Strategy Features

Trend is a great friend for trader, but noise and volatility make the friend very unreliable. IndEX is a professional strategy that benefits from all four key elements of markets - trends, volatility, market noise and swings.

Volatility

The GBP/JPY and XAUUSD pairs are a highly volatile currency combination, defined by large movements in price relative to most other pairs. The IndEX EA trades the volatility of this pair based on the relation between Yen/USD and GBP/Gold. The complex interaction between the currencies are analysed and high probability trades with a minimal profit goal of +150 pips to +200 pips are taken. IndEX EA is very successful in trading these pairs on H1 time frame.

Ignoring Noise

The USD/Yen is the second most liquid currency pair, often idling along at a particular level before a rapid movement to a different price level. Trading the USD/JPY requires enormous amounts of patience. IndEX EA trades USDJPY on the daily timeframe and based on breakouts and reversals at extreme levels. The USDJPY pair provides good support to the IndEX portfolio and plays a crucial role in achieving the quarterly gain targets of the strategy.

Risk Sentiment

EUR/JPY currency pair is a safe haven trade and sees very strong movements. The peculiar nature of the EURO - Yen relationship makes it an ideal pair for IndEX strategy to make momentum and trend based trades on daily timeframe. EUR/JPY also provides good trading liquidity and spreads are low across all brokers. The relationship of EURO against safe havens currencies like CHF, Yen and USD are used to identify major trends and momentum based entries.

Price Swings

Price action based day trading strategy finds high-probability entries in the market at swing points. Index information from multiple currencies enables buying the dips in a rising market and selling the rallies in a falling market. EURO + GBP + USD price moves are traded on a moving 24 hour time frame and executed on EURUSD or GBPUSD or EURGBP depending on most reliable signal.(only one open trade of these pairs allowed at any point of time)

Live Performance Analysis

RayBOT Cumulative Pip Gains

Official Reference Accounts

INDEX EA reference account by ForexGermany.de


Broker : FXPIG
Average Spreads 0.2 pip to 0.8 pip
[Low Spreads + Commission]
Start Date : 25th February 2018

INDEX Portfolio Report

portfolio

The portfolio report generated from the strategy tests of seven traded pairs shows good potential of gains between 3000 pips to 5000 pips annually. Overall drawdown is limited to about 1370 pips (24% at recommended risk level).

The maximum losing period during a drawdown is limited to about 3 months in duration and about 24% in depth. Recovery is very quick due to positive risk reward of close 1:2 and success rate of about 46%.

Default risk level is 2.0% per trade. This is medium risk with gain potential of between 120% to 180% per year. Traders should expect normal DD of 10% to max DD of 25% as part of strategy. You can increase reduce risk level as per your requirement.

When EA gains +1500 pips, the account equity would move up by about 40%. The EA uses geometric position sizing which increases trade size with increase in equity and reduces trade size with drop in equity. So, if a loss of -1500 pips happens, the account equity drops to by 25%.

There is a difference between gaining periods and losing periods with respect to pip contribution – This is not linear but rather has a compounding effect during winning phases and discounting effect on losing phases.

Importance of Strategy tests:

While live trading on real money accounts are the most reliable form of strategy analysis, strategy tests are equally important. It is quite easy for a strategy to be successful in real trading for three months, six months or maybe even one or two years. But there is no guarantee or information about the actual drawdown the strategy may see in future or when price action goes against it. This will lead to setting risk levels which will be harmful to the account when drawdowns occur.

The strategy tests provides a clear indication of what to expect from trading the strategy over long term and across various price actions. Setting risk based on strategy tests is a good way to know what is normal drawdown and when the drawdown is considered going beyond acceptable range of the strategy. Strategy tests (when honest) can also help provide good information if the strategy can be traded even before it has generated enough live trading history - an approach which has proven very profitable for our long term members. Here you can actually see the gains in your account rather than watch the EA gain in the account you are tracking.

For making a decision to trade the strategy based on strategy tests requires good understanding about the drawdown ranges, trading style and setting the right risk for being able to trade comfortably. All this in addition to the trust you have on the vendor.

Note : MetaQuotes has built in some of these limitations to prevent vendors or developers from seeing ahead and manipulating strategy test results. Please do not use the methods suggested to over ride MT4 strategy tester unless you have utmost trust in the vendor's integrity. Phibase has been developing trading strategies since 2011 and our backtests/real trading results have always been honest and true. Phibase guarantees none of our trading strategies will use any manipulations or read-ahead techniques to produce favourable backtest results. Further, Phibase publishes real trading vs backtest results regularly to show validity of strategy tests conducted.

Trading Strategy Explained

Trades GBPJPY, EURJPY, USDJPY, EURUSD, GBPUSD, EURGBP and XAUUSD based on currency index system which calculates the relative strength of EURO, GBP, USD, CHF and YEN. Trading is based on trading the falling currency pair against a gaining pair. The EA is designed with a positive Risk:Reward of 1:2 and aims to gain between 300 pips to 600 pips per month. The system typically makes between 15 to 20 trades per month.

