Multi-Divergence EA: Harnessing Confluence and Filters
If you’re looking to up your trading game, the Multi-Divergence EA is your go-to tool for automating a complex trading strategy centered around market divergence. This nifty Expert Advisor (EA) is built to pinpoint high-probability reversal points by identifying a confluence of signals from three of the most popular oscillators: the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and the Stochastic Oscillator.
How the Strategy Works
The logic behind this EA is a multi-layered confirmation process that ensures you get high-quality trade signals while filtering out the market noise.
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Divergence Detection: The EA continuously scans the price action along with the three indicators to spot divergences.
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Bullish Divergence (Potential Buy Signal): This occurs when the price makes a new lower low, but the indicator fails to do so, instead making a higher low. This suggests that bearish momentum is losing steam, indicating a possible bullish reversal.
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Bearish Divergence (Potential Sell Signal): This happens when the price makes a new higher high, but the indicator makes a lower high. This points to fading bullish momentum, signaling a potential bearish reversal.
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The Power of Confluence: What sets this EA apart is its reliance on multiple indicators. It waits for a user-defined number of indicators (MinConfirmations) to simultaneously show divergence before triggering a trade. For instance, a trade will only kick off if at least 2 out of the 3 indicators confirm the same divergence, significantly boosting the reliability of the signal.
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Advanced Signal Filtering (Optional): To enhance accuracy, you can enable two additional filters:
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Trend Filter: This uses a 50-period EMA to gauge the overall market trend. If activated, the EA will only initiate buy trades when the price is above the EMA and sell trades when it’s below, helping you avoid trading against the prevailing market momentum.
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Volume Filter: A trade signal is considered valid only if the volume of the signal bar is significantly higher than the average volume of previous bars. This confirms strong market interest and conviction behind the potential reversal.
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Input Parameters Explained
All external variables are fully customizable, allowing you to tailor the strategy to fit your trading style.
=== Risk Management ===
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LotSize: Sets the fixed trading volume when UseMoneyManagement is set to false.
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StopLoss: The stop loss in points.
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TakeProfit: The take profit in points.
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MaxSpread: The maximum allowable spread in points for opening a new position.
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UseMoneyManagement: If set to true, the EA automatically calculates the lot size based on RiskPercent.
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RiskPercent: The percentage of your account equity you’re willing to risk per trade.
=== Divergence Settings ===
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RSI_Period, MACD_Fast, MACD_Slow, MACD_Signal, Stoch_K, Stoch_D, Stoch_Slowing: These are the standard input parameters for the RSI, MACD, and Stochastic indicators.
=== Divergence Detection ===
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BarsToCheck: The number of recent bars the EA will scan for divergence patterns.
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MinBarsDistance: The minimum number of bars on each side of a peak/trough to validate it, helping to ignore minor price fluctuations.
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MinDivergenceStrength: A filter for the minimum required strength of the divergence signal (0-1).
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MinConfirmations: A key parameter. Sets the minimum number of indicators (from 1 to 3) that must show divergence for a trade to be opened.
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UseVolumeFilter: Set to true to enable the volume confirmation filter.
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UseTrendFilter: Set to true to enable the EMA-based trend filter.
=== Trading Settings ===
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AllowBuy/AllowSell: Enable or disable long or short trades.
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MaxTrades: The maximum number of concurrent trades allowed.
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MagicNumber: A unique identifier for the EA's trades, helping to avoid interference with other trading bots.
Recommended Usage
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Symbols: This strategy is versatile and can be applied to any major currency pairs (e.g., EURUSD, GBPUSD) as well as other liquid instruments.
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Timeframe: Divergence signals tend to be more reliable on higher timeframes. It’s advisable to use this EA on H1, H4, or D1 charts to filter out market noise and capture substantial market movements.
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