Forex Crescendo EA Manual v1.3

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Forex Crescendo EA Manual v1.3 | Manualzz

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Forex Crescendo

User Guide &

Installation

Manual

Brought to you by:

www.ForexCrescendo.com

Written by: Andrea Salvatore

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RISK DISCLOSURE STATEMENT / DISCLAIMER AGREEMENT

Trading any financial market involves risk. This report and its contents is neither a solicitation nor an offer to Buy/Sell any financial market. The contents of this report are for general information purposes only

(contents shall also mean the website

http://www.forexcrescendo.com/

and any email correspondence or newsletters related to the website).

Although every attempt has been made to assure accuracy, we do not give any express or implied warranty as to its accuracy. We do not accept any liability for error or omission. Examples are provided for illustrative purposes only and should not be construed as investment advice or strategy.

No representation is being made that any account or trader will or is likely to achieve profits or losses similar to those discussed in this report. Past performance is not indicative of future results. By purchasing the report, subscribing to our mailing list or using the website or contents of the website you will be deemed to have accepted these terms in full.

Old Tree Publishing (Pty) Ltd, in association with

http://www.forexcrescendo.com/

, the website, report, and its representatives do not and cannot give investment advice or invite customers or readers to engage in investments through this report.

The information provided in this report is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country.

Hypothetical performance results have many inherent limitations, some of which are mentioned below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and actual results subsequently achieved by any particular trading program.

One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading.

For example, the ability to withstand losses or to adhere to a particular trading program in spite of the trading losses are material points that can also adversely affect trading results. There are numerous other factors related to the market in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results. All of which can adversely affect actual trading results.

We reserve the right to change these terms and conditions without notice. You can check for updates to this disclaimer at any time by visiting

http://www.forexcrescendo.com/website-terms-of-use.html

Governing law

This policy and the use of this report and any content on the website site are governed by the laws of the

Republic of South Africa. If it proves impossible to arrive at a mutually satisfactory solution through mediation, we agree to submit the dispute to binding arbitration at the following location: Umhlanga, under the rules of the Arbitration Foundation of South Africa and an arbitrator appointed by the Foundation. The maximum of any claim against our site, its owner, directors, shareholders, agents, employees and related persons and as against distributors for same, will be the maximum cost of purchase of the Forex Crescendo

EA as will be set at 28 September 2010. www.ForexCrescendo.com Page 2

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CRESCENDO EA v1 User Manual

INTRODUCTION

The Crescendo EA is a piece of software made to make your life as an automatic trader, easier and more profitable. It is a very special EA as it can be used in two ways or modes. Both of which are profitable.

The first mode is fully automatic. Most of you will choose this option as it the option that is easier to setup and manage. It requires almost no time to install (less than 10 minutes to complete the entire process) and no time to manage. You only need to monitor your machine to ensure that it is running properly every once in a while.

That is how we tested it over the past few months with very good results. We achieved an average monthly gain of around 15%... without even touching it!

The second mode is semi-automatic. That means that you can use Crescendo EA as an automatic trading tool. In the How to use Crescendo EA section you'll find more details on that, based on my last year’s experience trading it. In general, using this mode means that you'll make part of the decisions that are made by Crescendo automatically www.ForexCrescendo.com Page 3

www.ForexCrescendo.com in the "fully automatic" mode. You have the option to change almost every parameter of the Crescendo EA strategy as well as force it to trade in the direction that you think is more profitable.

Whichever mode you decide to use (either fully automatic or semi-automatic), I'm sure it will be profitable. So let the journey begin! www.ForexCrescendo.com Page 4

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HOW IT WORKS

The Crescendo EA trades on two currency pairs: the GBPUSD and the GBPJPY.

Based on the frequency setting (look the Configuration Process chapter), at specific times of the day, the Crescendo EA checks if the conditions to open an order are met. It does that for both the currency pairs used for trading.

If there are no previous open orders, it opens one in the direction suggested by the trend algorithm. If there are already other open orders, and if the distance from the last open order is greater that the number of pips set in the order_step setting, it opens a new order in the same direction with the same lot size.

As soon as the profit of all the open orders for each pair is equal to or greater than the

target_profit, it closes all the open orders for that pair.

On average, around 2 trades a day are opened and closed. But you can usually expect between 0 up to 4 trades a day with the default frequency setting (4 = every 12 hours).

If the total $ value of all the open orders (both the currency pairs) is in loss of more than the max_total_DD percentage value, all the orders are closed.

