Arbitrage EA is a software program developed to automate arbitrage trading.  To understand more about Arbitrage EA we first need to know exactly what Arbitrage trading is Arbitrage trading looks at a currency and will compare its price across the various markets or indeed brokers.
The aim of Arbitrage trading and indeed Arbitrage EA is to exploit the difference in these prices. The main premise of the Arbitrage EA will be to purchase the currency at the cheaper price with one broker or from one market. At the same time, the same currency is sold at the more expensive price from another market or broker. Once the prices settle back to normal, the deal is closed out. This then yields a profit that is ‘risk free’ Arbitrage using Arbitrage EA is feasible on the foreign exchange market due to the fact that no specific central exchange exists.
To explain further, the foreign exchange market is a global network of many thousands of dealers who will all be offering different prices for currencies.
This means that it is normal practice for there to be a large price differential across all of the brokers around the world on a day by day basis. Similarly for securities, Arbitrage EA will exist for the automation of the dealing of stocks in a similar manner.  The opportunity is created throughout the day’s trading to manipulate the prices of exactly the same securities but on different markets. This form of trading will operate on all of the markets throughout the whole day Arbitrage traders and indeed Arbitrage EA will look to purchase and dispose of the exact same stock at exactly the same time.
For example, they may decide to use Arbitrage EA to benefit from a gap in the price on a couple of entirely separate markets such as the New York Stock Exchange and the Chicago Mercantile Exchange.  If all markets were ‘efficient’, then such a price difference would not exist and so neither would the opportunity for Arbitrage trading or Arbitrage EA. But there is no such thing as an efficient or perfect stock market where all prices are identical and move at the same time.  As any news of market moves will cause a shift in the price of a security, it is inevitable that there will be a minor difference in price for a short period of time.
However, as mentioned earlier, if all of the markets did work perfectly, then all of the stocks all around the world would all be dealing at an identical price at every single market at exactly the same time So because of this imperfection, Arbitrage and Arbitrage EA becomes a possibility. We can look at another example of this style of trading for which Arbitrage EA can be used. A firm may decide to issue a press release with some positive news about its prospects. The security may well start dealing at a higher value on the NASDAQ. Equally, some call options are available on this stock on the AMEX.
The AMEX call options have not been trading. By picking up these call options on the AMEX before the change in stock price kicks in you will be able to sell these securities as well as buying them at exactly the same moment. The time difference here is not a long period. You have to be quick as this gap will last no longer than a few seconds. This is where the Arbitrage EA becomes useful.The Arbitrage EA will follow the price movements of specific currencies across a number of exchanges and then brings these discrepancies to the attention of the dealers. The dealers can then use Arbitrage EA to gain from the moves in the market when the market closes off the difference By using Arbitrage EA, when a currency is being dealt at a cheaper price than another, the dealer will use Arbitrage EA to buy on the cheaper market and sell in the more expensive one all at the same time. The benefit here is obvious as Arbitrage EA automates an opportunity that may exist only for a few seconds to be spotted and exploited for profit.

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Would you be interested in a trading system that is practically 100% profitable?
Developed in the 18th century, this approach is centred on probability theory and if you have sufficient funds, it has an almost 100% success rate.
Known as the Martingale, this strategy was mainly used in Las Vegas gambling halls.
It is also the main reason why casinos now have gaming minimums and maximums, and why the roulette wheel has two green markers (0 and 00), as well as odd or even bets.

The problem with this tactic is that in order to attain 100% effectiveness, you must have a lot of cash. As this principle is based on mean reversion, one wrong trade can bankrupt an account. Also, the amount of money risked on the transaction is much greater than the likely gain. In spite of these drawbacks, there are ways to improve the Martingale approach. We are going to look at how you can improve your likelihood of making money using this very high risk and complicated strategy.

But first, what is the Martingale Strategy?

