9/18 Sometimes I borrow the power of ChatGPT, Number 158: What is averaging down EA?

FX Automated Trading, the developer of EAs, Reiwa no Double-E.

This series, which has aimed to post daily since last year,

has continued for probably about a year and a half now!

If you read what I have written up to now,

I believe you will come closer to better EA operations.

And since I want to take a short break,

I will continue posting by borrowing the power of ChatGPT.

Occasionally, I will post irregularly as before.

【What is a Grid Doubling EA?】

This time I would like to explain about the “Grid Doubling EA.”

The basic mechanism of grid averaging

Grid averaging is a method where after the first position entry, if the market moves against you, you add positions to lower the average acquisition price.

The idea is that if the market recovers a little, you can close with an overall profitable position.

There is also a derivative called “Martingale.”

For example,

1st position: 0.01 lots

2nd position: 0.02 lots

3rd position: 0.04 lots

…in this way, by doubling the lot size to add entries, you rapidly lower the average cost.

Differences from other EAs

Difficult to form a portfolio with other EAs:
Grid averaging assumes multiple positions, which is capital-inefficient and where risks tend to stack.

Whether there is a stop loss setting varies:
Grid-averaging EAs with no stop loss have especially high “bankruptcy risk.”

Backtest tends to show an upward slope:
Because there is no stop loss, the backtest graphs often look like a perfect rising curve.

However, this also means you are always carrying unrealized losses.

What happens when actually running it?

Assumes contrarian trading:
Grid averaging adds positions when the market moves against you, thus it always becomes counter-trend trading.

Prone to unrealized losses:
Until the market returns, you keep increasing positions and enduring losses.

High bankruptcy risk:
If you leave a grid-averaging EA running completely unattended, funds may not withstand the drawdown, so handling (deciding when to run or stop) is essential.Therefore, it is more of an EA for experienced users than for beginners.Important points and risk managementGrid-averaging EAs have “high required margin with thin profits,” so capital efficiency is not good.Guides from sellers like “run at this timing” or “stop now” fall under investment advisory, so it is important to obtain information only from companies registered for investment advisory services.First priority is risk management to avoid bankruptcy, more than profit.SummaryGrid-averaging EA lowers the average cost to aim for profit on market recoveryVisually it may look like a holy grail, but you will always bear unrealized lossesLeaving it unattended is dangerous; risk management and deciding when to operate are essentialNot for beginners; an EA for advanced users“Backtests are perfect, but real life leads to bankruptcy”… many EAs that are grid-averaging fall into this category. Therefore, it is important to use them with an understanding of the risks.Grid-averaging EA listing https://www.gogojungle.co.jp/systemtrade/fx/22224━━━━━━━━━━━━━━━【Flow from starting EA to intermediate level】First, it is important to master “installing the EA.”--------------------------------------------------------------------MT4 EA (Expert Advisor) and indicator installation procedures https://www.gogojungle.co.jp/post/1/8212--------------------------------------------------------------------※GoGoJungle video version※Even at the start, not everything can be understood at once, and some people may stumble.I also stumbled many times at first, so don’t rush—you’ll be fine!If you have questions, there is a contact form, so please use it!