This is a "safety net" in case of a huge sudden change of trend.

This has already happened during the demo and live testing periods but the

max_total_DD has never been reached, thanks to the fact that the lot size used for each

order was small enough. The Crescendo EA also recovers from those situations very quickly, usually within a few days.

In the "counter trend" phases it is crucial to have enough margin to be able to withstand even the largest moves. www.ForexCrescendo.com Page 5

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For example, during the big drop during the first few days of May 2010, the EA suffered a temporary max draw down of around 20% and it didn't even touch our initial investment as it was the 3rd month of trading and we were already in profit of about

40%.

Note that the profit check and the draw down check are made in real time. The

frequency setting determines only how often Crescendo EA will check the market for

conditions to open new trades. www.ForexCrescendo.com Page 6

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WHAT CAN YOU EXPECT FROM THE CRESCENDO EA

The average return with the default settings should be between 5-15% a month with a maximum temporary draw down of around 25% of the balance. The closed order draw down shouldn't be larger than 5-6%.

This is not a "stop loss" in the traditional sense. This is the "worst case scenario" maximum loss. This is something that CAN be hit only on "Black Swan" days like,

September 11th or something similar.

Usually the temporary draw down will be much lower than 10%. During the first days of

May when a huge, sudden drop occured (this was a greater than a thousand pip drop in a very short time) we reached a maximum draw dawn level of around 20%.

On average the EA should open and close around 2 orders a day. But that ranges from

0 to 4 (with the EA’s frequency parameter set to 4).

The Crescendo EA will at times place counter-trend trades, especially usually during periods when the long term market trend is changing direction. That means that it can open a number of orders for each pair above the usual average of 1-3 orders per currency pair.

If you set the lots used to open trades to the suggested size you should not have any problem. It is only a matter of time before everything is closed in profit (usually within a few days). www.ForexCrescendo.com Page 7

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Here you can see further performance statistics from Crescendo on our live trading account: www.ForexCrescendo.com Page 8

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INSTALLATION PROCESS

The Crescendo EA comes with an easy installer. The installation process shouldn't take longer than 5 minutes to be accomplished.

1. Close all MT4 platforms if open

2. Run the installer. www.ForexCrescendo.com Page 9

3. Accept the agreement. www.ForexCrescendo.com www.ForexCrescendo.com Page 10

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4. Select the MT4 platforms where you want Crescendo EA to be installed. www.ForexCrescendo.com Page 11

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5. If the MT4 directory is not listed, you can add it using the "Add a MetaTrader folder" button. www.ForexCrescendo.com Page 12

6. Review the information. www.ForexCrescendo.com www.ForexCrescendo.com Page 13

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7. Wait for the installation progress to arrive to the end (it should display "Done." in the text window). www.ForexCrescendo.com Page 14

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8. Run the MetaTrader 4 platform.

Once the MT4 platform is running, open a GBPUSD chart. No preference for the timeframe, choose any time frame you want. The Crescendo EA can be applied to

any timeframe.

Set all the options and then do the same for the GBPJPY pair. Open a GBPJPY chart

(any timeframe) and apply the Crescendo EA to it just like you have done with the other currency pair. www.ForexCrescendo.com Page 15

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CONFIGURATION PROCESS

Once you apply the EA to the chart you should see a window as shown below. On the

Common tab make sure that you have the following options ticked:

Enable Alerts

Allow live trading

Allow DLL imports

Allow import of external experts

All these options must be checked.

The installer should have set them automatically but in case they are not, make sure that they are checked or the Crescendo EA won't work properly and won't be able to place any trades.

Now click on the Inputs tab.

The Crescendo EA has the following options (see the image on the following page): www.ForexCrescendo.com Page 16

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AUTHENTICATION OPTIONS

username (Enter your email address here)

This is the email address you enter in the "Login ID" box to login to the download page.

Your login ID is the email address you used during the purchase.

password (Enter your password here)

This is the Clickbank receipt number you enter in the "Password" box to login to the download page.

Your password is your Clickbank receipt number.

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STRATEGY SETTINGS

initial_balance (1000)

This is the balance the EA will consider as available for trading. Many of the money management settings depend on this value so it is important that you set it the right way.

This should be a value equal to or lower than your account balance.

