Cascade ordering strategy base on mathematics and statistic

Summary

In this Eco Engineering video, host Chia leelipur introduces the Cascade ordering strategy, a mathematical and statistical approach to optimizing trade exits in Forex, crypto, and stock markets. The video is divided into three parts: explaining the strategy, demonstrating its programming in MQL4, and showcasing its performance through backtesting. The strategy involves opening new orders at the same lot size after hitting take profit, adjusting stop losses, and aiming for higher profits. The host emphasizes the importance of a solid entry strategy and responsible lot sizing for effective trading.

Takeaways

• 😀 The video introduces a unique trading strategy called 'Cascade ordering strategy' developed by the host, based on mathematics and statistics.
• 📈 The strategy involves opening new orders of the same lot size after hitting a take profit, shifting the stop loss to five points below the new order, aiming to compound profits.
• 🔢 The video is structured into three parts: explanation of the strategy, programming the strategy in MQL4, and testing the strategy's performance.
• 👨‍🏫 The host offers to teach viewers how to program the strategy in MQL4, suitable for those with no prior programming experience.
• 📊 The strategy is backtested using the Strategy Tester, demonstrating its performance over a specific period with a starting capital of $100,000.
• 💡 The Cascade ordering technique is not an entry strategy but a method to optimize exit points and maximize profit from existing trades.
• 📉 The strategy includes scenarios for managing losses by closing orders when the price hits the stop loss, ensuring risk management is maintained.
• 📈 The video emphasizes the importance of a good entry strategy, stating that the Cascade technique can only amplify profits if the entry strategy is already profitable.
• 📝 The host provides custom user-defined functions in MQL4 to check for new candles, count open orders for a specific symbol, and close all orders for a specific symbol.
• 📉 The video script mentions a scenario where even if the strategy is wrong in 10 trades, it can still make a profit due to the compounding effect of correct trades.
• 👍 The host encourages viewers to subscribe and provide feedback for future video topics, emphasizing the channel's focus on algorithmic trading strategies in Forex, crypto, and stocks markets.

Q & A

What is the main topic of the video by Chia leelipur?

The main topic of the video is the introduction and explanation of a new trading strategy named 'Cascade ordering strategy' developed by the host, which is based on mathematical and statistical principles.

What are the three parts of the video?

The three parts of the video are: 1) Teaching the Cascade ordering strategy and its mathematical and statistical basis, 2) Demonstrating how to program the strategy using the MQL4 language, and 3) Showing the results and testing the strategy's performance using a strategy tester.

What is MQL4 language used for in the context of this video?

In this video, MQL4 language is used for programming the Cascade ordering strategy, which is a technique for optimizing exit points in trading.

How does the Cascade ordering strategy differ from traditional order closing methods?

The Cascade ordering strategy differs by opening a new order with the same lot size instead of closing an order when the take profit is hit, and adjusting the stop loss to five points lower than the new order's entry point, aiming to capture more profits.

What is the purpose of opening a new order instead of closing the existing one when the take profit is reached?

The purpose is to potentially capture additional profits by maintaining a position in the market and allowing for further price movement in a favorable direction.

What is the significance of the 'new candle' condition in the MQL4 code?

The 'new candle' condition is significant because it ensures that certain parts of the trading strategy are executed only once per candle, which helps in managing the timing of order placements.

What does the 'symbol open orders' function do in the MQL4 code?

The 'symbol open orders' function counts and returns the number of open orders related to a specific symbol, which is important for managing orders and applying the Cascade ordering strategy correctly.

How does the strategy handle the closing of multiple orders when a stop loss is hit?

The strategy uses a custom 'close all orders' function to close all open orders for a specific symbol when the stop loss condition is met, ensuring a systematic exit from the market.

What is the importance of having a good entry strategy in addition to the Cascade ordering strategy?

A good entry strategy is important because the Cascade ordering strategy is designed to maximize profits and efficiently close orders, but it does not provide signals for market entry. A profitable trading approach requires both effective entry and exit strategies.

