Preview
In this post we introduce an Expert Advisor (EA) specifically designed for automated trading of the Euro versus US Dollar (EUR/USD) currency pair. What makes this EA unique is its multi-timeframe approach, utilizing a simple yet effective indicator—the moving average—as a trend filter. Trade entries, on the other hand, are based on pivot points but are only executed if price action confirms the ongoing movement. To ensure disciplined risk management, every position is safeguarded by predefined stop loss and take profit levels. The performance results visible on our YouTube channel are derived from a deliberately non-optimized system to prevent overfitting.
The development, testing and analysis of this EA have been conducted under consistent parameters:
- Starting capital: €1,000
- Fixed lot size: 0.01
- Position types: Long and Short
- Martingale or Hedging: No
- Maximum leverage: 1:100
- Maximum open lots: 1
We provide an in-depth overview of the EA’s features, alongside detailed performance metrics derived from rigorous testing. These insights offer traders a comprehensive understanding of the algorithm’s behavior in diverse scenarios, empowering them to make informed decisions about its integration into their trading strategies.
The final part of the post displays the status of the trading system, which can be modified when the system is disabled or replaced. Quarterly subscribers can download the EA executable file for free, ready for seamless integration into the MT4 platform, as long as the system status remains active.
Development and Logic Description
o validate the performance of this Expert Advisor (EA), rigorous Out-of-Sample (OOS) testing was conducted. OOS testing is a crucial method for evaluating trading strategies, as it uses data that was not part of the EA’s development process. This approach helps prevent overfitting to specific market conditions, ensuring that the EA can adapt effectively to real-world trading environments. The EA was validated over an eight-year period using historical data sourced from two different brokers. Additionally, various combinations of spreads and swaps were tested. Testing with multiple brokers—each offering distinct trading conditions—enhances the reliability of results by providing a more comprehensive simulation of real-market scenarios.
The results obtained are the outcome of:
- Spread: 10,00 points
- Swap (Long): -7,30 points
- Swap (Short): 2,00 points
The trading strategy operates with a fixed lot size of 0.01, executing trades in both directions—long and short. This balanced approach avoids the formation of parabolic equity curves, a common sign of excessive data manipulation or over-optimization. Furthermore, no hedging strategies (opening positions to counteract losses) or martingale systems (increasing position size after losses) are used, ensuring a straightforward and sustainable trading logic.
The core of this strategy revolves around a unique application of a moving average, as it is calculated on a different chart—the weekly (W) timeframe—while maintaining a simple and efficient configuration: Simple, Median, with a period of 1. In this specific setup, the moving average acts as a trend filter, ensuring that trades align with the primary market direction.
Trade entries, whether long or short, occur near pivot points, which are key price levels used by traders to identify potential support and resistance zones. Pivot points are calculated based on the previous period’s high, low, and close, and they help forecast possible price reactions.
- For a long entry, the EA opens a trade if the price is above the moving average on the weekly chart and reaches a level 176 points above Support Level 3;
- Conversely, a short position is triggered when the price is below the moving average on the weekly chart and reaches 176 points below Resistance Level 3.
This approach aims to anticipate a probable price reaction at pivot points, leveraging their historical significance in market behavior.
Each trade executed by the EA is managed with precise exit rules:
- Stop Loss: 355 points
- Take Profit: 1025 points
- Break Even: 475 points
- Trailing Stop: Adjusted when possible.
Trading System Statistics
The backtest results indicate a high level of quality, with no errors or ambiguous bars encountered during the process. One key observation is that the balance line maintains a similar upward trajectory across all tests, suggesting a consistent positive gain trend. However it is important to note that the number of trades varies significantly from broker to broker, likely due to differences in data feeds. This reinforces the importance of testing with multiple brokers to assess the EA’s adaptability across various trading conditions.
The most significant statistics of the EA can be summarized as follows:
- Sharpe Ratio: 0,11
- Profit Factor: 1,30
- Annualized profit (%): 2,55
- Maximum Drawdown: 3,54%
- Maximum Stagnation Period: 519 days
- Average Profit: 16,58 €
- Average Loss: -5,82 €
- Win/Loss Ratio: 0.30
Testing expert advisors firsthand is not only essential to verify their stability and functionality but also serves as a valuable exercise in understanding the disciplined approach and thorough methodology required to become a successful systematic trader.
The expert advisor can be downloaded directly from here: EURUSD30012025.ex4
Status: Active
Best regards,
TradingQuant
