Kangaroo EA combines several strategies in its trading. First and foremost, the visible operation of the EA consists of a down-averaging grid of up to 6 trades (as per the default settings). To put it in plain words, the EA opens a trade and as the market goes against the position (if it does), it keeps opening trades until it reaches its maximum of 6. It always closes all the trades that share the same direction together and this is accomplished by moving the take profit target of the existing orders as new ones are opened.
Its entry signals are supposedly based on retracements of the underlying AUDUSD trend, at which point the EA attempts to open a scalping trade with a take profit target of 20 pips and a stop loss of 60 pips. As the market starts heading toward the SL of the position, new trades are opened at different levels while the TP is moved closer to the market. In the end, if TP is hit, it still brings about 20 pips worth of profit at the initial lot size. This begs the question: what happens when it hits SL? The answer to that is not easy because of the distance between orders, but in a nutshell you get a drawdown. The EA manual has a rule of the thumb to calculate it: multiply the configured risk by 4 to calculate the potential drawdown (in percent) resulted from such a situation. From what we will see in the backtests below, this seems to hold true.
Edit: the profit target is adjusted by the spread so I initially thought it was lower. In fact, it’s 20 minus your spread.
It should be noted that the EA takes spread into account when setting its SL & TP, so the lower your AUDUSD spread, the better the EA will perform. This will probably lead to quite a lot of differences from broker to broker, but as can be seen from my backtests below, it seems to work with spread 3 about as well as with spread 2. Bottom line is that the better your spread, the faster the trades are closed and the lower the chance of the EA hitting a stop loss.
I’ve witnessed several occasions where the EA took hedged trades, so it doesn’t look very friendly to the NFA rules. Then again, I’m not very friendly to the NFA rules either and I don’t know any trader or broker who is. You can probably run it on a broker that enforces the NFA rules in their MT4 terminal, but you will likely miss trades now and then.
It should be noted that the EA does not trade very often. While there are usually around 2 trades per week (by “trade” I mean position, each such position having up to 6 trades), I’ve seen weeks without a trade. Most positions are typically closed within 24 hours, but I encountered quite a few situations where the trades were held open for 2-3 days. There is no concept of a “trading session”: positions are opened around the clock, with the notable exceptions of Fridays and early Mondays.
The EA runs exclusively on AUDUSD, at least for now. It’s unclear whether it will run on other pairs, but an article on the developer’s website seems to indicate a future competition for that.
