Trailing And Pyramiding Procedures Based On The Trend Score
In one of the last post I explained the new trend score calculation algorithms.
In this post I’ll explain more in depth how the new trailing feature (available only in the “Ultimate” version of Crescendo works)
We have seen that the trend score can go from -5 (strong bearish) to +5 (strong bullish) and we’ll use it to filter entries. By default we’ll enter only if the trend score magnitude is 3 or more: so +3 or more for a long trade and -3 or more for a short trade.
So let’s say we entered GBPUSD long with a +3 score. With a fixed take profit we’ll close when the total profit of all the long orders on GBPUSD is equal or greater than the “target_profit” (in US Dollars).
If we use the trend score based trailing procedure it’ll continue to keep the trade open until the trend score goes to a lower value than the one used to enter (in our case +3). For the orders to be closed the total value of them has to be equal or greater than 0, otherwise it won’t close even if the trend score decreases.
If the trend score increases, the new value is used as a limit.
So let’s say that we entered long with a trend score +3, and then the price continue to go up and the trend score increased to +5, then as soon as the trend score comes back to a value lower than +5, all the long orders will be closed.
Naturally the same applies to short trades and for trend score entry thresholds lower than 3 (1 for example).
This can let the EA ride trends in a very particular way. Depending on the trend algorithms used this can be more or less effective.
But also permits to close “bad” entries much shortly than using the usual strategy. Why that? I told you that not only the trend score has to be lower than the entry value or the highest value reached, bu the value of the trades should be at least 0 for the orders to be closed.
Suppose that we entered long with a trend score +3. The price then lowers and so the trend. So we have a trend score of less than +3 but the profit is also below 0. As usual, if there are the conditions it’ll open additional orders, lowering the breakeven level. If the trend score continues to be below the initial +3, as soon as the price touches the breakeven all the orders will be closed, letting the EA ready to eventually go short if the new trend score is -3 or less.
Pyramiding also works based on the trend score. Pyramiding means opening additional trades if the profits are positive and the trend is strong. How does it work. Let’s say again that we entered long with a +3 trend score. As soon as the trend score increses (and the total value of orders is positive) we open another long order. So if the trend is so strong that the trend score increased to +5, we open another long order. This works particularly well if we start to enter at magnitude 1 and even better if we use a trend score algorithm that has more steps (like the average of speed and acceleration one).