✔ Your resource for automated trading strategy development
✔ Empowering retail traders to create efficient income streams
Why Automate Your Trading?
Efficiency & Diversification
Simultaneously trade multiple strategies, markets and timeframes, any time of the day.
Determine Strategy Viability
Backtest your strategy to quickly determine its long-term profitability and risk profile.
Keep emotions at bay with the automatic execution of your trading rules.
Strategy Development Roadmap
‘The best trading strategy is the one you create yourself’
Part 1: Getting Started
Basic Strategy Development Concepts
- What is an algorithm?
- Strategy robustness
- Optimization and parameter stability
- Backtest precision
Trading Preferences and Goals
- Trend following or countertrend?
- Trading timeframe
- Trading goals
- Trading platform
- Algorithm programming
- Price data
- Strategy generation & analysis
- Virtual private server
Part 2: Market Research
Selecting an Appropriate Market
Is your trading idea aligned with the market?
Find out by quantifying your market’s historical volatility and trending tendency!
Part 3a: Strategy Development Using MT4
Selecting an Entry
The entry is the most important element of your strategy.
Let’s backtest and optimize three common technical indicators – Bollinger Bands, Donchian Channels and the Commodity Channel Index. Can these do the job?
Selecting an Exit
Good exits preserve capital and maximize profit retention.
Let’s compare the performance of stop losses, trailing stops, profit targets and time stops!
Selecting an Entry Filter
Filters improve your win rate by avoiding unfavourable market conditions.
Will time, trend and volatility filters improve our trading solution?
Part 3b: Strategy Development Using StrategyQuant
Automatic Strategy Generation
Why not harness the power of genetic algorithms to produce profitable strategies?
Check out this step-by-step guide on how to use StrategyQuant’s genetic builder!
Out-of-sample testing is a great way to verify your strategy’s robustness.
Leverage StrategyQuant’s efficient backtest engine to backtest your strategy over multiple markets and timeframes!
Walk-foward optimization is another stringent robustness test, and allows your strategy to adapt to changing market conditions through periodic reoptimizations.
This detailed guide shows you how to use StrategyQuant’s walk-forward optimizer.
Monte Carlo Simulation
Monte Carlo simulation uses random sampling to determine the probabilities of different backtest outcomes.
This guide shows you how StrategyQuant’s Monte Carlo simulator can provide a more reliable estimate of your strategy’s risk.
Part 4: Strategy Verification
Backtesting with tick data is the most precise, but is the extra development time worth it?
Find out what types of strategies require a tick backtest, and where to get quality tick data!
Sometimes called incubation or demo trading, forward testing provides a good estimate of your strategy’s live performance.
Find out what types of strategies require forward testing, and three simple methods to evalaute your test results!
Part 5: Portfolio Composition
Building a Diversified Portfolio
Diversified portfolio trading could be the closest thing to a holy grail.
Here I explain why portfolio trading is beneficial, and address three crucial considerations in portfolio composition: strategy performance, correlations and position sizing.
Part 6: Live Trading
Considerations Before Going Live
Are you finally ready to put money on the line?
Find out how to monitor your strategy performance in real time, and how to develop contiengency plans should it underperform.
Forex Weekend Gaps: Can You Exploit Them?
Have you noticed that forex weekend gaps usually reverse within 3 days? Here I’ll program a mean reversion strategy to exploit gaps over the last 18 years!
Dynamic Position Sizing: Is It Time to Go Big?
Should you increase your lot sizes for higher probability trades? Let’s code a dynamic position sizing scheme to capture more outsized wins!
Pivot Points: A Reliable Support & Resistance Indicator
Pivot points are the perfect tool if you trade using support & resistance. Here’s how to develop an automated pivot points forex strategy!
Money Flow Index: An Improved RSI?
The Money Flow Index is sometimes called the volume-weighted RSI. Can it outperform the RSI in this trend following strategy?
Automated Bollinger Bands Squeeze Forex Strategy
StrategyQuant’s BBWR indicator is the perfect tool to detect a Bollinger Bands squeeze. Here I explain how it’s calculated, and use it to program a breakout strategy for the AUDJPY!
Automated Schaff Trend Cycle Forex Strategy
The Schaff Trend Cycle is a unique combination of the MACD and Stochastic indicators. Here’s how you can use it to improve your trend following results!
Should You Use the Kelly Criterion for Forex Trading?
The Kelly criterion is a famous mathematical formula that attempts to maximize your long-term capital growth. In this post, I’ll apply it to a EURUSD breakout strategy and explain some of its potential shortcomings when applied to forex trading.
Forex Intermarket Correlations: How Do You Exploit Them?
