The7 trading strategy and advisor
In the 75th issue of ForTrader.org. magazine we will consider a curious trading strategy called The.7, which was discussed with interest by traders on a foreign forum. The essence of this trading algorithm is simple and will appeal to many, especially to those market participants who prefer to make deals rarely and aim for profits taken over the entire length of the trend.
Other ForTrader.org research:
- Skyplay - indicator strategy advisor
- Tricolor is a profitable scalping strategy for M1 timeframe
- A good scalping strategy on Bollinger Bands and RSI
Trading strategy settings
You can read more about The7 strategy in manual trading on our websiteHere we will discuss the main points we need to automate the process. So, for the work we will need:
Timeframe: Daily
Currency pairs: diverse
Trading time: once a day on the opening candle
Indicators: EMA (5) plotted on High and EMA (5) plotted on Low
According to the author of the strategy, the way to work on it is to maximum number of currency pairs so that a series of short trades can be overlapped by one good profitable one. In addition, the strategy makes about 10-15 trades per year on one instrument, which is obviously quite small and allows you to experiment.
It is also interesting to draw attention to the fact that we only open the terminal once a day - at the candle opening: if there is a signal - place an order, if not - go to rest.
The7 trading strategy rules
To trade, we set two moving averages with period 5 on the chart, one built on High and the other on Low. This will be our working channel. The rules are as simple as possible:
Buying deal is made when a bullish candlestick opens outside the channel and closes inside it. With the opening of a new bar, set a Buy order.
For a sale transaction a bearish candlestick should open outside the channel and close inside it, breaking the upper boundary from top to bottom.
Trading position is not openedIf the signal candle has broken both channel boundaries at once, as it may mean that the movement has already overcome its peak.
Stop Loss is set at the High or Low of the signal candlestick, adding to it the spread value.
Profit is taken when the conditions for the opposite transaction arise.
The description also recommends the use of Tralling stop. Having tested it in operation, we do not recommend it, as the closing is already earlier.
Automation of The7 trading strategy
As we can see, the rules are as formalized as possible, so it is not very difficult to write a robot. The only adjustable parameter is the period of the moving average - ma_per. It defaults to 5.
The author of the strategy The7 recommends trading on several currency pairs at once, let's test the Expert Advisor on EURUSD, GBPUSD и NZDUSD. The initial deposit we take 10 000$, test time - 24 years: from 1989 to 2013, to gain the necessary statistics. Testing is carried out at opening prices, as trades are opened at a new bar.
Unfortunately, as you can see in the pictures, strategy is unstable. Profit, of course, is achieved and high, but in peaks and immediately lost. We have also tested on other currency pairs and timeframes, optimized the strategy by moving average period, but everywhere the result is the same: the results do not justify the money and time spent.
It's obvious that The7 needs another filter to workpossibly an oscillator to help avoid losing series. We will be glad to receive your ideas regarding the development of the strategy, as the idea in general is interesting, it just needs a bit of refinement.
- The7 strategy discussion
- The7 strategy testing statistics
- The7 Expert Advisor - download
- Basic rules of The7 trading strategy