VKW Bands Advisor

Testing any trader’s idea takes quite a lot of time and effort, and, as a rule, there is always a human factor, due to which the effectiveness of testing can always be called into question.

As practice has shown, the best method of testing your own ideas is to program them and implement them in the form of a trading advisor, who clearly agrees with the rules and will conduct all trading for you.

It is automation and programming that allows you to most accurately show and prove the effectiveness of your assumptions and developments.

The VKW Bands Advisor is the result of a completely logical testing and implementation of the Advisor based on the VKW Bands indicator.

This expert was developed by one of the foreign programmers, who, in fact, like most traders, wanted to check the real effectiveness of the indicator.

As the implementation progressed, the trader received pretty good results, which led to the fact that the basic model for testing in the strategy tester turned into a full-fledged Forex advisor that is capable of trading independently without any intervention from the trader.

The VKW Bands advisor is multi-currency and can also work on any time frames; the only thing you have to do is optimize and adjust the parameters to modern market conditions. Actually, in this article we will conduct a detailed analysis of the settings and optimize them for the main currency pairs.

Installation in a trading terminal

The script works based on the popular oscillator VKW Bands, which in turn works in tandem with the METRO indicator. That is why, in order for the EA to work correctly, we need to install, in addition to the file with the EA itself, two more indicators VKW Bands and METRO.

After downloading all the necessary elements, you should be in the root directory of the platform. To do this, launch MT4 and go to the file menu where the “data directory” menu item will appear.  

After opening the data directory, find the indicators folder and drop two indicators into it, as well as the expert folder and drop the advisor itself into it. After restarting MT4 or updating components in the “Navigator” panel, the adviser will appear in the list of experts and will be ready to work. To start trading, drag the advisor onto the chart of the currency pair:

VKW Bands advisor settings

The author has divided all the expert settings into blocks, which greatly simplifies the optimization of the general structure of the advisors.

So in the VKW block you can directly change the parameters of the VKW Bands indicator, and in the RangePeriod line you set the number of bars to build the channel, in the SmothPeriod line you set the moving period, which affects the width of the indicator channel, and in the SmothetMode line you set the method for constructing the moving average, which is an integral part of the VKW Bands indicator.

It is worth noting that it is better not to touch the parameters of the main signal indicator of the adviser, but to focus your attention on money management.

The Lot Management block specifies the capital management model.

So if you put 0 in the mm line, the adviser will work with a purely static lot, which you set in the Lots line. If you specify -1, the fractional money management system will work. In the TP SL TS BE block, profit and stop orders are managed.

So you can turn profit and stop orders in money on and off in the Real Stop Loss, Real Take Profit lines. The Stop Loss and Take Profit lines specify a stop order and profit in points. In the Reverse line, you can enable the closing of the previous transaction and the opening of a new one in the event of a signal in the opposite direction.

The advisor also has a trailing stop , thanks to which you can squeeze the maximum out of trending markets.

So in the Trailing Stop line we indicate the number of points after which trailing will turn on, and in the Trailing Step line we indicate the trailing step. In the CanADtoPosition line you can enable or disable the top-up function based on additional signals, and in the MaxOpenOrder line you can limit the maximum number of orders if the top-up function towards the main position is enabled.

We decided to conduct the first test for the entire 2015 on the euro/dollar and pound/dollar currency pairs, without changing the settings on the four-hour chart.

Testing is carried out at opening prices to speed up testing. So, the test result for euro/dollar:

 
The result of testing the advisor on the pound/dollar currency pair:

 The graph shows that the settings are clearly outdated.

Having dug into the expert's parameters, it turned out that the default parameters do not include a stop order and profit, but a refilling system works, thanks to which the expert opens orders but does not close them. To correct a trivial error, we limited the advisor to only 1 open order in the MaxOpenOrder line and prohibited adding to a position in the CanADtoPosition line.

In order not to optimize the stop order and profit parameters, we decided to enable the Reverse function, which will lead to the advisor closing the position when a signal in the opposite direction appears.

So, the test result for euro/dollar:

 
 Test result on the pound/dollar currency pair:

In conclusion, I would like to note that the Expert Advisor based on the VKW Bands indicator has a pretty good prospect, since even without optimization and with the slightest debugging of the Expert Advisor, the balance curve shows good results.

It is also worth noting that the drawdown in both test options did not exceed two percent, which indicates a possible multiple increase in the lot in order to increase the profitability of the advisor.

Download the VKW Bands advisor