, on which all market participants can make money.
The first news advisor that can be found on the Internet is called EA News. Its author is a well-known programmer who, as a volunteer, creates advisors, indicators and scripts on various Forex forums.
The EA is based on a fairly simple idea: the EA places two pending orders at a certain distance from the price and moves them along the price path for a certain time. When strong news comes out, the expert simply does not have time to move one of the orders in the required direction by a certain distance, and the pushed order becomes a market order.
The second order that did not work is automatically deleted by the expert. Thus, a simple news advisor does not even take into account the possible further direction of the price and how the market will react after the news is released, however, taking into account the volatility, it takes the profit we need.
Installation of the News Advisor. Its settings
The advisor itself is designed to work in the MT4 trading terminal, so it must be installed first. There is nothing complicated in the installation process, just through the data directory in your MT4, place the downloaded file below in the Expert folder and update in the “Navigator” panel.
Next, drag the expert onto the chart of any currency pair of your choice on a one-minute or five-minute time frame (this does not matter, since the advisor works on the principle of price movement). A settings window will appear in front of you, which we will describe below:
All expert settings are written in Russian, but let's look at some of the subtleties. For example, if you set 0 in the stop loss column, then when the price moves in pending orders placed by the expert, our stop order will not be dynamic, but will be static. In the distance from price column, the number of points required to place pending orders is specified.
In the number of seconds column, the time for which the adviser should move orders after the valuable one is indicated, depending on the specified distance between the valuable one and the order. Also, when working with this kind of indicator-free experts, you should pay special attention to trailing, namely, you can set after how many points the trailing stop , the length of the trawl, as well as its step.
For the experiment, we decided to test the advisor for the entire year 2014 with the default settings provided by the author of the strategy. The result is below:
As for me, this is a completely expected result. The fact is that the weak point of the Expert Advisor is that it reacts to any, even the slightest, surge in price, which may not even be caused by news, but by an ordinary small purchase by a large player.
To bring the expert to fruition, you will need to optimize the distance between orders, profit, stop orders, as well as trail settings, and this must be done for each currency pair.
There is also a more effective version of this expert called EA News TimeM Virtual. Unlike the first version, the author solved the problem with sudden minimum jumps and introduced a time limit in the settings for all traders.
However, due to the introduction of new parameters, the autonomy of the adviser is lost, since your task becomes to set a clear time during which the expert is allowed to trade. On the one hand, we have lost complete autonomy, and on the other hand, we can clearly select the news that an expert should trade on.
This is quite difficult for an inexperienced trader, so we conducted research on how the market reacts to certain news. You can get acquainted with and accept some information on the news in more detail in the “ Fundamental Analysis ” section.
If we talk about the expert settings, then all the main parameters remain the same, the only thing that has been added are the Time Start and Time End parameters, in which you can set the time at which the expert can start working and when orders will no longer be opened.
In conclusion, I would like to add that any news advisor requires careful optimization and strict monitoring of its work. Remember, no robot can replace the human brain, so I recommend using the second version of the advisor and wisely selecting news that actually gives strong price movements.