Don't use values higher than your account balance, otherwise, the lot size used to open your orders and the maximum draw down value won't be calculated in the right way and you will end up risking more than you should.

order_step (60)

This is the minimum amount of pips between the last open order and the current that is used for Crescendo EA to open a new order.

target_profit (4)

This is the target profit in dollar for the group of orders for each single currency pair. The target should be based on the initial_balance value and on the lot size (you can read more about this in the upcoming chapter). So by default the take profit target on a $1000 account using

0.01 lots is 4$.

frequency (4)

This is the frequency the Crescendo EA will use to check if the conditions to open new trades have been met. They frequency can go from 0 to 5:

0 - check is always on

1 - check is made every 1 hour

2 - check is made every 3 hours

3 - check is made every 6 hours

4 - check is made every 12 hours (default)

5 - check is made every 24 hours

We suggest you to use the default value of 4 (every 12 hours) as this is the setting that works best in almost all market conditions.

dd_based_frequency (false)

With this strategy, the “frequency” setting is AUTOMATIC. The

Crescendo will adapt its trades based on the level of draw down of the

SINGLE currency pair. This will allow us to have two pairs trading with different frequencies. It works based on the “dd_step”.

The pair will start with a frequency 0 (so real time). So it’ll open a new trade immediately when the conditions are met. Remember that if you set a trend magnitude filter, the trend should be of that magnitude or more to open the trade. As soon as the first trade is open, the frequency switches to 1 (1 hour), and it’ll automatically adapt based on the “dd_step”. www.ForexCrescendo.com Page 18

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dd_step (1)

This is the percentage step that will be used to calculate the frequency.

So if for example, we set a dd_step of 2 (%), the frequency will be 1 for the total orders’ draw down between 0%-2%; frequency 2 for a draw down between 2%-4%; frequency 3 for a draw down between 4%-6%; frequency 4 for a draw down between 6%-8%; and frequency 5 for a draw down higher than 8%.

use_mtf_trend (true)

This option enables the multi time frame based trend algorithm. Read more about that in its specific chapter of the manual.

trend_threshold (3)

This is the minimum “magnitude” used for filtering entries.

trend_period_1 (60)

trend_period_2 (240)

trend_period_3 (1440)

trend_period_4 (10080)

trend_period_5 (43200)

Those are the 5 MT4 time frames used to calculate the multi time frames based trend. This value is in minutes and by default is: 1 hour (60), 4 hours (240), daily (1440), weekly (10080) and monthly (43200). We suggest that you do not modify them.

close_on_counter_trend (false)

If set to “true”, we instruct the Crescendo to close all the open trades and open a new one in the opposite direction if it spots that the trend has changed. This means that the trend score is above the set value but in the opposite direction of the initial trend upon entry.

For example, if you set the “close on counter trend” magnitude threshold to 5 then you were entered long with a +3 trend, it’ll close all the open long orders and will open a new short order as soon as it spots a -5 trend.

Vice versa, if you entered short with a -3 trend, it’ll close all the open short orders and will open a new long order if it spots a +5 trend.

You can read more on that in the specific chapter.

counter_trend_threshold (5)

This is the magnitude level used to filter counter-trends.

manual_trend (false)

If this is set to "false" (default), the EA will open trades in the direction given by the internal trend algorithm.

If set to "true" you will force the EA to open trades only in a specific direction. The direction is given by the trend_direction options. www.ForexCrescendo.com Page 19

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trend_direction (0)

If the manual_trend option is set to "true" then the EA will open new trades in the direction given here.

A value of "1" means that it will open only long trades. A value of "-1" means that it will only open short trades. If you put a value different from

"1" or "-1" the EA won't open any new trades.

trend_following (false)

If this parameter is set to “true”, the Crescendo will open a new order as soon as a set of orders is closed. This can increase the gains a lot in situations where there are strong trends because orders are opened and closed in profit one after the other without waiting for the next check to occur based on the frequency setting. This option is not needed in case the frequency is automatically determined, based on the DD level

(dd_based_frequency).

use_stop_loss (false)

If set to “true”, the Crescendo will add a hard stop loss to every order sent. This is against the strategy, so we strongly suggest that you do not enable it.

stop_loss (500)

This is the amount of pips for the hard stop loss.

MONEY MANAGEMENT

lot_size (0.01)

This is the lot size used for opening trades. The suggested lot size is 0.01 lots for each $ 1.000 in the account.

So for example, if you have a $ 1.000 account you should leave it to the default value of 0.01 lots. If you have a $ 2.000 account you can change it to 0.02. On a $10.000 account you can change this value to 0.1 lots.

We strongly suggest for you to use the suggested lot size (or less) as this is the setting with the right balance between risk and

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performance. If you want to risk less, use a lower lot size and everything will be scaled accordingly.

risk_percent (0)

If you want the lot size to be automatically adjusted based on the available equity value you can change this setting to a non-0 value. For example: 1.