----------------------------------■GoGoJungle “Contact form”https://www.gogojungle.co.jp/inquiry----------------------------------【How to choose an EA】Now that you think you can operate an EA,you might worry, “I don’t know which EA will win… I don’t want to lose money.”Therefore, Reiwa no Double-E has published articles so that you can judge to some extent by “backtesting.”The following articles have been serialized.--------------------------------■ How to find winning EAs from backtests https://www.gogojungle.co.jp/finance/navi/series/1714----------------------------------Forward testing is important, butthe backing is backtesting.Backtesting periods are usually longer than forward periods, andwhether you won by chance in forward testing can be gauged to some extent by mastering backtest evaluation methods.【How should EA risk management be done?!】And no matter how excellent an EA seems,FX can fail if risk management is neglected.So, for EAs, how should risk management be done?An article answering this is below.----------------------------------■ About calculating EA risk management https://www.gogojungle.co.jp/finance/navi/articles/64703----------------------------------【EA operation mindset is also important】And, to continue EA operation for a long time, an “EA operation mindset” is also important.Regarding these articles,----------------------------------12/30 Year-end and New Year SP!! A complete EA course Part 3 https://www.gogojungle.co.jp/finance/navi/articles/805518/12【Obon holiday special】 Now you too can become an EA master! “Mindset for improving EA operations”https://www.gogojungle.co.jp/finance/navi/articles/728298/17【Obon holiday special】 Now you too can become an EA master! “ cautions during EA operation”https://www.gogojungle.co.jp/finance/navi/articles/73797----------------------------------So,the content is quite substantial and important,even if you cannot understand it immediately, please make sure to read it!━━━━━━━━━━━━━━━【Reiwa no Double-E EA Listing】https://www.gogojungle.co.jp/users/112481/productsSpecifically categorized Reiwa no Double-E EAs https://www.gogojungle.co.jp/finance/navi/articles/67162(Genre diversification is essential when building a portfolio)━━━━━━━━━━━━━━━【Reiwa no Double-E serialized articles】■ EA for Beginners https://www.gogojungle.co.jp/finance/navi/series/1700--------------------------------About “How to calculate EA risk management”https://www.gogojungle.co.jp/finance/navi/articles/64703【Portfolio version】 About calculating EA risk management https://www.gogojungle.co.jp/finance/navi/articles/65978Tips for spotting fraudulent products (in the case of EAs)https://www.gogojungle.co.jp/finance/navi/articles/64738Where to check first when you have questions about EAs https://www.gogojungle.co.jp/finance/navi/articles/65619--------------------------------■ How to find winning EAs from backtests https://www.gogojungle.co.jp/finance/navi/series/1714--------------------------------■ No-Nonsense! GoGoJungle problem posing!https://www.gogojungle.co.jp/finance/navi/series/1701Where is GoGoJungle inquiry form?https://www.gogojungle.co.jp/finance/navi/articles/64723--------------------------------■ Reiwa no Double-E “Push-Entry Buy / Pull-Back Sell” public release!!https://www.gogojungle.co.jp/finance/navi/articles/65010■ Double-E FX miscellaneous talks https://www.gogojungle.co.jp/finance/navi/series/610━━━━━━━━━━━━━━━【Reiwa no Double-E's Philosophy】Develop EAs with proper methods,gain more supporters,and maintain a long-term WIN-WIN relationship,aiming to revitalize the EA market and improve literacy.━━━━━━━━━━━━━━━