You can watch the trading video to see how the EA trades.

Watch strategies in action

RayBOT support/resitance trading strategy

INDEX Strategy Details

IndEX MT4 EA is a platform for trading multiple currencies from a single chart based on currency strengths rather than individual pairs price action alone. The IndEX EA is a highly scalable platform to add additional pairs for trading using various strategies while keeping the relative strengths of currencies in view.

IndEX EA created currency index for EURO, GBP, USD, YEN and Swiss Franc. The index values are derived from price feed of various pairs in real time (updated every hour at new bar open). The index values are calculated using an proprietary algorithm developed by Phibase in which index values are created for each currency by calculating its relative strength. The currency Index is comparable to various trade-weighted effective exchange rate index. Based on the progression, The currency Index is used to identify the strength or weakness of a particular currency and its flow direction.

IndEX EA V2x is currently enabled for trading seven pairs : GBPJPY, EURJPY, USDJPY, EURUSD, GBPUSD, EURGBP and XAUUSD. The commercial version of the EA which will be launched in October 2018, will have option to trade more pairs (AUDUSD, OIL, etc).

Yen provides excellent oscillations between being strong and weak. This gives rise to potential of trading it across various other pairs like EURO, GBP and USD.

The GBP/JPY pair is a highly volatile currency combination, defined by large movements in price relative to most other pairs. The IndEX EA trades the volatility of this pair based on the relation between Yen/USD and GBP. The complex interaction between the three currencies are analysed and high probability trades with a minimal profit goal of +200 pips are taken. IndEX EA is very successful in trading this pair on H1 time frame.

The USD/Yen is the second most liquid currency pair, often idling along at a particular level before a rapid movement to a different price level. Trading the USD/JPY requires enormous amounts of patience. IndEX EA trades USDJPY on the daily timeframe and based on breakouts and reversals at extreme levels. The USDJPY pair provides good support to the IndEX portfolio and plays a crucial role in achieving the quarterly gain targets of the strategy.

EUR/JPY currency pair is a safe haven trade and sees very strong movements. The peculiar nature of the EURO - Yen relationship makes it an ideal pair for IndEX strategy to make momentum and trend based trades on daily timeframe. EUR/JPY also provides good trading liquidity and spreads are low across all brokers. The relationship of EURO against safe havens currencies like CHF, Yen and USD are used to identify major trends and momentum based entries.

EURUSD, GBPUSD and EURGBP (only one open trade of these pairs allowed at any point of time). EURO + GBP Index moves will be traded on moving 24 hour time frame. Trades will be executed either on EURUSD or GBPUSD or EURGBP depending on the pair providing most reliable signal. Trading EURUSD/GBPUSD will be based on strength or weakness of USD index. If EURGBP trade will be executed if the EURO and GBP index well defined inverse index directions.

Trading Gold is based on trading USD weakness and Gold breakouts on the H1 timeframe. The success rate is about 51% with R/R of 1:1.5 - trading frequency averages about 5 trades per month. Gold has always been a risk sentiment instrument and provides good moves - INDEX EA is able to provide consistent gains using its strategy based on USD Index and its relative movement to other pairs. As part of the INDEX portfolio, trading Gold is an excellent choice since the XAUUSD pair has very weak correlation to five pairs (GBPJPY, EURJPY, USDJPY, GBPUSD and EURGBP). The pair has a stronger correlation to EURUSD, but the INDEX strategy trades EURUSD based on INDEX values of EURO and GBP and its strategy is highly uncorrelated to the strategy used to trade Gold.

Since trading is based on actual index movements and directions, much of the price action within the daily trading range of the pair is considered noise. The strategy is able to filter out most weak signals and false breakout - trades are taken only when there is solid reason provided by the inbuilt currency indices.

Traditionally strategies for automated trading on MT4 are developed based on a specific pair. The limitations of MT4 and complexity involved in analyzing multiple currencies have been limiting strategy development to multiple time frames of pair being traded in addition to various filters and indicators in an attempt to create a strong and robust strategy - This has been missing the big picture of how the currencies are positioned in relation to each other. The importance of the strength and weakness of the currency pairs being traded has not been utilized much in automated trading. There have been numerous trading advisories and trading strategies suggesting trading based on currency strengths or trading the strong against weak, etc. but there has not been any proof or backtested data available to validate the trade setups or rules.

Phibase has built an platform on which we have developed MQL programs to enable us to test out various currency relationships, correlations and relative strength behaviours.

Strategy Test Reports and Analysis

GBPJPY-ST


EURJPY-ST


USDJPY-ST


EURGBP-ST


XAUUSD


IndEX EA enables backtesting of the pairs being traded to validate the strategy and check for its robustness over longer periods. Dukascopy tickdata has been used to test all the three pairs individually and a portfolio report created to show the combined trading result. Phibase will provide instructions to override the limitation of MT4 strategy tester to access other pairs during strategy testing. The charts above summarize the tick data test reports and provides in-depth view into the trading style of the strategy,