The RECO Expert Advisor is an innovative VertexFX client-side script that places trades by identifying the market trend. It is based on the Relative Strength Index (RSI), oscillator and employs a variation of the Martingale based position management.
When the Expert Advisor starts afresh without any open positions, it waits for the RSI to cross below the RSI_BUY_ZONE or above the RSI_SELL_ZONE threshold levels. The initial BUY trade is placed when the RSI is below the RSI_BUY_ZONE, and likewise, the initial SELL trade is placed when the RSI is above the RSI_SELL_ZONE.
Once the initial BUY trade is placed, the next BUY trade will be placed when RSI is below the RSI_BUY_ZONE, and the price is below the previous BUY trade price by at least START_DISTANCE and DISTANCE_MULTIPLIER points. For example, if START_DISTANCE is 30 points, and DISTANCE_MULTIPLIER is 1.5, then the second BUY trade is placed 30 points below the first trade, the third BUY trade is placed at distance of 45 points below the second BUY trade, the fourth BUY trade is placed at a distance of 67 points below the third BUY trade and so on. Subsequent BUY trades can be placed only if the RSI is below the RSI_BUY_ZONE level. The lot size of each subsequent trade is increased using the LOT_MULTIPLIER and is bounded between MIN_LOT and MAX_LOT. For example, if the LOT_MULTIPLIER is set to 2.0 and the value of LOT is set to 0.1, then the lot-size of the second trade is 0.2, that of the third trade is 0.4 and so on.
A similar contrary rule is employed to place SELL trades, where the next SELL trade is at a farther distance above the previous SELL trade calculated from START_DISTANCE and DISTANCE_MULTIPLIER with increasing lot size.
This mechanism adds safety to the Expert Advisor as it ensures that the new positions are not opened very quickly. This is especially valuable when the market is falling (or rising) very quickly, whereby the Expert Advisor avoids adding new trades very quickly and risking ruin.
RECO Expert Advisor does not use profit target and stop-loss for individual trades. It uses combined net profit / loss to exit the open positions when the profit or loss threshold is crossed. The profit threshold is calculated if USE_CLOSE_PROFIT is set TRUE, and likewise the loss threshold is calculated if USE_CLOSE_LOSE is set to TRUE.
To illustrate, assume PROFIT_1_ORDER is set to 3, PROFIT_MULTIPLIER is set to 2. If only one trade is open, it will be closed when the profit reaches $3, if two trades are open then both trades will be closed when the combined profit reaches $6, if three trades are open then these three trades will be closed when the combined profit reaches $12. The loss threshold can be calculated similarly from the above example by substituting the respective values of LOSE_1_ORDER and LOSE_MULTIPLIER.
The Expert Advisor can open SELL trades while BUY trades are open, and vice-versa depending on the RSI value and the RSI_BUY_ZONE and RSI_SELL_ZONE thresholds being triggered.