Knowledge of intermarket correlations can improve your forex trading win rate. Here I explain three important types of correlations, and how you can use them to benefit your trading.
Can a Trading Pause Improve Your Trend Following Results?
A temporary trading pause can improve your win rate if you’re trend following a volatile market. Here I’ll program a trading pause into a simple breakout strategy, and test its effectiveness on the Widow Maker – the GBPJPY.
Can Partial Profit Taking Benefit Trend Followers?
Partial profit taking is a dilemma often faced by long-term trend followers. Could this benefit your overall strategy performance?
Ride Breakouts With This Support & Resistance Indicator!
StrategyQuant offers a support & resistance ranking indicator to help detect upcoming breakouts. Use it to program an automated USDJPY strategy!
Automated MACD Divergence Forex Trading Strategy
The MACD is a simple and effective momentum indicator. Here’s how you can save screen time by programming a MACD divergence strategy for the GBPJPY!
Catch Breakouts With an Inside Bar Trend Strategy!
Inside bars can be a valuable predictor of trend continuation. Here’s how you can program an inside bar, and use it to improve your trend following strategy!
Laguerre RSI Trend Following Strategy
The Laguerre RSI attempts to improve the responsiveness of the regular RSI, whilst keeping whipsaw trades to a minimum. Let’s see how well it detects short-term pullbacks for a trend following strategy!
Bollinger Bands Free Bar Trading Strategy
Bollinger Bands are great at predicting upcoming price reversals. Here’s how you can use its ‘free bars’ to build a reliable Asian scalper!
How to Use the Supertrend Indicator
Despite its cool name, the Supertrend indicator often seems to slip under the radar. Here I explain how it’s calculated, and combine it with moving averages to produce a simple trend following strategy.
5 Easy Trailing Stops to Boost Your Trend Following Results
Trailing stops are a popular feature in trend following strategies. They provide downside protection and allow you to ride the big trends. Try out these simple yet effective trailing stops for your next trend strategy!
Ichimoku Trend Following Strategy
Like candlesticks, the Ichimoku indicator is a fine Japanese creation. Here I’ll explain how the Ichimoku is plotted, and use it to build a trend following strategy for the USDJPY.
Forex Trading With Volume – Does It Work?
Volume is seldom discussed in forex trading. But as a stock trader would tell you, volume provides insights into the underlying market sentiment. Here I’ll demonstrate the use of two simple volume filters to improve entry reliability.
What Is the Kaufman Adaptive Moving Average?
The Kaufman Adaptive Moving Average is a unique indicator that automatically adapts to the market’s noise. Here I explain its inner workings and show you how to build a trend following strategy around it.
Awesome Oscillator Forex Trend Strategy
The Awesome Oscillator is one of Bill Williams’ fine creations. It is a simple yet effective momentum indicator that can be a valuable addition to your strategy. Here we’ll use it together with a moving average to fine-tune our trend following entries.
Dual CCI Indicator Forex Trend Strategy
The Commodity Channel Index (CCI) is an underrated momentum indicator that is often overshadowed by the RSI and MACD. I’ll show you how to build a simple trend following strategy using a pair of CCI indicators!
What is Fixed Ratio Money Management?
Have you heard of fixed ratio money management? How does it compare to the popular fixed fractional approach? Here I’ll explain how fixed ratio works, and see how it stacks up against fixed fractional money management.
What Is the Kaufman Efficiency Ratio?
Avoiding false breakouts is a common goal among trend traders. The Kaufman Efficiency Ratio provides a simple method of quantifying a market’s noise, helping traders focus on the smoothest trends. Let’s add the efficiency ratio to a simple trend following strategy and see whether its performance improves.
What Is the QQE Indicator?
The QQE is a mysterious indicator that sometimes pops up in trading forums. Does it deserve a place alongside the more traditional momentum indicators like the RSI and CCI? Let’s add it to a trend following strategy to find out!
Do Bollinger Bands + Candlestick Patterns Work?
Bollinger Bands are great at detecting overbought and oversold conditions. Let’s use them to develop a countertrend strategy, and then refine our entries using limit entries and candlestick patterns.
How Good Are The Bollinger Bands’ Trailing Stops?
Trailing stop losses are a popular feature in many trend following systems. Bollinger Bands, the ever-popular technical indicator among retail traders, actually contain two inbuilt trailing stops. Are these any good? Let’s find out!
Bollinger Bands vs. Keltner Channels
Bollinger Bands are ubiquitous in the trading world, but there’s less discussion about their lesser-known cousin, the Keltner Channels. Do these perform as well as the Bollinger Bands? Let’s compare them over a broad range of input parameters.
Trade Slippage: How Can You Simulate and Minimize It?
Are you a victim of excessive trade slippage? Here’s how you can minimize slippage, and more realistically simulate it in your backtests!
