Explore the innovative application of Hidden Markov Models (HMMs) in trading strategies using MetaTrader 5. HMMs, employed for market regime identification, enhance volatility prediction by modeling transitions between hidden market states. This comprehensive guide details the development of a trend-following strategy, leveraging HMMs within MQL5. It covers fetching data with Expert Advisors, training HMMs in Python, and integration for real-time adaptability. Tested from 2020 to 2025, the strategy showcases improved predictability and profitability compared to traditional methods. Despite the complexity of neural networks, HMMs offer a simpler, resource-efficient alternative, balancing model clarity with predictive power.
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