Cointegrated Pairs Trading Indicator

The Cointegrated Pairs Indicator is a groundbreaking tool designed for real-time Forex trading on the MT4 trading platform. Focused on exploiting the mean-reversion property of stationary processes in the forex market, this innovative indicator is a game-changer for traders who leverage MT4 for their trading activities.

Understanding the Cointegrated Pairs Indicator

The Cointegrated Pairs Indicator employs a unique forex system model known as Model Lelothoane. This model is packaged into an executable indicator that can be run on a PC with the MT4 platform installed. It leverages the mean-reversion property of stationary processes, which is confirmed by conducting cointegration tests between two forex instruments.

If strong evidence of cointegration is found, the two instruments can be traded as a stationary process. This indicator plots four multiples of standard deviation in the indicator window beneath the main chart window, providing traders with valuable information to guide their trading decisions.

Trading with the Cointegrated Pairs Indicator

The Cointegrated Pairs Indicator allows traders to make entries every time the model spread or deviation crosses a new multiple of the standard deviation from the mean. When the model spread crosses the first standard deviation, either on the negative or positive side away from the mean, the trader will open two orders.

These orders act as a pair for the model spread, which is a synthetic instrument. If the model spread moves further away to cross the second standard deviation from the mean, the trader can then open another pair of orders with the same lot sizes.

Profitability with the Cointegrated Pairs Indicator

The unique feature of the Cointegrated Pairs Indicator is its propensity for mean reversion. This means that the probability of the model spread moving further away from the mean decreases exponentially, making it an investment system with a positive expectation value. Thus, when the model mean reverts back to the mean, there will be a net profit provided the cointegration model remains valid.

Additional Features of the Cointegrated Pairs Indicator

Apart from the primary trading functions, the Cointegrated Pairs Indicator provides other useful information. This includes cointegration model parameters, lot size ratio, standard deviation, model deviation, levels, and much more. These are displayed in the main chart window for easy access and interpretation.

FAQs on the Cointegrated Pairs Indicator

Q: How does the Cointegrated Pairs Indicator work on the MT4 platform?
A: The Cointegrated Pairs Indicator works by running in real-time on the MT4 platform and uses a unique forex trading system model to exploit the mean-reversion property of stationary processes.

Q: What information does the Cointegrated Pairs Indicator provide?
A: The Cointegrated Pairs Indicator provides various information including cointegration model parameters, lot size ratio, standard deviation, model deviation, and levels. These are displayed in the main chart window on MT4.

Q: How does the Cointegrated Pairs Indicator ensure profitability?
A: The Cointegrated Pairs Indicator works on the principle of mean reversion, that decreases the probability of the model spread moving further away from the mean exponentially. This makes it an investment system with a positive expectation value.

For those interested in seeing the Cointegrated Pairs Indicator in action, independent testing of this product is available on the forexroboteasy.com website. Subscriptions for updates on testing results are also offered. We encourage readers to share their experiences using this product. Please note, this is an independent product review and the product is not affiliated with this review.