Moving Average strategy & low volatility

Helsinki123 · **Joined:** Thu Jun 28, 2012 9:31 am **Posts:** 6

Dear Forum members,

I am currently working on building an Expert Advisor which execute trades based on Moving Average (line cross over) however I got a problem when the market have low volatility the EA execute trades when the market have almost none movement, what is the best way to handle this problem ? Integrate an Indicator into the strategy which measure the volatility of the market like an Average True Range ?

RJo · **Joined:** Sun Jun 19, 2011 9:38 pm **Posts:** 270

ATR is probably the most popular for actual movement. If you want to get into the nitty gritty regarding tick activity, there is a free Better Volume indicator out there that shows tick volume per bar, the "churn" type of each bar, and an MA of tick volume. Note that actual order volume is not available in retail forex, so you really have no idea whether one tick represents 1 lot or 100 lots--a major limitation.

Helsinki123 · **Joined:** Thu Jun 28, 2012 9:31 am **Posts:** 6

Dear Rjo,

thank you for your reply, I wonder what could be the right away to avoid "fault trades"
when the market have low movements ?

RJo · **Joined:** Sun Jun 19, 2011 9:38 pm **Posts:** 270

You could stay out of the market when tick volume is below average tick volume:

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Or stay out when standard deviation value is below ATR value:

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Helsinki123 · **Joined:** Thu Jun 28, 2012 9:31 am **Posts:** 6

Hi Again,
I tryed to follow your advice to stay out of the market if Volume is lower than average tick volume, now I got a problem because the EA doesn´t trade, my setup is following: If Volume Indicator is higher than user defined number than open a trade, I was wondering what option I could choose that the EA takes the average tick Volumen automatically without I have to set it by user defined number ? Or could there be another problem

Amy · **Joined:** Sun Oct 07, 2012 3:40 am **Posts:** 13

Hi Helsinki123,

To begin with, you can't totally avoid chopping your account in choppy market. So be prepared to lose some money before cathching a trend.
The use of ATR may look like that: enter a trade only if ATR > ATR[1]*1.5 (current ATR is bigger than previous ATR by 50%). This reduces some fake breakouts (while causing other problems, so you may tweak the coeficient to a bearable level).

You also treat the problem by pure MM, either lot management or Martingale, depends on your preferences.

Some notion I use is to make sure all ma's point to the same direction and the entry bar's low > faster ma and vice versa with short.

LUCK

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Moving Average strategy & low volatility