Description

Correlation Divergence Pairs EA

Short Tagline: A statistical strategy that monitors two historically correlated instruments and trades…

Short Description:
Correlation Divergence Pairs EA is a fully automated statistical arbitrage / mean reversion. Expert Advisor for MT4 and MT5. A statistical strategy that monitors two historically correlated instruments and trades the reversion when their short-term correlation temporarily breaks. Built-in risk controls and market filters keep execution disciplined across live and demo accounts.

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Overview

A statistical strategy that monitors two historically correlated instruments and trades the reversion when their short-term correlation temporarily breaks. When the spread between a correlated pair stretches, it fades the divergence expecting the relationship to re-converge.

Features

• Rolling correlation coefficient (e.g., 100-bar)
• Normalized spread / z-score of the pair
• ATR for stop context
• Configurable stop-loss, take-profit, and trailing logic
• Session, spread, and news-time filters for disciplined execution
• One-trade-per-bar / duplicate-signal protection
• Clean, single-file MQL4 and MQL5 implementations
• No hidden logic — every input is exposed and documented
• No martingale, no grid, no hidden recovery logic

Trading Strategy

Entry logic: – Require baseline high positive correlation (e.g., > 0.7) over the lookback.

• Compute the z-score of the normalized price spread.
• When z-score > +2 (leg A over-extended vs leg B): short the outperformer / long the underperformer (or trade the single lagging leg).
• When z-score < −2: mirror.

Exit logic: – Exit when the z-score reverts toward 0 (mean) or correlation regime breaks down (correlation drops below threshold).

Stop-loss: SL at an extreme z-score (e.g., ±3.5) or an ATR-based stop on the traded leg — divergence beyond this signals a regime change.

Take-profit: TP at z-score mean reversion (0 to ±0.5).

Trailing stop: Optional: tighten as z-score approaches the mean.

Break-even: Break-even when z-score halves from entry.

Why it works: Market-neutral-ish edge, uncorrelated with directional systems.; Statistically grounded..

Recommended Settings

• Timeframes: M15, H1.
• Instruments: EURUSD & GBPUSD, AUDUSD & NZDUSD, XAUUSD & XAGUSD, US30 & US500.
• Account type: ECN/Raw spread accounts preferred
• Minimum recommended balance: $500+ (adjust lot sizing to your risk tolerance)
• VPS: Recommended for 24/5 uptime and consistent execution
• Risk management: Risk 0.75% per leg; account for combined exposure of both legs. Max 1 pair position at a time.

Supported Markets

Correlated forex pairs (e.g., EURUSD/GBPUSD), or index/commodity pairs.

Supported Brokers

Compatible with any regulated MT4 or MT5 broker offering standard order execution (market or instant execution). Works with ECN, STP, and standard account types. No broker-specific dependencies.

Installation Guide

1. Download the .ex4 (MT4) or .ex5 (MT5) file from your purchase delivery.
2. Open MetaTrader, go to File → Open Data Folder.
3. Copy the file into MQL4/Experts (MT4) or MQL5/Experts (MT5).
4. Restart MetaTrader or right-click Expert Advisors in the Navigator and select Refresh.
5. Drag the EA onto the chart of your chosen symbol and timeframe.
6. Enable Allow live trading (and Allow DLL imports if prompted) in the Common tab.
7. Adjust inputs to match your risk profile, then click OK.
8. Confirm AutoTrading is enabled in the toolbar.

• Session filter: Trade overlapping active sessions for both instruments to keep correlation stable.
• Spread filter: Reject if either leg’s spread > threshold; two legs double transaction costs.
• News filter: Avoid when only one leg has scheduled news (breaks correlation for the wrong reason).
• Volatility filter: Require a stable correlation regime; suspend when correlation breaks down structurally.

Risk Disclaimer

Trading forex and CFDs carries a high level of risk and may not be suitable for all investors. Past performance, backtest results, and simulated outcomes are not indicative of future results. This EA does not guarantee profits. Always test thoroughly on a demo account before deploying real capital, and never risk funds you cannot afford to lose.

Version

v1.0.0

Support

Support is provided through the marketplace messaging system. Please include your broker, symbol, timeframe, and EA version when reporting an issue.

Updates

Free updates are provided for bug fixes and compatibility improvements. Feature updates may be released as versioned upgrades.

FAQ

Q: Does this EA work on both MT4 and MT5?
A: Yes, separate optimized builds are provided for each platform.

Q: Can I run this on multiple pairs at once?
A: Yes, attach separate instances to separate chart/symbol combinations.

Q: Does it use martingale or grid recovery?
A: No. This is a pure signal-based strategy with defined risk per trade.

Q: What timeframe works best?
A: M15, H1. for the cleanest signals, but the EA can run on other timeframes with adjusted inputs.

Q: Is a VPS required?
A: Not required, but strongly recommended for uninterrupted 24/5 operation.