Dear Funyoo and friends
I read trough this article. Maybe you can concentrate and focus to have a good EA from this;
It's something I have posted in the old FAP forum, but I guess it's worth to be discussed again.
There is an EA called KAS Correlated Hedge, which is based on a very interesting idea that the pairs EUR/USD and USD/CHF are negatively correlated for most of the time. By this, just by measuring the correlation between the two pairs, you can identify a trend. See its description:
"I have tested numerous EA, commercial, non-commercial and especially my own EAs based on ALL KINDS of Trading Systems and Rules, backtested and forwardtested. The Result ? Almost all EAs fail miserably during RANGING times... That’s why I have spent a lot of time in analyzing all kind of trading systems, developed all kinds of EA based on those trading systems including my own, until I finally spend a lot of my time in studying the BEHAVIOUR of the Correlation, the Pseudo Hedge of EURUSD and USDCHF pairs, the Correlated Hedge of those 2 pairs, the Correlated Grid and the ‘Shaken’ Correlation Triangle that involves its cross-pair - EURCHF. That SIMPLE thing is finally found! The rest is history to be taught."
Although I have no clue how the EA actually works, I guess we can all benefit from the very core idea it mentions - the negative correlation of EUR/USD and USD/CHF. In other words, a true up trend in EUR/USD should be matched by a downtrend in USD/CHF, and vice versa. See the attached image and you'll know what I mean.
Please Refer attachment photo
The Failure of Most EAs
Most EAs, 95% of them, fail.
It is a fact that can never be argued. Why? Because most EAs execute trades based on indicators and indicators are lagging - all of them. I have developed more than 30 EAs that are based on indicators and all fail in RANGING time. It can be very profitable during TRENDING time because most indicators work well during that time, but most INDICATORS fail during ranging time, so do the EAs that are based on the Indicators.
The ROOT CAUSE of the EAs' Failure?
The answer relies on the ROOT CAUSE of the problem. For every problem in this world, if we can identify the root cause, and do something to the root cause, the effect will change almost instantly. We cannot run away from this Universal Cause and Effect scenario.
So, what is the ROOT CAUSE of the Failure of EAs? Simple - the Indicators!
The Solution - so how to find the Profitable EA then?
Now, the answer is 'almost' clear. One must find the EA that is developed NOT USING ANY INDICATORS. That's it. That is the SOLUTION.
So, have we solved the problem yet ? Not quite yet. How on earth would we know that the EA is not based on any INDICATORS?
Is there any CLUE?
The CLUE to find EA that is not based on any Indicators is to search for the word - Correlated Hedge EA or Correlation Triangle EA and read the small description of the EA of how the 'formula' used by the EA. This info is available even in a short description of the EA's trading principal.
These type of EA does NOT use any Indicators, so we remove the root cause of the problem.
Why Correlated Hedge or Correlation Triangle EA consistently profitable?
It uses the formula of a/b x b/c = a/c (eg. EUR/USD x USD/CHF = EUR/CHF).
By playing around with its thousand combinations of ways to trade based on this rule, this amazing correlation triangle and its obedience to the fundamental mathematics, enable the traders to gain steady and consistent profit, and by compounding the equity, the wealth created from this will be unbelievably great for the whole forex community of traders.