Assembling a strategy (e.g. Babypips)

Books, websites and magazines often contain detailed description of trading strategies. Converting a description into a functioning strategy which can be traded manual or (semi-)automatically on a trading platform is not always evident. Most trading platforms, including MT4, require the trader to start coding (programming). NanoTrader is different. Many trading strategies can simply be assembled without coding.

These are the advantages for traders who want to implement trading strategies described in books, magazines or websites:

• Strategies can usually be assembled without coding.
   
• Strategies can be automated without coding.
   
• Once assembled strategies can be tested using the simulation ticker.
   
• Once assembled strategies can be backtested and optimized.
   
• If coding is required an easy language us available.
   
• The platform contains more than 50 pre-fabricated trading strategies.
   
• Pre-fabricated strategies can be modified.

To illustrate that coding is rarely required in NanoTrader we convert, by way of example, a forex trading strategy described on the website Babypips (babypips.com) into a functioning and automated strategy. This is done in 4 1/2 minutes.

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1. THE BABYPIPS FOREX TRADING STRATEGY

In this Babypips article the author explains a trading strategy called ‘SMA Crossover Pullback’. The strategy is traded by one of the website’s contributors. Towards the end the author writes “... putting our coding skills to the test ...” in order to code the strategy for use in the Metatrader trading platform.

This strategy can be assembled and traded in the NanoTrader Full without coding. Users familiar with NanoTrader can do this in less than 10 minutes.

2. THE STRATEGY’S RULES

The SMA Crossover Pullback strategy described on Babypips is traded on a 1-hour chart.

The strategy uses three technical analyses indicators: a 100-period simple moving average (SMA) (blue), a 200-period SMA (magenta and the stochastic (14, 3, 3).

A buy signal occurs on the first instance when the stochastic crosses back above the 25 level after the 100 SMA (blue) crossed the 200 SMA (magenta) upwards. When the 100 SMA > 200 SMA the chart background is green.

A short sell signal occurs on the first instance when the stochastic crosses back below the 75 level after the 100 SMA (blue) crossed the 200 SMA (magenta) downwards. When the 100 SMA < 200 SMA the chart background is red.

This EUR/USD example shows two moving average crosses and the ensuing trading signals based on the stochastic. The first signal is a buy signal. The stochastic crosses back above the 25 level after a moving average cross. The second signal is a short sell signal. The stochastic dips back below the 75 level after a moving average cross.

The Babypips SMA Crossover Pullback strategy uses a profit target and a stop loss. The profit target is 300 pips above the entry price. The stop loss is 150 pips below the entry price. The result is return/risk ratio of 2:1. If the market price moves 150 pips in the trader’s favour, the trader can move the stop to his entry price.

3. WHAT THE TRADER NEEDS

In order to convert the Babypips strategy description into a functioning strategy the  following components are needed:

1. A 1-hour chart of the forex pair.
    
2. A stochastic with the levels 25 and 75. The stochastic triggers the signals.
    
3. A crossing moving average. The crossing moving average acts as a filter. If 100 SMA > 200 SMA a buy signal is acceptable. If 100 SMA < 200 SMA a short sell signal is acceptable.
    
4. An instruction which automatically opens the position when the criteria are met.
    
5. An instruction which automatically places the bracket orders (target 300 pips and stop loss 150 pips) after the position has been opened.
    
6. An instruction which moves to stop loss order to the entry price, if the market price moved 150 pips in the trader’s favour.

Contrary to Metatrader all these elements can be assembled in the NanoTrader Full without programming.

4. ASSEMBLING AND TRADING THE STRATEGY WITHOUT CODING

The video below shows you how to implement the strategy without coding.

In the video you see the BETrail stop. The BEtrail stop does automatically what Babypips requires: move the stop order to the entry price if the market moves a specified number of pips in the trader’s favour. This example shows the BETrail stop (red) at work. No coding required!

This video shows the assembly and trading of the Babypips strategy. It takes only 4 ½ minutes and no coding to assemble the trading strategy.

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