Most of the strategies are based on indicators of technical analysis and only a few tactics use graphical analysis and pattern building. In the proposed strategy, an attempt was made to combine several types of analytical tools, taking their strengths and optimizing them into one combined pattern indicator I_XO_A_H. Despite the fact that he is the only one in the strategy, his work is based on the “tic-tac-toe” chart and candlestick analysis.
Tic-tac-toe graphics: a strategy for graphical analysis
The Tic-tac-toe chart is a type of asset quotation chart on which the change in the price of an asset is reflected in the form of vertical columns consisting of crosses and zeros. A cross (X) means an increase in the price of an asset, a zero (0) means its decrease. A cross or a toe appears through each fixed number of points.
At first glance, the graph seems inconvenient and less practical in comparison with the linear or candlestick. But in professional circles he is valued for the following benefits:
- well shows resistance and support levels that are not visible on line graphs due to price noise and local fluctuations;
- helps to detect trend lines;
- ignores insignificant movement of quotes and helps focus attention on the long-term trend.
The I_XO_A_H indicator converts historical historical data for the system used in the Tic-tac-toe graphics. In other words, I_XO_A_H is an attempt to display the Tic-tac-toe chart as a histogram. That is, the schedule itself is not necessary to use, its principle has already been laid down in the indicator. It does not have an indication of timing: if the price grows a fixed distance, X is drawn. The system’s parameters have a so-called reversal factor that determines how much the price must turn in order for a new column to appear.
The strategy, built on the basis of I_XO_A_H, was tested on the EUR / USD currency pair in a 30-minute interval. The indicator setting is the only one: BoxSize = 15, the value of the reverse is equal to “2”, it is inscribed in the code and cannot be changed. There is no indicator for MT4, but it’s enough to find its template on the Internet and add it to the platform in 10 minutes.
Conditions for opening a long position:
- the indicator works best in the time interval 10.00-20.00 EST;
- indicator drew 5 or more red candles in a row, each subsequent candle must be greater than the previous one;
- I_XO_A_H draws a green candle.
At the next candle you can open a position. The principle of operation of the indicator schematically resembles the formation of a reversal pattern, the only difference is in its internal formula. Opening a sell position has mirror conditions. Stop loss is placed at a distance of no more than 15 points, at the nearest local maximum or minimum. The target profit horizon is 10 points, after reaching which 50% is closed, the rest is fixed by trailing at a distance of 10 points.
Recommendations for strategy traders:
- If in the series of consecutive indicator candles there are identical in length, it is not recommended to open a position. The following condition must be strictly observed: each next candle is greater than the previous one;
- trading is not recommended at the time of publication of important news;
- You can increase the timeframe to H1 (no more), while the stop loss can also be slightly increased, but it should remain relatively short.
I_XO_A_H is an interesting example of using Tic-tac-toe charts in indicators. Install I_XO_A_H, test your strategy and write about the results in the comments!