Refined filters in Renko EA version 2

The second iteration of the open source Renko EA* has a set of more refined filters which can be used for the entries or exits. 

The power of linear regression lines used as filters

The linear regression lines seem to be doing a very good job in filtering out ranges and pullbacks. This eliminateds most of the false entry signals that would normally be taken durrign consolidation periods after a strong move as well as those pesky pullback traps.

The Turbo Renko chart shown below illustrates how a set of two linear regression lines MA2 (blue) and MA3 (white) work as filters for the 2 consecutive renko entry signals. MA1 is used as an exit filter.


The settings of MA2 on the renko chart are:

Show the second MA: Yes 

2nd MA draw as Line

2nd MA period: 86

2nd MA method: Linear regression

2nd MA apply to Close price

2nd MA shift: 0

2nd MA show price label: No

The settings of MA3 on the renko chart are:

Third second MA: Yes 

3rd MA draw as Line

3rd MA period: 20

3rd MA method: Linear regression

3rd MA apply to Close price

3rd MA shift: 0

3rd MA show price label: No

New filters in Renko EA version 2

I used the following entry and exit filter settings for the Renko EA:


As you can see, each filter has the following settings available to the user:

 

  • Filter Mode:
    • OFF
    • ON for entry
    • ON for exit
    • ON for entry & exit
  • Filter condition - sets the completed renko brick values that will take part in the filter evaluation
    • Open
    • Close
    • Open or Close
    • Open and Close 
  • Filter on last completed bars - sets the number of bars that will be evaluated by the filter 


For example, looking at the settings for MA2 filer used to filter out the BUY entry signals:


The two renko brick entry signal is only valid if the closing price of the last two completed renkos is above the 86-period linear regression line (blue line on the chart).


Since we are using MA2 and MA3 filters, the condition defined by the MA3 filter must also be satisfied -  if the closing price of the last two completed renkos is above the 20-period linear regression line (white line on the chart).


The only valid Buy signals are those that happen when the two consecutive renko bricks close above the 20-period and the 86-period linear regression lines.


As you can see on the example chart, the two linear regression lines serve as effective filters.

 

*)The Renko EA is an open-source project distributed as part of the Ultimate Renko Indicator package for Metatrader 5.

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