Price As An Indicator
In this document we will show you how to build a simple strategy using PRICE as an indicator.
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.
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’, as we have all heard the saying buy low and sell high, we will use ‘Price’ for this example.
7. Begin your statement by selecting Indicator, from there select ‘Price’. This will then offer you two options. As we are doing a comparison, high vs low, select ‘Comparison’.
Other indicators available:
8. On the next page you will be given a selection of conditions that your trade could meet. (Let us start by building a ‘buy’ statement) So select ‘Less Then Or Equal To’ this will then be added to your statement line. We now want to give it a number to be less than or equal to, so select ‘Number’, depending on the currency pair you are working with you will then need to enter what you consider to be the bottom of the market (your buy point). 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. Your next step will then be to select an ‘Action’ in this case we will be looking to select Buy. Once you have selected the buy action, review your statement line to check it is correct and click ‘Confirm’ if you are happy. The alternative option would be to ‘Sell’. This will then complete your statement line and we can now move onto setting our money management which outlines the ‘Risk’ you are willing to take on your trade.
10. 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)
11. 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.
12. 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.
13. After setting these we then set our Position Take Profit. As on the stop loss this out-lines 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.
14. 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.
15. After completing our money management, we will be taken back to the strategy over-view page and your Algorithm is ready to start using.
16. Before taking to the live markets we allow you to back test your strategy up to 10 years using Back Test or specific dates if required, plus you can ‘Paper Test’ which will allow you to trade in live market conditions risk free.
Once the back test has run, it can give you 3 results. The overall result of the test, the equity graph showing you where and when the strategy was making money across the market conditions, the historical value on each individual trade by running the strategy and taking profit or stop loss kicking in.
You also have the ability to test the strategy on current market conditions by running a paper test.
17. If you are ready for your strategy to take on the market, click ‘Live Trade’, you will then be taken to a new window which will have a ‘Status’ as ‘Running, waiting for the conditions’ until your condition is met.