What was the performance of the Cascade ordering strategy in the backtest shown in the video?

In the backtest, the strategy demonstrated a profit of $12,175 with an initial deposit of $100,000, achieving approximately 12% return on the balance in one month, based on the parameters and conditions set for the test.

Outlines

00:00

📈 Introduction to the Cascade Ordering Strategy

The host, Chialeelipur, introduces a unique trading strategy called the Cascade ordering strategy, developed by himself, which is based on mathematical and statistical principles. The video is divided into three sections: explanation of the strategy, programming it in MQL4 language, and testing the strategy's performance. The strategy involves opening new orders at the same lot size with adjusted stop losses instead of closing orders when take profit is hit, aiming to maximize profits. The host encourages viewers to subscribe and leave comments for future video topics, emphasizing the channel's focus on algorithmic trading strategies in Forex, crypto, and stock markets.

05:03

💻 Programming the Cascade Strategy in MQL4

This paragraph delves into the technical aspect of programming the Cascade strategy using the MQL4 language. It requires knowledge of programming and the script includes user-defined functions for checking new candles, counting open orders for a specific symbol, and closing all orders for a symbol. The host explains the logic behind the strategy's programming, such as checking for overbought or oversold RSI levels to determine buy or sell orders. The paragraph also discusses the importance of having a good entry strategy and how the Cascade technique is meant to optimize exit points rather than provide entry signals.

10:04

📊 Backtesting the Cascade Strategy's Performance

The host demonstrates how to backtest the Cascade strategy using the strategy tester, emphasizing the importance of having a solid entry strategy as the Cascade technique does not provide market entry signals. The backtest involves setting up the strategy tester with specific parameters, including the initial deposit, symbol, and time frame. The process shows the strategy in action, opening and managing orders based on the RSI indicator, and adjusting stop losses and take profits as the market moves. The results are displayed, showing the strategy's performance over a period.

15:06

🏆 Analyzing the Results of the Cascade Strategy

In this paragraph, the host analyzes the results of the backtested Cascade strategy, highlighting the initial deposit, profit gained, and the absolute drawdown. The summary of trades shows the number of trades, win rate, and profit from short positions. The host stresses that the strategy's success is contingent on having a good entry strategy and that the Cascade technique is designed to maximize profits by efficiently managing exit points. The results are presented to illustrate the potential of the strategy when used correctly.

20:09

📚 Conclusion and Final Thoughts on the Cascade Strategy

The host concludes the video by reiterating the importance of the entry strategy and the role of the Cascade technique in enhancing profit efficiency. He emphasizes that the strategy's success is not standalone and depends on the effectiveness of the entry strategy. The host also reminds viewers that the lots and points used in the demonstration are for educational purposes and should be tailored to individual trading logic and risk management. He invites viewers to like the video if they found it useful and bids them farewell, promising more informative content in future videos.

Keywords

💡Cascade Ordering Strategy

The Cascade Ordering Strategy is a unique trading strategy developed by the host, Chia leelipur, which is grounded in mathematical and statistical principles. It is designed to optimize exit points in trading by opening new orders of the same size after hitting a take profit, thereby cascading the stop loss to a more favorable position. This strategy is central to the video's theme as it is the main technique being taught and demonstrated.

💡MQL4 Language

MQL4, which stands for MetaQuotes Language 4, is a programming language used for creating custom indicators, scripts, and automated trading systems for the MetaTrader 4 platform. In the video, the host teaches viewers how to program the Cascade Ordering Strategy using MQL4, making it a key concept for those interested in implementing the strategy programmatically.

💡Risk to Reward Ratio

The risk to reward ratio is a fundamental concept in trading that compares the potential loss (risk) of a trade to its potential gain (reward). In the script, it is mentioned that the host establishes a stop loss 10 pips below the entry point and a take profit 20 pips above it, indicating a risk to reward ratio of 1:2. This concept is crucial for understanding how the Cascade Ordering Strategy manages risk.