Popular in the 18th century, the Martingale was introduced by a French scientist by the name of Paul Pierre Levy. The Martingale was initially a type of gaming trend that was founded on the premise of “doubling down.” A lot of the background work on the Martingale was done by an American mathematician called Joseph Leo Doob, who wanted to disclaim the probability of a 100% profitable gaming strategy. The mechanism of the model obviously entails a starting bet, however, every time the bet loses, the stake is doubled in a way that, given adequate time, one win will make up all of the previous failures.
The introduction of the 0 and 00 on the roulette table was intended to break the mechanism of the Martingale, by granting the game with more than two potential outcomes besides the odd versus even, or red versus black. This effectively killed off the long-run gains the Martingale could realise destroying any motivation for using it. Let’s look at a basic example to help grasp the basis of the Martingale strategy.
Suppose we took a $1 coin and played heads or tails, there is a 50:50 chance that the coin will fall on either heads or tails. As each individual toss is independent, the preceding toss has no effect on the next one. So if you always bet on heads, in the end you would, given an unlimited sum of money, at some point land on heads. The technique is based on the concept that just the one successful transaction is needed to turn your account around. As an example, let’s pretend that you have $10 to gamble. You start off with your first gamble of $1. You bet on heads, heads comes up and you win $1. You now have $11. You then carry on betting $1 until you don’t win.

But if the following toss doesn’t win, your ‘account’ moves back to $10. On the following bet, you stake $2 hoping the coin lands on heads; if so, you would recover your earlier losses. But if it lands on tails, you lose another $2, so you’re now down from $10 to $8.
According to Martingale strategy, on the next gamble you bet double the previous sum to $4. But if you hit a winner, you gain attain $4, so you’re now up to $12. Clearly, all you called for was a single success to recover all of your earlier losses.

However, let’s now consider what happens when you hit a losing run:
Again, you hold $10 and place an initial bet of $1. You lose and so your balance is now $9. So, you bet $2 next time, lose again and end up with $7. On the third bet, you gamble $4 but as your losing streak persists, you now only have $3. You now do not have enough money to ’double down’ so all you can do is gamble it all. Lose again and you are down to nil but even if you do win, you are now some way from the $10 you started off with. You may believe that an extended sequence of losses would represent unusually bad fortune, but when you deal currencies, they are likely to trend, and trends can last for a very long time, The key element with Martingale, is that by “doubling down” you basically reduce your average entering price. In the following example, at two lots, you need the EUR/USD to recover from 1.263 to 1.264 to break even. The price lowers so now you add four lots, but now you only need it to comeback to 1.2625 instead of 1.264 to break even. The greater lots you add, the lower your average entry price. Even though you may lose 100 pips on the initial lot of the EUR/USD if the price hits 1.255, you just need the currency set to recover to 1.2569 to break even. So this is why you need deep pockets.
If you only own $5,000 to trade, you would be bankrupt before you the EUR/USD had a chance to reach 1.255.
Sooner or later, things may turn in your favour, but with the Martingale strategy you may not have sufficient money to keep you in the game long enough for that to happen.

Exactly why Martingale gets better results with FX

A main reason why the Martingale method is popular in the currency trade is because, as opposed to stocks, currencies reflect a country (not companies) so hardly ever go to nil. A currency can drop but even a sharp drop won’t result in a currency price of nil. It is technically feasible but a lot would have to go wrong if it did. The FX market also offers one unique benefit that makes it more attractive for traders who can afford to use the Martingale strategy: Interest.

Traders can offset a portion of their shortfalls with interest earnings. Because of this, an astute Martingale trader would buy a currency with a high interest rate (and so earn that interest) whilst concurrently selling a currency with a low interest rate.
In large amounts, the income from interest becomes so substantial that it can decrease the average entry price.

The conclusion

Enticing though the Martingale system may seem to some traders, severe caution is needed if attempting this type of trading. Mainly because even an apparently guaranteed trade may destroy your balance, just when you thought you are about to turn a financial gain or recover your losses.
In the long run, traders must question whether they are prepared to lose the majority of their money on a singular trade. As they need to do this just to average substantially smaller profits, several feel that the Martingale trading strategy is simply too hazardous for their liking.

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Best Forex Scalping Robot

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Wolfe Wave Video – Standard Situation

Wolfe Wave Video – Situation when Line 1-3 has been broken

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Wolfe Waves  was introduced by Linda Raschke.

