Advisor is not necessarily a massive algorithm to understand which in addition to the Creator will be able to force a couple of people. Quite often, trading robots do not use indicators for trading, while trading profitably and stably.
Indicator-free expert advisors are a rather heterogeneous group of trading robots. They are United by one thing-indicators are not used, otherwise the principles of work can differ significantly from each other. You can select several common types of expert advisors that do not use indicators:
- news – the most basic type of robot, just trying to catch a sharp move after big news;
- arbitrage-much depends on the correlation between currency pairs;
- there are also exotic bots that use, for example, carry trade. That is, in addition, such a robot tries to get out of the positive amount of swaps, while the movement of currency pairs is balanced. But this option is not suitable for an ordinary trader, because more or less serious profit will be only with a large Deposit;
- graphical patterns can also be used as the basis of the EA. In General, it is difficult to” train ” the EA to perform graphical constructions independently, but it is quite possible to distinguish some graphical combinations of the bot, the same Wolfe Waves are fully recognized in automatic mode;
- expert advisors using candlestick combinations can also be classified as non-indicator;
- there are interesting bots based on certain patterns of price behavior, for example 80/20 expert Advisor, 10 points, etc.
Indicator-free expert advisors trading on the news
If you look at the history and compare it with the release of important news, you will notice that sometimes important data provoke real “shots” on the chart. The price moves by dozens of points in a matter of seconds. Before the release of these data, the market is moving in a horizontal corridor.
The only task of the expert Advisor is to try to catch such a movement, and none of the indicators is needed. The EA algorithm is quite simple and performs only a few functions:
- analyzes the news release calendar (in some bots, you can configure which currency pairs the EA will monitor the situation, as well as the “weight” of the news);
- parallel analysis of price movement;
- if there is a calm before the news on the market, the EA simply places pending orders on both sides of the horizontal channel, the calculation is made on the fact that during the impulse movement the TP will have time to work (it is set not very large).
Work according to this principle all the news with out any indicators expert advisors. As for the effectiveness of trade, such a method has the right to life, but it is not necessary to talk about the regularity of earnings. Monitoring of some news robots may show good results, but in practice they are not suitable for regular earnings.
Graphical analysis and automated trading
Graphical analysis is very popular and gives good results in manual trading. But with the automation of this method of market analysis there are problems. The main difficulty is subjectivity in the analysis of the market, for example, how to derive a universal criterion for the truth of the trend line breakout or its retest after the breakout. And with the construction of even the simplest elements (the same trend lines), problems may arise.
The EA itself is initiative-free and works strictly according to the rules laid down in it, and graphical analysis requires an individual approach in each situation. Hence the almost complete absence of fully automatic bots trading exclusively with the help of graphical constructions.
Indicator-free expert advisors of this type often play the role of auxiliary tools, that is, without the intervention of the trader can not do. As an example, ChartPatternHelper. All the constructions on the chart should be performed by the trader himself, but the robot will be able to work with pending orders taking into account the constructions. But even here, not everything is so smooth, for example, the breakdown of the trend line he perceives as a simple touch of its price.
Psychology and nothing more
Behind the price movement in the market are the usual human emotions, which means that you can try to determine some patterns in the behavior of the chart on the basis of only logical considerations. This is how the EA was born 10 points.
The author correctly noticed that many traders put SL and TP on the extremes of the previous day, so that when the chart crosses it, the whole wave of orders is closed and the price moves by inertia in the direction of the breakdown. Experimentally, it was found that the price of 10 points passes in more than 65% of cases. This is the basis of the EA algorithm, in later versions martingale was added, which only benefited the results.
Non-indicator advisers of this type captivate with their simplicity and efficiency, a person trusts more what he understands, hence the popularity.
Well-known Linda Raschke once published a strategy 80-20, which was later written by the eponymous Advisor. She noticed an interesting pattern:
- if the candle has small tails that do not exceed 10-20% of the daily range, then most likely the next day the price will go in the direction of closing the candle;
- however, there is a possibility that the price will turn around, it exceeds 50%.
So the EA 80-20 waits until the price crosses the extremum the next day after the formation of the signal candle and places a pending order in order to catch the price reversal. Testing shows that this approach has the right to exist.
By name, it is clear how the indicator-free expert advisors differ from the usual ones. The advantages of such robots include simplicity, clear algorithm, less need for optimization, and most importantly-they are also able to make a profit over a long period of time.
Preference is given to such advisors or traders who do not favor indicators as such, or “paranoid” (in a good sense of the word), that is, traders who want to know all the details of the trading robot.