💡Stop Loss

A stop loss is an order placed with a broker to sell a security when it reaches a certain price. It is designed to limit an investor's loss on a position. In the context of the video, the stop loss is used to protect against unfavorable market movements and is adjusted as new orders are opened following the Cascade Ordering Strategy.

💡Take Profit

Take profit is an order set by a trader to sell a security when it reaches a certain price, locking in a certain profit level. In the video, instead of closing an order when the take profit is hit, the host opens a new order with the same lot size and adjusts the stop loss, aiming to capture additional profits as the market moves in a favorable direction.

💡Algorithmic Trading

Algorithmic trading refers to the use of computer programs to execute trades automatically based on predefined criteria. The host mentions that the channel focuses on different strategies for Forex, crypto, and stock markets, specifically on creating algorithms for them and using algorithmic trading in daily tradings, highlighting the importance of automation in implementing trading strategies.

💡RSI (Relative Strength Index)

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. It is used to identify overbought or oversold conditions in the market. In the video, the host uses RSI levels to determine entry points for trades, preferring to sell when the RSI is in the oversold area and buy when it is in the overbought area.

💡Strategy Tester

The Strategy Tester is a tool within the MetaTrader platform used to backtest trading strategies on historical data. In the video, the host uses the Strategy Tester to evaluate the performance of the Cascade Ordering Strategy, demonstrating its effectiveness over a specific period using historical price data.

💡Lot Size

Lot size refers to the number of units of a security that a trader intends to buy or sell in a single transaction. The host discusses lot size in the context of opening new orders with the same lot size after hitting a take profit, emphasizing the importance of appropriate lot sizing in managing risk and maximizing profit.

💡Backtesting

Backtesting is the process of testing a trading strategy using historical data to see how it would have performed. It is a key part of the video as the host uses backtesting to demonstrate the performance of the Cascade Ordering Strategy, providing insights into its potential profitability and risk.

Highlights

Introduction of the Cascade ordering strategy, a unique mathematical and statistical approach developed by the host.

The video is structured into three parts: strategy explanation, programming in mql4, and performance testing.

Cascade strategy involves opening new orders of the same size instead of closing when take profit is hit, moving stop loss to five points lower.

The strategy's performance is demonstrated through various scenarios, illustrating potential profits and losses.

Explanation of the traditional order closing method versus the Cascade strategy's approach to maximize profits.

The importance of having a good entry strategy into the market before applying the Cascade technique.

Programming the Cascade strategy using mql4, including custom functions for new candle detection and symbol-specific open orders.

The video provides a step-by-step guide on implementing the strategy in mql4, suitable for viewers with programming experience.

Discussion on the logic behind opening and closing orders based on RSI levels, favoring contrarian entry points.

The strategy's performance is backtested using the strategy tester, with settings for initial capital, time frame, and other parameters.

Results from the backtest, showing a 12% gain in balance with a maximum drawdown of 1% of the balance.

Emphasis on the importance of risk management, with stop losses set to ensure only a small percentage of the balance is at risk per trade.

The strategy's effectiveness is highlighted by the potential to be wrong on multiple trades and still maintain profitability.

A reminder that the lots and points used in the video are for educational purposes and should be tailored to individual trading strategies.

The video concludes with a reminder that the Cascade technique is not an entry strategy but a method to optimize exit points and maximize profits.

An invitation for viewers to request videos on specific topics, including the custom functions used in the strategy.

A call to action for viewers to like the video to support the channel and help it reach a wider audience interested in algorithmic trading.

