Forex Crescendo EA Manual v1.3

Forex Crescendo EA Manual v1.3
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Forex Crescendo
User Guide &
Installation
Manual
Brought to you by:
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
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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
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The information provided in this report is not intended for distribution to, or use by any person or entity in
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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
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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
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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.
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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
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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!
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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.
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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.
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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).
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Here you can see further performance statistics from Crescendo on our live trading
account:
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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.
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3. Accept the agreement.
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4. Select the MT4 platforms where you want Crescendo EA to be installed.
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5. If the MT4 directory is not listed, you can add it using the "Add a MetaTrader
folder" button.
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6. Review the information.
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7. Wait for the installation progress to arrive to the end (it should display "Done." in
the text window).
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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.
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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):
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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”.
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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.
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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.
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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.
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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.
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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.
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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
0
1
2
3
4
5
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
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.
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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
$ 1.000
$ 2.000
$ 3 000
$ 4 000
$ 5 000
$ 10 000
$ 15 000
$ 20 000
initial_balance
1000
2000
3000
4000
5000
10000
15000
20000
lot_size
0.01
0.02
0.03
0.04
0.05
0.10
0.15
0.20
target_profit
4
8
12
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).
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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
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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
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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.
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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.
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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.
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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
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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
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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.
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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.
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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
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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]
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