The suggested value is "1" as it is the value that we have tested, and that is the best balance between risk and performance.

Note: This does not mean that you are risking 1% (or n%) of you account but that you're using 1% (or n%) of the available equity to open an order.

max_total_DD (30)

As described in the How it Works section of the manual, Crescendo EA uses global risk management. This percentage is the maximum loss of the actual balance (initial_balance + profits made until then) that the EA can stand before closing all the orders for all the pairs.

slippage (5)

This is the maximum deviation allowed between the price that the

Crescendo EA is using to open the order, and the price that the broker is giving to open the order.

linear_martingale (false)

If you set this parameter to “true”, the additional orders will be opened with increasing lot sizes based on a linear sequence. So if you set the lot_size to 0.01, additional orders will be opened with 0.02 lots, then 0.03 lots, 0.04 lots, etc.

fibonacci_martingale (false)

If you set it to “true”, additional orders are opened with increasing lot sizes based on the Fibonacci sequence. So if you set the lot_size to 0.01, additional orders will be opened with 0.02 lots, then 0.03 lots, 0.05 lots,

0.08 lots, 0.13 lots, etc. www.ForexCrescendo.com Page 21

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exponential_martingale (false)

If you set it to “true”, additional orders are opened with increasing lot sizes based on an exponential sequence, depending on the

“exponential_factor” (see below). So if the exponential_factor is 2 and you set the lot_size to 0.01, additional orders will be opened with 0.02 lots, then 0.04 lots, 0.08 lots, 0,16 lots etc.

exponential_factor (2)

This is the multiplication factor used by the “exponential_martingale” option. By default, it is 2 (so every time, the lot size is doubled) but can be any number like 1.1 (so every additional order’s lot size is 10% more than the previous one), or 1.5 (so every additional order’s lot size is 50% more than the previous one).

EA SETTINGS

GMT_time_shift

This is the shift in hours from the GMT time. It can go from -11 to +11, and it will shift all the entries by the amount of hours. If you leave it to 0, it'll use GMT time. If you put 1, for example, it'll add one hour to the actual

GMT time.

GBPUSD_Magic_Number (130907)

This is a sort of "id number" used to identify all the orders sent for the

GBPUSD currency pair. It is important that no other EA is running on the same account with the same magic number. If so, change one of them.

GBPJPY_Magic_Number (300610)

This is a sort of "id number" used to identify all the orders sent for the

GBPJPY currency pair. It is important that no other EA is running on the same account with the same magic number. If so, change one of them.

You don't need to edit those two numbers unless you want to make sure that they are the same for both currencies on the two charts.

This allows the money management to work by calculating profits/losses for both.

randomize_entry_minute (false)

If set to “true”, this parameter will let the Crescendo add a random number of minutes (up to 10) to the beginning of the hour so that its behaviours are a little more “disguised”.

comment

This is the comment added to every order made by Crescendo EA. To this comment the EA automatically adds the Magic Number. www.ForexCrescendo.com Page 22

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hide_comment

If you want Crescendo EA not to send any comment along with orders set that option to "true". This way the trades made by Crescendo EA are more difficult to be distingueshed from any manual trades.

CRESCENDO EA INTERFACE

Once you apply the Crescendo EA to a chart, after the authentication process, you should see a text interface explaining what’s happening. Let’s go through it and see what it tells us:

The first section shows us the authentication status (it should display “OK”) and the EA status (should display “RUNNING”). In the status you should also see a set of dots moving so that you have feedback about the EA that is running.

The second section is the one dedicated to the balance/gain/max loss information. Here you’ll see the initial_balance value and the profit that all the closed orders have made.

The “EA balance” is the sum of the initial_balance plus the “Closed Orders Profit”.

The “Max DD” shows you the max loss that Crescendo EA has to reach before closing all the orders. www.ForexCrescendo.com Page 23

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The third section is dedicated to the currency pair information. Here you can see how many orders are open for each of the two currency pairs, what’s the target profit for the open orders. You can also see what the value of the total open orders for each currency pair is at any given time and also see the value of the total open orders for both the currencies together.

The forth section is a simple review of the lot size used to open new orders and the maximum slippage allowed but the EA.

The fifth section tells you if the EA calculates the trend automatically or if the trend has been manually set by the trader.