Wolfe Wave Construction
1. Wave 2 is the top of a bar chart.
2. Wave 3 is the bottom of the first decline after wave 2.
3. Wave 1 is then the bottom prior to the wave 2 top. Point 3 must be lower than point 1.
4. Wave 4 is the top of wave 3. Wave 4 should be higher than the wave 1 bottom.
5. A trend line is drawn from point 1 to point 3. The extension of this line projects to the anticipated reversal point which we call wave 5. This is the entry point for a ride to the target line (1 to 4).
6. The price objective of this pattern is from a trendline drawn from points 1 to 4. The initial stop is placed just beneath the newly formed reversal at point 5. It can then be quickly moved to break-even.
Note: You cannot begin looking for the Wolfe Wave until points 1, 2, 3, and 4 have been formed.

Bullish Wolfe Waive Pattern

Bearish Wolfe Wave

Wolfe Wave Trading Strategy

We successfully  use this strategy within two years, but only now we’ve got to automate the process of finding Wolfe Waves. We were able to formalize the rules for finding the waves and create  Wolfe Wave Indicator.

But it is possible to draw Wolfe Waves manually.

Trading rules

We use own (modernized) trading rules.

Bullish Pattern.

BUY when price touch line 1-3  (pint 5 )

Take Profit – point 4

StopLoss – double distance from 2 to 3

If the price moves in the direction of StopLoss (line 1-3 was broken) we should add position after N pips.

N depends from Time Frame.

In this case we should close all position when price touch line 1-3 from the bottom.

Bearish Pattern

Vice versa.

2011 © http://iticsoftware.com

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At this moment very important to determine what should happen:

- the price will be stay within the framework of minimal channel and next  channel or support/resistance  line will be breakdown;

-the minimal channel will be breakdown, and price will be rebound from the next level channel or from the  support /resistance line.

For the significance of channels comparison,  at a certain time, best suited two criteria:

1. Hurst criteria calculated inside channel

H = Lg(R/S)/Lg(n/2)

R – Max range of sample

S – SD (standard deviation)

n – Number of observations

Hurst criterion is an empirical evaluation of how far we are from the distribution converges to normal or evaluation of fractality of the market. Any convergent distribution with increasing degrees of freedom converges to the normal, which means – the possibility of the applicability of the mathematical statistics apparatus on samples of approximately longer than 30 degrees of freedom (bar). It cuts off the sample and test – because the algorithm is obtained by iteration) – the error will tend to zero.
When this parameter is closer to 0.5 – indicates that the white noise dominates.
When approaching the 1 – indicates the presence of stable structures,
to 0 – unstable structures.
Further interpretation of the applicability of the stable – the trend,
unstable – kontrtrend.

2. Distance from the price to the center of channel.

channel will be stronger in certain time, if price will be  closer to center.

These rules can help to create different types of trading strategies. You can use these rul for short term trading and for long term trading as well.

Indicators:

LR-Channels – this MetaTrader 4 Indicator finds all possible regression channels on the chart and draws channels with minimal standard deviation. Indicator also calculates Hurst criteria.

i-BJF-SupResLines Metatrader Indicator – this Metatrader 4 Indicator draws support and resistance lines on the chart.

2011 © http://iticsoftware.com

As United State is going to celebrate its 235th Independence Day on July 4th 2011, BJF Trading Group inc. is proudly announcing a  25% discount for all our products.  Limited time offer. Expire date: 6 July 2011
Visit our website for more information

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Currency: eurusd, gbpusd, usdcad…

Conditions for open position

Buy/Sell only on Support/Resistance Level (i-BJF-SupResLines Metatrader Indicator)

Buy/Sell  only in case of divergence between Stochastic and price (Stochastic Divergence  Indicator)

Buy/Sell only if Hurst Exponent value between 0 and 0.5 (Hurst Divergence Indicator)

Stop Loss

We will use High/low TrailingStop (Expert Advisor TrailingStop-Toolkit)
High/Low Trailing  (settings)
HLTrail.On = true HLTrail.ProfitReq = 70; // Minimum profit to activate the trailing, pips
HLTrail.Bars_timeframe = 0;// 0 is the current TimeFrame of the chart
HLTrail.Bars_shift = 1; // Get High/Low from the first closed bar (shift = 1)
HLTrail.ExtraPips = 0; // Add this pips value to High or Low on StopLoss calculation

Conditions for close position

Close position on Support/Resistance level

Close position if opposite divergence signal is appear and Hurst Exponent value between 0 and 0.5

Close half position if if opposite divergence signal is appear and Hurst Exponent value around 0.5

