No time to trade? Well each of our levels of membership provide access to our FireFly auto trading software for MT4.
What Is FireFly
FireFly is an automated trading strategy coded into a MT4 EA. An automated trading system (sometimes referred to as “black-box trading”) is a computer trading program that automatically submits trades to a broker or to an exchange. Automated trading systems are systematic trading structures based on specific strategy parameters using algorithms to execute pre-programmed trading instructions whose variables may include timing, price, or quantity of the order, or in initiating through the program.
The Trading Logic
FireFly enters trades based on a range breakout approach. The EA uses an algorithm to establish the range and then checks to see if certain conditions are met, one being that the CCI indicator has to be above or below a certain level, the EA sets pending orders for a breakout to the long side or for a breakout to the short side; these orders are reviewed on open of every candle.
Once in a trade there are several possible exit criteria. The main criteria for exiting is a trailing stop. The initial stop is based on a fixed multiple of ATR. The trail is calculated on the value of the upper or lower Keltner channel level and Bollinger Band range. If the overall stop or trail is not activated then there is an overriding parameter of trade length whereby the trade will be exited after a fixed number of periods.
The entry and exit points have been optimised to provide the most consistent profitable results over the back test periods. They have not been optimised for the most profitable scenarios as this could result in “curve fitting”.
As you are aware each currency pair behaves differently from any other. Some pairs are more similar than others. The bottom line is that generally speaking every automated trading system needs to be optimised for the specific currency that it is going to be used on. This particular EA was designed and tested on EUR/USD and is primarily intended for use on that pair. In back testing however positive results were also achieved on GBP/USD, and USD/JPY although bay far and away the best results were achieved on EUR/USD.
In the same way that each pair behaves differently the choice of time frame also changes the dynamics of the EA. The shorter the timeframe the more erratic price action becomes with the result that false triggers can be produced The FireFly EA has be designed to be used on the 1 hour time frame, although good results were also achieved on the 15 minute time frame. Running FireFly on timeframes shorter than 15 minutes or longer than 1HR are likely to produce negative results.
CCI: An oscillator used in technical analysis to help determine when an instument has been overbought and oversold. It quantifies the relationship between the asset’s price, a moving average (MA) of the asset’s price, and normal deviations (D) from that average.
Keltner Channel: Keltner channel is a technical analysis indicator showing a central moving average line plus channel lines at a distance above and below. The centre line is a 10-day simple moving average of typical price, where typical price each day is the average of high, low and close. The lines above and below are drawn a distance from that centre line, a distance which is the simple moving average of the past 10 days’ trading ranges (i.e. range high to low on each day).
Bollinger Bands: Bollinger Bands are volatility bands placed above and below a moving average. Volatility is based on the standard deviation, which changes as volatility increases and decreases. The bands automatically widen when volatility increases and narrow when volatility decreases.
Bollinger Band Range: Measures the percentage difference between the upper band and the lower band. Band Width decreases as Bollinger Bands narrow and increases as Bollinger Bands widen. Because Bollinger Bands are based on the standard deviation, falling Band Width reflects decreasing volatility and rising Band Width reflects increasing volatility.