Edge Ratio: A Unique Way to Quantify Entry Profitability
Selecting a profitable entry is a critical step in strategy development. Here I’ll demonstrate how to use the Edge Ratio to maximize your profit potential.
Do You Know Your System Quality Number?
The System Quality Number measures the profitability & consistency of your trading system. Here’s how to calculate your SQN and use it to improve your trading!
Using Maximum Adverse Excursion for Stop Loss Placement
A catastrophic stop loss is a vital risk management tool for many traders. Here I’ll show you how to optimize your stop loss distance using maximum adverse excursion.
Multiple Timeframe Backtesting – A Quick Robustness Test
Multiple timeframe backtesting can be a valuable addition to your strategy development workflow. Here I explain why you should do it, and how to conveniently do it in MT4 and StrategyQuant.
How to Get a Realistic Backtest Spread
Your choice of backtest spread can certainly make or break a strategy. This post will show you how to study the intraday spread variations of your market, and suggest several ways to avoid paying ridiculous spreads.
What’s Your Risk of Ruin? (Use this FREE Spreadsheet!)
Risk of ruin is a useful metric to help develop trading strategies that suit your risk appetite. This post explains how to calculate your risk of ruin, and how to use it to improve your trading!
Do You Know Your Strategy’s Optimization Profile?
Your strategy’s optimization profile often reveals its robustness, helping you select strategies that will remain profitable in live trading. Here I explain why an optimization profile is important, and how you can easily obtain one using StrategyQuant’s optimizer.
Which MT4 Backtest Report Metrics Should You Use?
Understanding your backtest report is an essential part of being a successful strategy developer. Here I explain what the numbers mean, and how you can make use of each metric during strategy development.
Out-of-sample Testing Using Monte Carlo Simulations
Traders often use Monte Carlo simulations to estimate worst-case drawdowns, but did you know they can be used for out-of-sample testing too? This post demonstrates the use of StrategyQuant’s Monte Carlo simulator to randomize historical prices and strategy parameters, helping you select robust strategies for live trading.
How Many Trades Should Your Backtest Have?
We all want a large sample of trades in our backtests, but practical limitations such as data availability often get in the way. Here I’ll explain why 30 trades is insufficient, and how you can use standard error to quantify the uncertainty arising from a small sample size.
Which Forex Markets Are the Best for Trend Following?
They say the trend is your friend, but how do you find your friends in the forex jungle? This post shows you how to use the ADX indicator to identify forex markets and timeframes that trend well.
Build a Diversified Portfolio With QuantAnalyzer
The ability to efficiently trade a diversified portfolio of strategies is one of the biggest advantages of algorithmic trading. Here we will use QuantAnalyzer’s Portfolio Master to build a portfolio consisting of high performing, uncorrelated strategies.
Strategy Optimization Using MT4
How do you improve your trading strategy in MT4? This post will show you how to optimize the entry and exit parameters for a moving average crossover strategy. Finally, an intraday time filter will be added to help avoid false breakouts.
Debugging & Backtesting Using MT4
With a fresh algorithm at your fingertips, how do you verify that it has been programmed correctly? This guide will show you how to use Metatrader 4’s visual backtester to debug and backtest your strategy.
Create Your Trading Algorithm in 15 Minutes (FREE)
Converting your trading idea into an algorithm is the first step towards reaping the benefits of automated trading. This guide will cover the creation of a simple moving average crossover algorithm, without any actual programming.
What Is Drawdown in Trading?
Are you getting a comprehensive assessment of your strategy’s downside? This post will discuss several methods to measure drawdowns, helping you build and select strategies that better suit your risk appetite.
How to Select the Best Trading Strategy Entry
With an abundance of technical indicators available, selecting your strategy’s entry conditions can be overwhelming. This post will illustrate a method to graphically compare the profitability of different entries.
5 Forex Day Trading Challenges & How to Overcome Them
Forex day trading seems to have a particular appeal to new traders. Here I highlight five hidden challenges of day trading, and offer some suggestions on how to overcome them.
How to Find a Real Trading Guru
Every day I come across a trading guru offering educational content on the internet. Many of them speak of huge returns with minimal effort. Should these be trusted? Here’s some tips on how to separate the wheat from the chaff.
How to Enjoy Stress-Free Trading
Trading is a great way to make some additional income, but not if you’re constantly pulling your hair out. Here I offer 7 tips to help make your trading profitable and stress-free.
How to Select the Best Forex VPS
A virtual private server (VPS) is a virtual computer that you can rent and access remotely. It provides a reliable platform on which to execute your forex strategies. This post will help you decide whether you need a VPS, and show you how to select an optimal VPS.