How I built trading algorithm in a day without much trading experience
Building a trading algo is made easy by Capitalico. I myself had very little experience in technical chart analysis, or to be honest I have never day-traded before, but was able to build profitable trading algo in a day so I’m explaining how.
The key indicator I’m using this time is Bollinger Band. This indicator is to show moving average and moving standard deviation and looks like this.
There is a gray range around the candlesticks with a center line. This center line is the moving average over the last time window and the upper and lower lines are the standard deviation over the same time window. As you can see, the price movement tends to fit within this range, and that’s based on the standard distribution. So on the flip side, you can also say that if the price goes out of range, it tends to come back closer to the center line. Combining with two simple moving average lines, the price range is moving down but I thought at some point the price goes up again when it goes out of the band. That is happening in the chart above, so I click the beginning of pattern and drag up to the entry point where price uptrend starts. The right edge of the selection range should be the entry point where you buy this currency pair.
Then I click the “Make Algorithm” and wait for 30 minutes or so. After it becomes ready for backtest, I try different set of backtest parameters. It seems the confidence level of 0.85 should be enough to say the pattern is happening, and set “buy” with the loss cut/profit take at 10 pips.
Hmm, it’s not bad… Keep in mind that it does not trade very frequently. It is most likely because I have chosen only one range of the history, making the AI look for very strictly similar pattern to what I chose. If you think other, slightly different patterns are acceptable, you are going to tell so by giving more of those patterns.
But it is still good that the strategy can win constantly. Did I write any programming at all? Note that this happened to be a good algo and many times you will see unstable or low performance ones, but that’s good as you can learn how it wins and loses and think again about your strategy, which is exactly what most professional traders are doing.
Hope this help you understand how you can build a trading algo with Capitalico. We are running closed beta in a limited time and we value your feedback. Sign up for the beta test today, and don’t miss this chance to get involved in the new trading era with Capitalico!
Enjoy happy trading life!