Build A Moving Average Strategy
In this document we will show you how to build a strategy using a simple moving average of 14 and 28 candles.
1. After logging into your account, click the ‘Build a strategy’ button in the top right-hand corner.
2. Let us begin by creating a new strategy by clicking ‘Build a New Strategy’
3. From there give your strategy a name, add the symbol set you want to trade and the candle duration. (Durations of 1, 5, 15, 30 minutes, 1 hour, 4 hours, 1 day, 1 week, 1 month)
4. When you are ready to start defining your strategy click ‘Create’ at the bottom of the screen, this will take you to the strategy overview page.
5. Begin defining your strategy by selection ‘New Condition’ at the bottom of the screen. Our strategy builder allows you to build condition met statements.
6. Once on the ‘Algorithm Creator’ page you will see the first part of your ‘statement’ will say ‘when’. Begin your statement by selecting ‘Indicator’, from there select ‘Moving Average’.
Other indicators available:
7. You will then be asked to enter your ‘Period’ (this will be the number of candles you want to take an average over) and the ‘Type’ of moving average you want (either SMA – simple moving average or EMA – exponential moving average). For this example, we need to have a longer-term and a shorter-term moving average.
8. We will then need to do a ‘Comparison’, for this example, we will have our shorter-term moving average ‘Crosses From Above To Below’ our longer-term moving average.Other options include:
- Less than
- More Than
- More than or equal to
- Less than or equal to
- Crosses from above to below
- Crosses from below to above
- Increases by
- Decreases by
9. From here you will need to select ‘Indicator’ and do another moving average with a longer period than 14.
10. Finally set your ‘Action’, for this example, we will do a ‘Sell’.’Buy’ being the other option.
11. Once in ‘Manage Money’ the first line will be ‘Trade Amount’ which is what we use to set the size of each contract that will be booked when the condition of our statement line is met. In this example we want to book 1 CFD lot, which is equal to 100,000 notional (0.01 CFD lots is the minimum amount which equates to 1000 notional)
12. The next line is ‘Position Stop Loss’ this is the amount in pips that we are willing to lose on each trade. In this example we will use 20pips as our stop loss.
13. The next line ‘Strategy Stop Loss’ is what we use to set out how many times we are willing for the trade to make a loss. So, for example if we want this strategy to lose a maximum of 10 times, we will set out strategy stop loss at 10 x 20 = 200pips. If we set the stop loss at 20 pips, this means the strategy will only run once with 1 loss.
14. After setting these we then set our ‘Position Take Profit’. As on the stop loss this outlines how much we want to make on each trade. For this example, we will use 40pips. The ‘Strategy Take Profit’ will set out how many times we want our strategy to make a profit. In this example we will also use 10 times, so 10 x 40 = 400pips. If we set the ‘Take Profit’ at 40 pips, this means the strategy will only run once with 1 profit.
15. At the bottom of the manage money screen we have a ‘Trailing Stop’ which will allow you to set a trailing stop loss which means that every time the market moves up by a number of pips you specify, it will set your new stop loss at this level. For this example, we are using 10pips which means that once the market moves 10pips up our stop loss will also move up by 10pips, also guaranteeing that we breakeven as our 10 pips stop loss has now covered our entry point. After setting all of these click save at the bottom of the screen. Each of these will also give you an overall profit and loss on the left-hand side of the screen.
16. After completing our money management, we will be taken back to the strategy overview page and your ‘Algorithm’ is ready to start using.
17. Before taking to the live markets we allow you to back test your strategy up to 10 years using ‘Back Test’ or you can ‘Paper Test’ which will allow you to trade in live market conditions risk free.
18. If you are ready for your strategy to take on the market, click ‘Live Trade’, you will
19. It also gives you a graphical representation of where you made and lost money across the period, and the historical individual trades.
20. Once you are happy and confident about results, set the strategy live. The status will read “Your strategy is waiting for conditions to be met”.