The sixth and last section is dedicated to the frequency setting. It shows you the server time and how much time is needed before the EA scans the market to open a new trade. www.ForexCrescendo.com Page 24

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0

1

2

3

MORE ABOUT FREQUENCY

The frequency setting is probably the most important for the Crescendo EA strategy. It can change the performances of the EA quite a bit. We strongly suggest you to leave it to the default value (4) but in the later chapters I’ll explain how to optionally adapt this setting to the market conditions.

The following table details the time of the day that the EA will use for scanning the market to open new positions.

Frequency Base GMT Time Hours

Always

Every Hour

12 AM - 03 AM - 06 AM - 09 AM- 12 PM - 3 PM - 6 PM - 9 PM

12 AM - 06 AM - 12 PM - 6 PM

4

5

12 AM - 12 PM

12 AM

Setting values below 4 will make the Crescendo EA open orders more frequently. This may increase the profits but also increases the risk.

Using a more conservative setting (5) will instruct Crescendo EA to open orders only once a day and can lead to lower performances but also lower risks.

Again, based on our backtests and forward tests the setting of 4 has proved to be the best balance between performance and risk. Only when you start to become familiar with the market’s behaviour and how the Crescendo EA should you think of changing and adapting the frequency setting to suit the market conditions (read more on that in the Semi-Automatic section of the manual).

Below are the results of the optimization process made on the “frequency” setting, made using GBPJPY tick by tick data for 2010.

As you can see, the value of 4 (the actual default) is the best one in terms of draw down and the second best as Profit Factor. It’s 4th in terms of pure profit but if you relate DD and profit you’ll see that frequency 4 is still the best one by far. www.ForexCrescendo.com Page 25

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SETTING THE RIGHT TARGET AND LOT SIZE BASED ON ACCOUNT BALANCE

This is probably the most important chapter of the manual as it is crucial that you set these 3 options correctly!

The general rule is:

For every $ 1000 in your account (initial_balance) you should use 0.01 lots for each order (lot_size or enter 1 as the risk_percent value).

This lot size is the maximum size you should use. Do NOT use lot sizes larger than that!

So, for example on a $ 2000 account you should use a maximum lot size of 0.02 lots.

On a $ 10 000 account you should use a maximum lot size of 0.1, and so on.

The target profit in $ is calculated based on the initial balance and on the lot size. The rule is that it should be $ 4 for each $ 1000 on your account, if you are using 0.01 lots per order.

Here’s an table showing you how to set these 3 settings with different account sizes:

Account Balance initial_balance lot_size target_profit

$ 1.000

$ 2.000

$ 3 000

1000

2000

3000

0.01

0.02

0.03

4

8

12

$ 4 000

$ 5 000

$ 10 000

$ 15 000

$ 20 000

4000

5000

10000

15000

20000

0.04

0.05

0.10

0.15

0.20

16

20

40

60

80

$ 50 000 50000 0.50 200

It is really crucial for maintaining the right balance between profit and risk that you don’t

“over-leverage” these settings.

If your account is below $ 10 000 and your account balance is not a round number (for example $ 2550) simply round this number off to the nearest, lower number (in this example that would be $ 2000). www.ForexCrescendo.com Page 26

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THE CRESCENDO's SAFETY STRATEGIES

The Crescendo has been coded with 3 safety strategies:

• Trend Filter Magnitude

• Close On Counter Trend Filter Magnitude

• Max DD (the same as for the previous versions)

Trend Filter Magnitude

This new trend algorithm calculates the trend using 5 timeframes instead of the default which is 1.

The trend is determined only for the first trade of the set of trades that is going to be opened to reach the target_profit. So, all the (optional) additional orders will be opened in the same direction as the first one.

To reach that target gain (the target_profit), it may be necessary to open multiple orders.

Most of the time, one or two orders are enough. But, we have all experienced situations when more than 2 orders have been opened to close the trades in profit, leading to a larger draw down and lower profits due to the fact that you will have to wait longer for the trades to be closed in one currency.

The default algorithm could give only two options: buy and sell.

The MTF (multi time frames) algorithm calculates the trend, applying the same indicator

(Hull Moving Average) to 5 timeframes (monthly, weekly, daily, 4 hours and 1 hour) instead of just one timeframe. Each timeframe gives a buy(+1)/sell(-1) score. The 5 scores are then summed up, and you got an overall score going from -5 (all timeframes are short) to +5 (all timeframes are long). There are 6 possible score values, and they are: -5, -3, -1, +1, +3, +5. So, you have 3 possible “magnitudes” or score levels that are

1 (+-1), 3 (+-3) and 5 (+-5).