Transcripts

Hello everybody welcome to your channel

Eco engineering this is your host Chia

leelipur in this video I'm going to

teach you a new strategy named Cascade

ordering strategy this strategy was

developed by myself I have never seen

anybody else use it and it's completely

based on mathematics and statistics uh

this video has three different parts in

the first section I will teach you the

strategy we will talk about the uh

mathematics and statistics behind it and

in the second section I teach you how to

program it with mql4 language and in the

third section I will show you the

results and test this strategy by using

strategy user and we can see the

performance of this strategy if if this

is your first time watching our Channel

I would really appreciate to hips hit

subscribe button in this channel we

focus on different strategies in Forex

crypto and stocks markets and

specifically on I'm making an algorithm

for them and using algorithmic trading

in our daily tradings if you have any

suggestion for upcoming videos and you

want me to make a video regarding them I

would really appreciate to leave me a

comment I will read them and consider

them for upcoming videos I hope you

enjoyed this video and stay with me to

the end

normally when we open an order based on

any strategy and we enter into the

market we have established for example

10 P 10 points or Pips lower than the

entry point and if the risk to reward is

two we put the take profit 20 Pips or

points higher than the entry point and

whenever the price goes high and uh it

goes in our favor and hit the take

profit

we close the open order

and if it goes down and hit the establas

we close the order with losing money but

with this strategy instead of closing

the order when we hit the take profit we

open a new order exactly with the same

lot size and transfer the establas to

five

points lower than the new

open orders and we hope that the price

goes higher

and we make more money because in this

case we have two open orders

but

the first scenario is that the price

does not goes in our favor and it goes

back and hit this Star Plus which is in

this case is establas for second open

order and take profit for the first open

order

uh we calculate the profit that we have

in this scenario the profit would be one

lot multiply 50.1 lot for this order uh

which gained 15 points plus minus one

Lord multiply five point for this open

order which

uh it lost four five points and the

result would be 10 unit

so

if we didn't do that

then we would have gained 20 points 20

20 units and now we have gained 10 units

but we continue we continue and see

other scenarios imagine that price goes

in our favor and uh increased by 20

points in this case again instead of

closing the order we open a new order

with exactly the same lot size and we

transfer the stop loss to five point

below the New Order and in this case

then this line would be take profit for

the first and the second

order and star plus four the third one

and we are hoping that the price goes

even higher and we gain and if we

multiply actually our profit but the

first scenario is that the price doesn't

do that and it goes back and hit this

stop loss

and we calculate our profit the first

profit that we have is one lot

multiplies 35 regarding the first order

Plus

one large multiply 15 points regarding

the second order

and plus minus one lad multiply five

point regarding the third open order

which last

three

Five Points in this case

the profit would be 45 units

see it's increased very fast but again

we continue we continue the scenarios

now imagine that a game price goes even

higher

and after 20 points

we open again another order

and we hope that price goes higher so

our profit would be multiply

and we transfer the stablas Five Point

lower than below the force order which

is only the established for this order

and take profit for the others

again we hope that the price goes higher

but in this case the first scenario is

that the price goes down and hit the

establas and we calculate the profit the

profit would be one lot multiplier 55

for regarding the first order Plus

one lot multiplies 35 Point Plus

one lad multiply 15 points regarding the

second and the third open order and plus

minus one that multiply 5 unit regarding

the last order and then in this case

we gain 100 units

so

uh imagine that only once per month we

get to this point and we hit the force

open orders

in this case we need to

be wrong in 10 other orders and we hit

the establas for the next 10 orders to

lose this money that we gained here

statistically speaking this way of

closing the order is

perfect actually I have worked with that

a lot in the next section I will teach

you how to program this strategy and in

the last section we will

uh test this strategy by using strategy

tester Stay With Me

so in this part of the video I will show

you how I program this strategy uh with

mql4 language if you are not interested

in the programming side programming

section I will suggest you

to pass this video to the minute and the

second that you can see here to see only

the results of this strategy and its

performance

so this section of the video needs some

knowledge about the programming with MP4

language if you don't have any

experience I leave you uh the link to

the video that I started completely from

A to Z and even it's suitable for those

