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Reversing trades with MT4 trade copier

by anonymous

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One of the most interesting features in the trade copiers is that they can reverse trades. To be simple this means that receiver EA that is running on a slave MT4 account will execute a copied trade in an opposite direction. A simple example would be when a master account execute a long trade, it will be executed as a short trade on a slave account. The same is applied for the short trades, they are executed as a long trades on a slave account. This is basically what a trade reversal term means and most of the modern trade copiers have that.

Additionally it is important to know how a copy trade software handles stop loss and a take profit values when duplicating orders in reverse mode. Normal and acceptable behavior would be to swap the stop and profit values for all reversed orders, otherwise Client EA will have trouble placing those orders on a slave account. This is obvious, because on a long trade the stop loss is always will be below the entry price at the time of a trade execution while on a short trade it is always above entry price. So when a long trade having a stop loss set below its entry price is copied as a short trade, the same stop loss value will be incorrect. EA must use a take profit price of the original long trade and set that as a stop loss on the short trade. The take profit on a long trade is always above the entry price like the stop loss on a short trade. And the stop loss on a long trade is always below the entry price like the take profit on a short trade. This is the reason why stop and profit levels are reversed by default in reverse trade copying.

Some MT4 trade copiers have ability to swap stop and profit values and usually have external setting for this which can be controlled by the user. This gives the user more abilities to control how their trade reversal should be handled and gives more options to experiment with.

When orders are reversed, keep in mind that entry prices will never be the same. This is because long trades are executed at the ask price while short orders are executed at a bid price. The difference between the ask and bid price is known as tge spread and it is always applied to all pairs. This means when a long trade executed at an ask price is copied and reversed on a slave account as a short trade, it must and will be executed at a bid price. There will be a difference between entry prices by the size of a spread or more when markets are moving fast. If your trade copier has a maximum price deviation option, you should note that it must be at least 2 times bigger than the spread when copying orders in reverse mode.

Pending orders are reversed too and it may look like a complicated operation, but it's not. For example if a buy stop order is reversed, it will become a sell limit order. This is because they both are above the current market price. The same applies to the sell stop and a buy limit orders. They both are below the current market price so the buy limit will become a sell stop in reverse mode or vice versa.


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