Expert ZZ LW A

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Installation Instructions Testing

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This publication aims to showcase the profitability potential of the ZigzagLW addition indicator, a "trend indicator" in brief. For a comprehensive understanding of the indicator algorithm, refer to the provided source.

An expert advisor from the specified source will be utilized to create an automated system model for trading, based on the given indicator. The EA body remains intact, with unnecessary lines commented out and required code blocks added. The EA name has been modified.

How it Works:

The EA initiates buy and sell actions in response to relevant signals, but it is not a reversal EA. All orders are closed by stop loss and take profit, ensuring the number of open orders matches the number of signals.

Evaluation Criteria:

To assess the automated system's effectiveness, we establish the following criteria:

- The initial model should exhibit a stable and upward-trending balance curve over an extended testing period, indicating its potential as a foundation for a robust system.

- Optimization should involve selecting the most promising parameter sets to avoid manual evaluation of various balance curves.

Trading Secrets:

- Cut your losses.

- Run your profits.

- Trade selectivity.

- Trade with the trend.

In this context:

- Stop loss should be minimal.

- Take profit should be substantial.

- Trade signals should be followed, buying on buy signals and selling on sell signals.

While the indicator partially addresses items 3 and 4, it doesn't fully cover them due to the early alert and mandatory formation at the trend's beginning. Long-term trend indicators often suffer from significant lag, but their signals can still be valuable for position scaling.

Optimization Parameters:

The first screenshot illustrates the optimization of two parameters: stoploss and takeprofit.

The level parameter represents the utilized level of the ZigzagLW addition indicator, while the mode parameter indicates the EA's operation mode. In original_mode, the EA functions as the original MT4/MT5 expert advisor; in addition_test_mode, it utilizes signals from the ZigzagLW addition indicator; and in ma_test_mode, it relies on MA intersection signals.

Optimization was conducted in the MetaTrader 5 terminal using data from the access.metatrader5.com:443 server, as suggested in the referenced article. The data interval spanned from 1.01.2020 to 31.12.2022, and optimization was performed in the control points mode on the M15 timeframe, as depicted in the second screenshot.

Optimization Results:

The optimization result is provided in the file complete period.xml. The highest result exhibits a prolonged unsuccessful period at the end of testing, highlighted in orange.

A subsequent optimization was performed on data from 1.01.2022 to 31.12.2022, with the outcome available in partial period.xml.

Evaluation and Comparison:

Selecting the best result, we assess its performance over the entire interval from 1.01.2020 to 31.12.2022. For comparison, the third EA mode, ma_test_mode, was included, utilizing moving average crossing as a signal to achieve a similar number of deals for result comparison.

General Observations:

The results may be encouraging for some and underwhelming for others. We highlight the following:

- The model aligns with experienced traders' recommendations for cutting losses and running profits, evident in the balance curve where the equity line surpasses the balance line.

- The equity curve demonstrated a consistent upward trend over an extended period with minimal drawdowns.

- The model is purely mechanical with a limited number of optimization parameters.

- The optimal parameters (stoploss=3600, takeprofit=6700, level=long_term1) represent a compromise. Testing parameters closer to traders' recommendations, such as stoploss=500 and takeprofit=8000, could yield more interesting insights.

- Comparing the same parameters for signals on moving average crossing reveals that the variant with stoploss = 500, takeprofit = 8000 aligns closely with experienced traders' strategies but presents psychological challenges due to balance curve plateaus and extended losing trade sequences.

- Trading recommendations from literature prove effective. Even with random market entries, these parameters could potentially generate profits.

- Automated systems can significantly differ in performance despite similar order-placing parameters and trade counts in the selected interval.

- The forex market's extreme volatility may have impacted results, suggesting potential improvements on less volatile markets.

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• This tool is provided for educational and testing purposes only.
• Past performance does not guarantee future results.
• Trading involves substantial risk of loss. Use on a demo account first.
• Results may vary depending on market conditions, broker, and settings.
• We recommend thorough backtesting and forward testing before using with real funds.