who doesn't have any experience in

programming I teach it I had it from

very Basics so ah the first thing is

that we have here is an if condition and

I check it whether it is the new candle

or not because I want to send a cell or

buy order only at the beginning of the

candle we don't have such predefined

function in mql4 and I had to write it

down by myself I used three user defined

function and at the end of this section

I will explain how they are worked I

once I wrote them and now I saved them

in my most common includes and for any

new projects even in the future I don't

have to write them down again and I just

call them and use them so if it's new

candle it means trade is okay I am ready

to send

an order so

here I'll check

here we have another if

condition I check the number of open

orders for a specific symbol if you are

familiar with the mq4 language normally

we use orders total to see the open

orders but this order totals return all

open orders but it doesn't separate them

based on the symbols for example when we

have 10 orders orders totals return 10

but maybe I'm just interested in two of

them which are related to the euro USD

so I had to wrote down write down

another another

a user defined function which is simple

open orders and I show you at the end of

this section two and if the open orders

for specific symbols is zero it means

we can go for our open or order strategy

not uh not

closing strategy remember these

techniques this Cascade ordering

techniques is just for closing and

optimizing our exit points not for

opening a new strategy this strategy is

very simple it checks whether we are it

checks whether we are in the oversold

RSI or overbought RSI levels if in

contrast with what is common between

people and new Traders I prefer whenever

I start to get

into or enter the oversolds area I want

to sell and if I entered into the the

overbought area I wanna buy and this is

strategy work like that and after that

the process after opening the first

order from this else to the end the

process of opening second and third and

fourth order starts and here we have two

separate sections

the first section is when the first open

order is by and the second section is

when the first open order is sell it

checks

checks when whether when the ask is

greater than take profit and the first

order is Buy

and then it update the take profit and

update the stop loss and open a new buy

order

but in this section when the first open

order is sell the first open order is

sell at this one is means that it's not

by the first order is not by

and when and at the same time the beat

is less than take profit it sends a new

sell order and update take profit and

stop loss

ah and uh

after that for closing the orders we

should have

another section here for closing the

orders when for example we open 10

orders and at the tense order uh it goes

back and hit the stop loss we should

close all of them based on some

technical issues I prefer instead of

writing them writing it down here to

write it down at the beginning of the

code which is Trail stop loss and

closing it

in this section

if uh if the conditions met then I send

the order of closing all open orders

and again I use a user defined function

which is defined by myself

close orders say mql4 language has a

predefined function names

uh

order close but this order closed just

close one

order I want to close all open orders

only regarding a specific symbol that's

why I write I wrote down this code by

myself several years ago and I saved it

in my most common includes

and when these conditions are true then

we close all

open orders and I mentioned three

previous three user defined function

which I'm using by myself the first one

if you remember was

new candle

because

I want to send some I want to

run some part of the code only once per

candle so I had to

uh Define these codes and I usually use

it a lot in different codes that's why I

saved it you can pause the video and

read it because I think it would be

interesting for you too and if you are

interested did I please leave me a

comment to make a video for that I will

consider it for each of these user

defined functions if you are interested

in them please let me know I will

consider them for upcoming videos and

the second

user defined function was symbol open

orders this one which is again it's

written by myself because I needed a lot

in different projects and different

codes that's why I saved it and

it just

check the name of

open orders with the in

symbol or name which is entered by

a user and check it and if they were

equal to each other

in we have a counter name open orders

open orders and this counter would be

added by one would be increased by one

and it just count count at the end at

the end

it Returns the number of open orders

related to a specific symbol you can

again pose this part of the video too

and read it more carefully and if you

want me you place them to have to make a

video for that please leave me a comment

and the last and not least but not least

is the close all orders which is written

here I suggest you to post this part of

the video too and look at it carefully

in the next section I will

show you the performance and the results

of this strategy

again I don't like to call it a strategy

I prefer to call a technique to close

the orders because

it's just it just make your strategy

more efficient first of all you have to