The Crescendo's settings are based on the “magnitude” of the trend. A magnitude 1 trend is a weak trend, a magnitude 3 trend is a strong trend, and a magnitude 5 trend is a very strong one.

As you can easily guess, the larger the magnitude, the more rare the trend is. This means that we’ll have many trends with magnitude 1, less with magnitude 3, and only very few with magnitude 5.

Using the MTF trend algorithm, the Crescendo is able to “filter” entries based on trend magnitude. We can set the Crescendo to enter only in the trends with magnitude 3 or more, or only with magnitude 5.

This leads the Crescendo to take fewer trades. For example, we won’t enter on trades with magnitude 1 that are not “strong” enough to guarantee that the trend won’t reverse before the target_profit is hit. When taking trades with a higher magnitude, the trades will www.ForexCrescendo.com Page 27

www.ForexCrescendo.com be closed in a shorter time and with fewer orders needed, which also means that we will have an average lower draw down. We are dealing with the average draw down. It is still possible that a trend reversal will happen. To solve that, read more about the “Close On

Trend Reverse” feature.

We have 3 levels of "scoring" the trend (1 - weak, 3 - medium, 5 - strong), and we filter entries based on that score. By default, we'll enter only on trends with magnitude 3 (so we’ll enter long only when the trend score is +3 or more, and enter short only when the trend score is -3 or less).

It is important to stress the fact that by filtering, we lower the number of trades, so don't expect Crescendo to open orders immediately. Check for the trend score first to see if is strong enough based on your setting.

This first level is important as it lowers the average draw down as we'll trade in the trend.

So, it'll be easier to reach the target_profit with a much lower number of orders. But it may happen that after our first entry, the trend strongly reverses. That's where the second strategy comes in.

Close On Counter Trend Filter Magnitude

The second strategy tells Crescendo to close all the open trades and open a new one in the opposite direction if it spots that the trend has changed, meaning that the trend score is above the set value but in the opposite direction of the initial trend upon entry.

So for example, if you set the "close on counter trend" magnitude to 5 then you’re entered long with a +3 trend, it'll close all the open long orders and will open a new short order if it spots a -5 trend. Vice Versa, if you entered short with a -3 trend, it'll close all the open short orders and will open a new long order if it spots a +5 trend.

In this case, it is important to stress that this is done when the Crescendo checks for opening new orders (not in real time but only upon market check, so depending on the

"frequency" setting, by default every 12 hours). In case of a huge drop due to some big event, this strategy won't work unless that happens close to the 12 hours check. What can we do in those dramatic situations? We still have our Max_DD, that is the third safety strategy.

With the second strategy, we’ll cut possible losses, avoid larger draw downs, and thus, avoid having the currency locked into a position waiting for days or weeks them to be closed. If it's evident that the trend has changed, it may be better to take the loss and have the EA restart trading in the new trend direction.

Max DD

The third level is the "Max_DD". It is still set by default at 30%, but you can decide to set it to lower values now, like 20% for example. The above strategy should prevent the maximum DD to increase to worrying levels, but it won't work in real time. The MaxDD www.ForexCrescendo.com Page 28

www.ForexCrescendo.com monitors for the DD level in real time. It stops all the orders and the EA from trading if the set % value is reached. This is a real safety net.

But there’s another strategy that somehow relates to safety, and it’s something that some of you are already doing “manually” somehow: the draw down level based frequency.

Draw Down Level Based Frequency

With this strategy the "frequency" setting is AUTOMATIC. So Crescendo will adapt its frequency based on the draw down level of a SINGLE currency pair. So, we'll have two pairs trading with different frequencies. It works based on a "dd_step". This is the percentage step that will be used to calculate the frequency.

The pair will start with a frequency 0 (real time). So it'll open a new trade immediately when the conditions are met. Remember that if you set a trend magnitude filter, the trend should be of that magnitude or greater to open a trade. As soon as the first trade is open, the frequency switches to 1 (1 hour), and it'll automatically adapt based on the

"dd_step". So if for example, we set a dd_step of 2 (%) the frequency will be 1 for a total orders draw down between 0%-2%; frequency 2 for a draw down between 2%-4%; frequency 3 for a draw down between 4%-6%; frequency 4 for a draw down between

6%-8%; and frequency 5 for a draw down higher than 8%.

