Reversal trend strategy audcad forex

The Reversal Trend Strategy is a trading system that utilizes a combination of technical indicators and trend analysis to generate buy and sell signals in the forex market. It operates on three timeframes (H4, H1, M30) for the AUDCAD currency pair.

1. Technical Indicators Used in the Strategy

1. RSI (Relative Strength Index)
2. MFI (Money Flow Index)
3. SMA (Simple Moving Average)

2. Trend and Signal Identification

• The strategy recognizes trends by comparing closing prices between the current candle and a candle from 4 periods ago:
  • Uptrend - current price is higher than the price from 4 periods ago
  • Downtrend - current price is lower than the price from 4 periods ago
• The strategy counts consecutive candles in a trend. When the trend reaches a specific level, the strategy looks for trading signals in the opposite direction.

1. Buy signals (BUY) are generated during a downtrend when:
   • The downtrend has reached one of three required levels
   • RSI is below a specified buy threshold (different for each signal)
   • MFI is below a specified buy threshold (different for each signal)
   • The difference between RSI and SMA is within a specified range
   • The difference between MFI and SMA is within a specified range
2. Sell signals (SELL) are generated during an uptrend when:
   • The uptrend has reached one of three required levels
   • RSI is above a specified sell threshold (different for each signal)
   • MFI is above a specified sell threshold (different for each signal)
   • The difference between RSI and SMA is within a specified range
   • The difference between MFI and SMA is within a specified range

3. Risk Management

1. Stop Loss (SL) - each order has a dynamic SL in the range of 3-5% for positions
2. Take Profit (TP) - each order has a dynamic TP in the range of 1-3% for positions
3. Position Size - calculated based on the percentage of capital and available leverage
4. Maximum Number of Positions - the system limits to 5 simultaneous positions, allowing for frequency adjustment of position entry

4. Trading Suspension Conditions

• Trading is suspended in the following cases:

1. Trading Hours:
   • Outside the hours of 21:50-02:50 CET (the strategy does not trade during low liquidity periods)
   • During holidays (December 24-26, December 31, January 1-2, July 4)
2. Market Conditions:
   • When the spread exceeds a specified maximum level
   • Minimum time between transactions (MIN_TRADE_INTERVAL = 300 seconds)

5. Additional Functions and Strategy Features

1. Multiple Entries - the strategy can add to positions when the price moves by a specified percentage from the first entry
2. Parameters for Different Timeframes - each signal has dedicated parameters for three timeframes (H4, H1, M30)
3. Currency Conversion - automatic currency conversion for proper risk management

6. Key Parameters Affecting Trading Decisions

1. RSI and MFI Thresholds - determine when indicators show overbought/oversold levels
2. Maximum Differences Between RSI/MFI and SMA - determine if the trend has adequate strength
3. Take Profit and Stop Loss Percentage - affect the risk-to-reward ratio
4. Trend Tracking Parameter - counting consecutive candles in a trend to identify reversal points
5. Maximum Spread - control of transaction costs
6. Capital Risk Percentage - determines position size

7. Trading Frequency

It is important to note that orders are not executed daily as the strategy requires multiple specific conditions to be met simultaneously. For the AUDCAD currency pair, the strategy generates an average of 9 main entry signals per month. This selective approach helps ensure that only high-probability trading opportunities are taken, rather than forcing trades in suboptimal conditions.

8. Additional indicator

The strategy can be visually improved with an indicator that is calculated in the EA. Indicator is not required, but:

https://www.mql5.com/en/market/product/134668?source=Site+Profile+Seller

IMPORTANT WARNING

Before purchasing this strategy, it is crucial to verify that it works with your specific broker. Different brokers have varying spreads, execution delays, and volume restrictions that can significantly impact the performance of this strategy.

Conducting thorough backtesting in the MetaTrader platform using your broker's specific conditions is MANDATORY before purchase. The strategy's performance in historical testing may differ substantially from real-world results due to these broker-specific factors.

Never invest in a trading strategy without first confirming its viability under your actual trading conditions.

In summary, this is a sophisticated trend-following strategy that attempts to capture turning points after strong trends, using a combination of technical indicators and price analysis. The system has built-in risk management mechanisms and can operate on multiple timeframes.