have a very good strategy to enter the

market and this strategy doesn't give

you a signal to enter the market this

strategy just help you to maximize

maximize your profit in previous section

I showed you how I program this strategy

and in this section we use strategy

tester to back test these techniques

first the entry strategy is very simple

we just enter this enter the market by

based on the other side and whenever the

RSI is going for example into the

overbought area we send an order we hope

that it continues the trend and whenever

it goes to oversold area we send a sell

order to and hope that the

uh Trend will continue now and then

after opening the first order we check

it whenever we hit the take profit

uh instead of closing the order we open

new orders and we do that as many time

as possible until we hit the stop loss

so first I from here I open the strategy

Tester the strategy tester is opened

I chose the Cascade ordering code which

is the

code of this strategy and from here I

choose Euro USD and I from here I use

the date from when to when I wanna test

this strategy from first of

Argos to force of

September

and from the expert properties in the

testing I want my initial value be 100

000 USD I wanted to

be able to open buy and sell or long or

short positions

and the inputs of the strategy the

inputs of these code is written here and

we can give them initial values if you

are not familiar with that I again leave

you the link for

uh its course and you can find it and

see the course and learn how to use it

so

now the strategy tester is ready

and I press ok

and now the period I wanna I want this

strategy this could be run on the one

hour time frame

and the speed will be controlled from

here everything is controlled now if I

press the starter strategy with star to

run I press start and I add a template a

clean one which is used here

and

we it starts to running after

downloading the data of previous months

for this Euro USD

symbol it takes a while

it's downloading

and we wait for it and it's already

download and I press run and it starts

running see the first order is opened

and it waits to go higher and if it goes

back and hit the stop loss it's over we

lost it because our entry

uh was not correct but if it's go

continue and Go in our favor then it

open new order in this case it didn't go

in that way

we wait for it and now here it goes in

our favor it opens the second order and

the third order was opened here and it

goes higher but it couldn't reach the

point to open the force order and it

goes back and here it closed or orders

now again

I it comes down the first order was open

then the second order was open but it

couldn't reach the for the third order

and

it continues

as we can see

it's going very fast

but I think

if we see the results we can see here

for example here as you can see for

example here as you can see we have

three orders it couldn't reach the

fourth orders the first orders closed

with uh

3592 dollars in profit one the second

one is one hundreds

1663 dollar and uh

Force search third one minus 261 dollar

uh is lost and if I goes down we can see

all the results the graph is like that

it's going in this sleep page very

beautiful one and uh now as you can see

this is the result of this strategy

um

the initial deposit was one thousand one

hundred thousand dollar uh we gained uh

twelve thousand dollar twelve thousand

twelve thousand one hundred seventy five

dollars

uh and the absolute drawback is written

here the total trades 30 trades were

open in these one month the short

positions that we won

uh is 43 percent of them closed by

profit

and you can see all other data related

to this strategy but at the end without

risking whole balance with having only

risking one percent of our

uh and balance because whenever we open

we open an order the establas was in a

place which when we hit it we only would

have lost one person out of our balance

so with all with only uh with having a

logical stablas we gained about 12

percent of our balance in one month uh

before finishing this video I want to

notice that all the lots and points

which were used and mentioned in this

video actually they are for just

educational purposes for example these

one lots that I mentioned is should not

be always one last it should be based on

the logic and risk to reward and what is

optimized optimized lot size for your

tradings it should be calculated but

here I just wanted to see to show you uh

the mathematics and I wanted it to be as

easy as possible that's why I used 1.10

one last 10 points for Star Plus and 20

points for take profits it can be

anything and any combination and you can

do it even more efficient than me and

the second one is I want you I want to

mention you again that the interest

strategy is very important this strategy

or it's better to say techniques that I

showed you in this video is actually

just a strategy and techniques to gain

more money to be more efficient and to

increase and multiply your profit it's

not an entry point strategy if your

interest strategy for inter the market

is not a good one and it's not a

profitable one there's techniques does

not help you a lot I hope you enjoyed

this video If you enjoyed it please hit

the like button so the algorithm YouTube

will introduce us to those who are

interested in this subject

I wish you have a good day goodbye