This option is not enabled by default as it can cause the Crescendo to open more trades at the beginning and less later, making it more difficult to close "large" sets of orders. www.ForexCrescendo.com Page 29

www.ForexCrescendo.com

HOW TO USE THE CRESCENDO EA

You can use the Crescendo EA in two ways: fully automatic (this is how we used it in our live forward testing with very good results), or as a trading tool in "semi-automatic".

FULLY AUTOMATIC

In the first case you don't have to do anything other than edit the initial settings. I strongly suggest you to use the default settings and only adjust the

initial_balance and the money management setting accordingly to match your

account size.

Those are the settings that proved to be the best. When we spot a change in the market behaviour, we will update them. But for now the Crescendo EA has been very consistent with those settings so it’s better not to change them.

Remember that the minimum account size for microlots (0.01 lots) is $ 1.000 and

$ 10.000 for minilots (0.1 lots). That way you'll have enough margin to withstand even the largest drops.

SEMI-AUTOMATIC

For those who want to also use the Crescendo EA as an automatic trading tool here are my suggestions about that.

There are a few parameters you can play with to adapt the Crescendo EA to the market conditions based on your analysis as a trader. Let’s go more in depth on each of them and see how to use them best.

order_step & target_profit

These two variables define how the Crescendo EA should behave with respect to the "price". The default values have been tested and in my opinion they are a very good balanced setting, which works most of the time.

But there are also periods of lower volatility, or higher volatility where you can decide to lower or increase their values. When volatility is lower you can decide to decrease them and when it's greater you can decide to increase them. www.ForexCrescendo.com Page 30

www.ForexCrescendo.com

One of my preferred "indicators" for volatility is the Average Daily Range

(ADR). The Average Daily Range is the average distance from the daily high and the daily low of the last N days, in pips. You can decide how many N days to use.

If, for example, you want to calculate the weekly ADR, you'll use 5 days

(because there are 5 days of trading in a week). If you want to calculate a monthly ADR you'll use around 20 days. For the quarter, you'll use 60 or

70 days. And so on.

If you compare the weekly, monthly and quarterly ADRs you will have important information about the market "trend". You will be able to determine if it is increasing or decreasing based on this information. You can then decide to increase or decrease the "order_step" and

"target_profit" accordingly.

This is just one of the many "volatility" indicators that you can use.

Standard Deviation and ATR are a couple of other commonly used ones. www.ForexCrescendo.com Page 31

www.ForexCrescendo.com

frequency

This variable defines the Crescendo EA’s behaviour with respect to

"time". Like we did for the "order_step" we can strongly modify the way the Crescendo EA behaves setting this variable to one of the 6 possible values: from 0 to 5.

0 - check always on

1 - check is made every 1 hour

2 - check is made every 3 hours

3 - check is made every 6 hours

4 - check is made every 12 hours (default)

5 - check is made every 24 hours

How should you decide to modify it? Your decision should be based on trend strength. The stronger the trend the lower the number of the frequency option. That way the Crescendo EA will open orders more frequently and you'll be able to "scalp" the trend in further depth.

So when you see that the trend strength is increasing, lower that number.

You can even use the "0" setting and you'll see the Crescendo EA open a new order as soon as one is closed.

You can greatly increase profitability using this technique. But use it cautiously because if the trend suddenly and strongly reverses you can find yourself with many open orders in the wrong direction.

How to measure the strength of a trend? Again, there are many methods to do so, but if you bought the Crescendo EA you should also have my

Cruscotto indicator.

The Cruscotto indicator is a very good tool to help you in finding out if the trend on pairs is weak or strong. I won't go in depth about how to use the

Cruscotto in this document because you will find a comprehensive manual on the download page and videos that will explain everything.

But you can also use the "frequency" to lower the risks and draw downs by letting Crescendo EA open fewer trades. Let's say for example that you are in a counter-trend. I mean that you are opening long positions, while the trend turned down. To wait for the trend to come back to long www.ForexCrescendo.com Page 32

www.ForexCrescendo.com and close all the open orders, with the minimum number of orders possible, you can decide to increase "frequency" to 5 (daily). That means that the Crescendo EA will check for conditions to open new orders only once a day.

manual_trend & trend_direction

The algorithm behind the trend direction resolution is one of the best that

I've ever come across. But it doesn't take into account many external aspects that may influence currencies. For that reason I wanted to leave you the opportunity for you to decide the direction that Crescendo has to use for trading.

Doing that is very easy: set "manual_trend" to true and then set the

"trend_direction" to "1" if you want it to go long only, or "-1" if you want it to go short only.

max_total_DD

In my opinion this is one of the real key concepts of the Crescendo EA.

