The filters in Active Trader describe chart situations where the basic strategy is inappropriate. Mostly it makes sense to reverse the direction of the trade at that situation.
To demonstrate how the filters work we use the ‘turn around’ feature of Active Trader. At the end of the settings are the settings TestFilterBuy and TestFilterSell. Each filter of Active Trader can be tested by adding 100 to the number of the filter. Then only the tested filter is active and turned around – instead of suppressing a trade it triggers one in the opposite direction. Then its function can be seen easily in the chart after a backtest. A reversed test of a filter with a good, profitable test result means that the filter is good. Let’s test filter S1, so we set 101 in TestFilterBuy and make a backtest.
Below is one of the triggered trades.
Touching the red ‘ok hook’ with the mousetip a small popup window shows what we’ve put here under the hook. To understand this we go back to the point when the trade was started.
After a backtest: If you open ‘Graph’ in the Tester and click on the graph ‘Results’ opens and shows the result of the trade made at that point where you clicked on the graph.
If you click on a result the chart jumps to the point where that trade was made.
In picture below you see the chart right after the trade was triggered. We are in H1 chart. Our current candle that just started and develops the next 60 minutes, we call candle 0 (Zero). The long rising candle right before the trade was triggered is candle 1, the next to the left 2, 3 and so on.
An open-high-low-close chart (also OHLC) describes the candle right before the trade is triggered with: open1 – high1 – low1 – close1 or short: o1 – h1 –l1 – c1.
So it becomes understandable what the text says about the filter: o2>c2 means open of candle 2 is higher than its close, so the candle is falling. The same is true for candle 3. Then follows that the hour must be higher than 10 und lower than 16.
So this simple filter says: No Buy trade if, before our triggering candle appears, the price has been falling for 2 hours, in the time from 11 to 15 hours. We simply don’t trust in a sudden upward move when the price has been falling before for 2 hours.
If you make a ‘normal’ backtest with all filters active, only filter B1 deactivated, the test result is significantly worse than with all filters active.. A test since 2008 to end of 2018 with 1 lot fixed lotsize shows about 2800 USD less in the result without filter B1. So this filter improves the test result about 2800 points or 280 pips.
Let’s go to filter B2. Here a special theme is treated: the round numbers.
We use again the ‘turn around’ feature of Active Trader, set 102 in TestFilterBuy and look at the chart after the backtest. If you touch with the mousetip one of the yellow dash-dot lines it shows rdn what means in our code round number. In the chart below the round numbers are 1.33 and 1.34 and 1.35. The brown dash-dot lines also show rdn, but they are another class of round numbers, the ..50 values. Here it is 1.3350 and 1.3450.
For our look at the chart we define 2 parameters rdn and rdu. We always look at it from the close of our last candle (before the trade is triggered). The next round number below the close of candle 1 is rdn, the next above it is rdu (round number up)
The code of the filter shows: o1>rdu. So it is clear that the candle was falling, its open was above the round number. The opposite statement would be: o1<rdn. Then is clear that the candle is rising, it started below the round number.
The next parameters regarding round numbers are rd0 (r d zero) and rdx. If c1 is above a ‘real’ round number like e.g. 1.33 and below a ‘false’ round number like 1.3350 rd0 is true.
If c1 is above a ‘false’ round number like e.g. 1.3450 and below a ‘real’ round number like 1.35 rdx is true. In our chart above that is the case. The condition + rdx is fulfilled.
The 2 statements o1>rdu and rdx together describe clearly that the last candle started above a ‘real’ round number and ended below it. When you study the charts a little you’ll see that the round numbers are hotly contested, especially the ‘real’ round numbers. So the fact that a candle started above and closed below a ‘real’ round number triggers this filter. The additional condition ll5 (lowest low of last 5 hours) != (is not equal) lld (lowest low of the day) means that the days low must not be within the last 5 hours. This prevents that filter B2 triggers at trades like shown in the picture below.
In the left chart l1 itself is the low of the day, then of course we prefer a Buy trade. In the right chart you see a typical situation where price after a ‘shake out’ at the bottom rises sharply. The low of the day lld was 4 hours ago when the trade was triggered. Then its more likely that the rise continues.
Filter B2 is not one of the best, it improves the test result since 2008 only 100 pips. But it is good to explain the round numbers parameters. They appear in some other filters again.
You know now how to read the info the filters show in the chart. It is not possible to edit and change a filter directly. But you can deactivate each one in the settings and replace it by a own filter. Your own filter may be a new version of a deactivated filter or you just add a complete new filter. You can create up to 2 own filters. As written in Active Trader for free good own filters are rewarded and are added to the existing ones. We also work on new filters. So the amount of filters should grow in the future.
Setting of the filters
In the settings you find a setting:
Here the Buy filters 1 to 6 are set. The first number relies to filter B1, the second to filter B2 etc. A zero means the filter is deactivated, 1 means the filter blocks a Buy trade, if 2 is set a Sell is triggered instead of a Buy. A 3 means the filter triggers a sell only if hour > 13, set 4 the filter triggers a sell only if hour < 15.
FiltersB7_12 is the next block where the filters 7 to 12 are set. This way it continues up to filter 30. With the Sell filters it works the same way.
Later we’ll explain here some more filters. But with the info the filters give in the chart you already can understand the function of each one.