Hurst Exponent Rules
Value 0.5 – 1 = whatever is happening now is likely to continue
Value 0 – 0.5 = whatever is happening now is likely to reverse
Value around 0.5 = likely to go in any direction

Point 1 (22.06.2011 00:00 GMT +2)
Price has touch resistance line 1.44406 (i-BJF-SupResLines Metatrader Indicator)
Stochastic Divergence Indicator – sell signal
Hurst Exponent (Hurst Divergence Indicator) Value 0 – 0.5 – whatever is happening now is likely to reverse
Strong Sell Signal
Sell EurUsd price: 1.44000
Trailing H/L Stop Loss  =   1.44700
TakeProfit = 1.41416 – Support  Level  (i-BJF-SupResLines Metatrader Indicator)

Point 2 (22.06.2011 18:00 GMT +2)
Price has touch resistance line 1.44406 (i-BJF-SupResLines Metatrader Indicator)
Stochastic Divergence Indicator – sell signal
Hurst Exponent (Hurst Divergence Indicator) Value 0 – 0.5 – whatever is happening now is likely to reverse
Strong Sell Signal
Keep position

Point 3 (23.06.2011 11:00 GMT +2)
Price has not touch Support/resistance line
Stochastic Divergence Indicator – buy signal
Hurst Exponent (Hurst Divergence Indicator) Value 0.5 – likely to go in any direction
Undefined situation – close 50% of position

Point 4 (23.06.2011 15:00 GMT +2)
Price has touch Support  line 1.41416 (i-BJF-SupResLines Metatrader Indicator) 50% of position was closed by TakeProfit
Stochastic Divergence Indicator – buy signal
Hurst Exponent (Hurst Divergence Indicator) Value 0.5 – likely to go in any direction
Undefined situation –  do not open buy

Point 5 (24.06.2011 13:00 GMT +2)
Price has not touch Support/Resistance line (i-BJF-SupResLines Metatrader Indicator)
Stochastic Divergence Indicator – sell signal
Hurst Exponent (Hurst Divergence Indicator) Value 0 – 0.5 – whatever is happening now is likely to reverse
Sell Signal   Open Sell EurUsd price: 1.42009    50%
Trailing H/L Stop Loss  =   1.42709
TakeProfit = 1.41416 – Support  Level  (i-BJF-SupResLines Metatrader Indicator)
Position was closed 27.06.2011 02:00 GMT +2  by Take Profit

Point 6 (27.06.2011 05:00 GMT +2)
Price has  touch Support  line  1.41263 (i-BJF-SupResLines Metatrader Indicator)
Stochastic Divergence Indicator – buy signal
Hurst Exponent (Hurst Divergence Indicator) Value 0 – 0.5 – whatever is happening now is likely to reverse
Strong buy Signal   Open Buy  EurUsd price: 1.41263
Trailing H/L Stop Loss  =   1.40503
TakeProfit = 1.44406 – Resistance  Level  (i-BJF-SupResLines Metatrader Indicator)

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Expire date: 2 July 2011

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One more example USDJPy current situation

2011 © http://iticsoftware.com

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Trend line break happens when the price reaches a trend line, breaks through this line and continues moving in the determined direction. The occurrence of trend line breaks is possible thanks to showing the most probable point of future support or resistance on the trend line, and this support and resistance is going to weaken at some time.

Using Trend Line Breaks For Trading

You may call trend line breaks as “counter trend trades”. The reason is that trend line breaks are based on continuation of price movement in its new direction against the previous trend. If we have an upward trend and trend line, there would be a short trade in case of trend line break; it means that selling would occur at a price near the trend line, and after that buying would occur at a price below the trend line. If we have a downward trend and trend line, there would be a long trade in case of trend line break; it means that buying would occur at a price near the trend line, and after that selling would occur at a price above the trend line.

As a rule, use of trend line breaks alone is counterproductive. Generally, traders combine trend line breaks with other information, for example, volume or price movement information. For instance, a trader might create a complete trend line trading system from the combination of strong volume in the correct direction and a trend line break.

The most likely location of the  trend line breakdown is  the intersections with the  resistance and support lines . When prices approach the line of resistance or support we can estimate the value of  Hurst exponent  and Hurst exponent divergence. This will help you to find enter point with high probability and accuracy.