I've heard traders always saying that you should not trade without using stop losses. That is true if you look at each single trade.

But think about that...

Every time you open a trade, let's say a long trade, what is the probability that, the next day, at the same time your trade is in profit? I'd say 50%.

Nothing, not even technical analysis, can give you a different percentage from that. But if you put a stop loss on your trade you are cutting your www.ForexCrescendo.com Page 33

www.ForexCrescendo.com

50% chance of being profitable to less, because you are not giving your trade the chance to come back in to profit.

But we also have to "protect" our money. How do we protect our money without cutting our chances of our trades ending in profit? By thinking globally! The Crescendo EA manages risks looking at the global picture of all the trades it is managing and not by looking at just one single trade. www.ForexCrescendo.com Page 34

www.ForexCrescendo.com

BACKTESTING THE EA

As explained, the Crescendo EA uses a multi-currency approach to trading the markets.

The Metatrader 4 platform strategy tester is not able to backtest an EA using multiple currencies (this feature has been added to MetaTrader 5).

So doing a backtest has no real meaning as the strategy works using the two pairs at the same time.

Most of all the data coming with the MT4 platform are really poor and are not good to do a reliable backtest for Crescendo.

On our website ( http://www.forexcrescendo.com

) you'll find backtests made using a particular technique and tick by tick data from Dukascopy ( http://www.dukascopy.com/

).

They are very reliable (99% quality) and these are the backtests we used to develop and optimize the strategy behind Crescendo EA. www.ForexCrescendo.com Page 35

www.ForexCrescendo.com

TROUBLESHOOTING

The installer doesn’t work.

If your computer is running Microsoft Windows 7 or Windows Vista, you should run the installer with administrative privileges. To do that simply right click on it and choose “run as administrator”.

Can’t find Crescendo EA in the list of Expert Advisors

To find the Crescendo EA to be applied to the charts, you have to open the

“Navigator” window in your MT4 platform. To do so, go to the “View” menu and choose Navigator (or press CTRL+N). Double click the “Expert Advisors” section so that the list of EAs will be shown.

If “Crescendo_v1” is not in that list, it means that something went wrong with the installation. Close the MT4 platform, run the “Crescendo_v1.exe” installer again and make sure that your broker platform is in the list of those automatically found. If not, simply add the directory manually (as described in point 5 of the

Installation Process).

Crescendo EA only shows the “authenticating” message

This usually happens during the weekend when the Forex market is closed. At that time no new data is sent to the platform and new data is what makes EAs and indicators work. As soon as the market opens again on Sunday (the time depends on where you live), the Crescendo EA will start working again and it will authenticate.

If the market is open and the Crescendo EA still doesn’t show any message other than “authenticating”, simply remove it from the chart (right click on the chart, “Expert Advisors > Remove”) and re-apply it.

My Crescendo EA authentication failed

There may be two reasons for that:

• You did not enter any values in the username and password fields of the

Crescendo EA.

• You entered the wrong values in the username and password fields of the

Crescendo EA.

To re-authenticate you have to remove the Crescendo EA from the chart (right click on the chart, “Expert Advisors > Remove”) and re-apply it. Make sure you enter the correct values in the username and password options on the EA’s

“Input” tab.

Crescendo doesn’t place any orders

The Crescendo EA’s trades are based on a frequency setting. The default setting

(4) makes the EA trade every 12 hours, or twice a day. The very last line of the www.ForexCrescendo.com Page 36

www.ForexCrescendo.com

Crescendo EA text interface, shows a countdown to the next market scan. When the countdown reaches the 00:00 mark, it will check the conditions to open a trade and if they are met it will open a new order.

To make sure that everything is OK, also check that the “HullMA” is listed under the “Custom Indicators” section of the Navigator window, as this is the indicator used to automatically check the trend of the market. If it’s not there, close MT4 and run the Crescendo installer again.

Another possible reason for that is if your broker uses suffixes for the symbol names. If so you have to set the “suffix” option accordingly.

Crescendo places orders only on GBPUSD (or only on GBPJPY)

To trade both GBPUSD and GBPJPY, you have to open two charts (one for the

GBPUSD and one for the GBPJPY, the timeframe is not important) and apply the

Crescendo EA on each of them. If you apply it to only one chart there will be no trades placed on the other pair.

If you are unable to resolve any problems simply write an email to me using the following email address and we’ll be happy to help out in any way possible: [email protected]

www.ForexCrescendo.com Page 37

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