Useful Metatrader 4 Indicators:

- MetaTrader Indicator Support Resistance Levels

-MetaTrader Indicator Hurst Divergence

2011 © http://iticsoftware.com

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First of all, developing trading system (manual trading system or automatic trading system)  you should decide whether you want to trade long term positions or sort term positions. After choosing your style of trading you should master your skills in that single direction in the beginning, because otherwise you will lose.

Concept №2. Multi-Timeframe analysis.

In case you use only one timeframe, even the best trading system in the world won’t help you to make profit and you’ll lose a lot. That is why Multitimeframe charting is one of the best indicators. First of all, it is free of charge, and, moreover, it is the true indicator of a trend.

Forex Trading System – Concept №3.  Currency pairs divergence.

Currency forex divergence or spread is your way to big profit. What is meant here is SPREAD, but not MACD divergence or CCI divergence. The common forex indicators only show you the direction of trend, but they never tell you why this trend is moving in this or that direction. For example, if your forex indicator flashes sell signal when you trade GBP/USD currency pair, it could be that both currencies are losing strength, but one of them is just losing strength faster, for example, GBP. Are you really going to trade that? It is unlikely. You won’t do it because the first currency can start gaining strength again, or the second currency can start falling faster. In this case you will suffer losses. If you want to make profit, you should wait the beginning of forex divergence, i.e. when currency pairs start moving in opposite directions. For example, a sell of GBP/USD currency pair is possible only when one of currencies is rising, and another one is falling.

Forex Trading System – Concept №4.  Momentum.

You can get it only in case you are able to get currency pairs divergence. The ideal forex difference is about 45 percent. For example, in case of a sell of GBP/USD, one of currencies should be, for instance, -35, and another one should be about +80. In this case a perfect trend arises, which will help you to make profit. Just remember, that such situation is very common and happens all the time.

Forex Trading System – Concept №5. Entry point.

Trading System entry points should be based on several factors, including pivotal points, forex divergence and momentum of all your timeframes. We recommend you using pivot points only for entry and trailing stops for gravity. Don’t use them for exit.

Forex Trading System – Concept №6.  Exit

You should let your winning positions run and close loosing trade on time. One of the perfect ways for exiting a position is to use a middle timeframe by the formation of a reversal candlestick color change, For example, if you use three timeframes in yoiur forex system  (15 minutes, 1 hour and 4 hours), you can enter a trade on the 15 minutes timeframe, and then exit from the trade with 1 hour candlestick color change. In this case you can simply ignore stop-loss and still make profit. If you are only a beginner, everything may end with account depletion, but, finally, you lose only money and not your life. That is why you shouldn’t restrict yourself to just one currency pair. Try to open several currency pairs simultaneously, but don’t execute orders on too many pairs. So, you will be able to catch up opportunities.

The given concepts are only clues. You can’t use them as a system, but you can search additional information about each of these items, and then you’ll succeed.

2011 © http://iticsoftware.com

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Forex Indicators:

• Hurst Exponent Divergence
• Bollinger Bands Divergence
• Standard Deviation (standard MetaTrader Indicator)

First and most important step for this forex trading system and for any other forex trading sustem  is determination of market condition. We will define three states of the market:

• FLAT (sideways) movement
• Trend reversal
• Continuation of the trend or flat

Algorithm for forex market conditions determination

Flat conditions  ( Hurst exponent around 0.5 ; stdDev around 0 ) We will use forex scalping strategy.

Forex Trading System General Rules for Flat Conditions

• Open sell position when price touch or cross upper band (Bollinger Band Indicator)
• Open buy position when price touch or cross lower band (Bollinger Band Indicator)
• Close position when price touch or cross opposite band.
• Stop Loss under lower band for buy position and under upper band for sell position.

Forex Trading System General Rules for Trend reversal Conditions

Hurst exponent   around  Value 0 – 0.5 and tends to zero.   stdDev  grows

Trend following strategy.

• Waiting for Hurst or Bollinger bands divergence arrow and open position in the direction of arrow.
• Close the position if appeared an opposite arrow or(and)Hurst exponent tends to 0.5, or close at predefined target, or close By time

Continuation of the trend

Hurst Exponent Value 0.5 – 1 – We recommend to close part of position (50% for example) if you have opened it before. Or do not open any position if you do not have opened positions.

2011 © http://iticsoftware.com

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