Therefore, it is more of an EA for experienced users than for beginners.

Important points and risk management

Grid-averaging EAs have “high required margin with thin profits,” so capital efficiency is not good.

Guides from sellers like “run at this timing” or “stop now” fall under investment advisory, so it is important to obtain information only from companies registered for investment advisory services.

First priority is risk management to avoid bankruptcy, more than profit.

Summary

Grid-averaging EA lowers the average cost to aim for profit on market recovery

Visually it may look like a holy grail, but you will always bear unrealized losses

Leaving it unattended is dangerous; risk management and deciding when to operate are essentialNot for beginners; an EA for advanced users“Backtests are perfect, but real life leads to bankruptcy”… many EAs that are grid-averaging fall into this category. Therefore, it is important to use them with an understanding of the risks.Grid-averaging EA listing https://www.gogojungle.co.jp/systemtrade/fx/22224━━━━━━━━━━━━━━━【Flow from starting EA to intermediate level】First, it is important to master “installing the EA.”--------------------------------------------------------------------MT4 EA (Expert Advisor) and indicator installation procedures https://www.gogojungle.co.jp/post/1/8212--------------------------------------------------------------------※GoGoJungle video version※Even at the start, not everything can be understood at once, and some people may stumble.I also stumbled many times at first, so don’t rush—you’ll be fine!If you have questions, there is a contact form, so please use it!----------------------------------■GoGoJungle “Contact form”https://www.gogojungle.co.jp/inquiry----------------------------------【How to choose an EA】Now that you think you can operate an EA,you might worry, “I don’t know which EA will win… I don’t want to lose money.”Therefore, Reiwa no Double-E has published articles so that you can judge to some extent by “backtesting.”The following articles have been serialized.--------------------------------■ How to find winning EAs from backtests https://www.gogojungle.co.jp/finance/navi/series/1714----------------------------------Forward testing is important, butthe backing is backtesting.Backtesting periods are usually longer than forward periods, andwhether you won by chance in forward testing can be gauged to some extent by mastering backtest evaluation methods.【How should EA risk management be done?!】And no matter how excellent an EA seems,FX can fail if risk management is neglected.So, for EAs, how should risk management be done?An article answering this is below.----------------------------------■ About calculating EA risk management https://www.gogojungle.co.jp/finance/navi/articles/64703----------------------------------【EA operation mindset is also important】And, to continue EA operation for a long time, an “EA operation mindset” is also important.Regarding these articles,----------------------------------12/30 Year-end and New Year SP!! A complete EA course Part 3 https://www.gogojungle.co.jp/finance/navi/articles/805518/12【Obon holiday special】 Now you too can become an EA master! “Mindset for improving EA operations”https://www.gogojungle.co.jp/finance/navi/articles/728298/17【Obon holiday special】 Now you too can become an EA master! “ cautions during EA operation”https://www.gogojungle.co.jp/finance/navi/articles/73797----------------------------------So,the content is quite substantial and important,even if you cannot understand it immediately, please make sure to read it!━━━━━━━━━━━━━━━【Reiwa no Double-E EA Listing】https://www.gogojungle.co.jp/users/112481/productsSpecifically categorized Reiwa no Double-E EAs https://www.gogojungle.co.jp/finance/navi/articles/67162(Genre diversification is essential when building a portfolio)━━━━━━━━━━━━━━━【Reiwa no Double-E serialized articles】■ EA for Beginners https://www.gogojungle.co.jp/finance/navi/series/1700--------------------------------About “How to calculate EA risk management”https://www.gogojungle.co.jp/finance/navi/articles/64703【Portfolio version】 About calculating EA risk management https://www.gogojungle.co.jp/finance/navi/articles/65978Tips for spotting fraudulent products (in the case of EAs)https://www.gogojungle.co.jp/finance/navi/articles/64738Where to check first when you have questions about EAs https://www.gogojungle.co.jp/finance/navi/articles/65619--------------------------------■ How to find winning EAs from backtests https://www.gogojungle.co.jp/finance/navi/series/1714--------------------------------■ No-Nonsense! GoGoJungle problem posing!https://www.gogojungle.co.jp/finance/navi/series/1701Where is GoGoJungle inquiry form?https://www.gogojungle.co.jp/finance/navi/articles/64723--------------------------------■ Reiwa no Double-E “Push-Entry Buy / Pull-Back Sell” public release!!https://www.gogojungle.co.jp/finance/navi/articles/65010■ Double-E FX miscellaneous talks https://www.gogojungle.co.jp/finance/navi/series/610━━━━━━━━━━━━━━━【Reiwa no Double-E's Philosophy】Develop EAs with proper methods,gain more supporters,and maintain a long-term WIN-WIN relationship,aiming to revitalize the EA market and improve literacy.━━━━━━━━━━━━━━━

Not for beginners; an EA for advanced users

“Backtests are perfect, but real life leads to bankruptcy”… many EAs that are grid-averaging fall into this category. Therefore, it is important to use them with an understanding of the risks.

Grid-averaging EA listing
https://www.gogojungle.co.jp/systemtrade/fx/22224

━━━━━━━━━━━━━━━

【Flow from starting EA to intermediate level】

First, it is important to master “installing the EA.”

--------------------------------------------------------------------

MT4 EA (Expert Advisor) and indicator installation procedures

https://www.gogojungle.co.jp/post/1/8212

--------------------------------------------------------------------

※GoGoJungle video version※

Even at the start, not everything can be understood at once, and some people may stumble.

I also stumbled many times at first, so don’t rush—you’ll be fine!

If you have questions, there is a contact form, so please use it!

----------------------------------

■GoGoJungle “Contact form”

https://www.gogojungle.co.jp/inquiry

----------------------------------

【How to choose an EA】

Now that you think you can operate an EA,

you might worry, “I don’t know which EA will win… I don’t want to lose money.”

Therefore, Reiwa no Double-E has published articles so that you can judge to some extent by “backtesting.”

The following articles have been serialized.

--------------------------------

https://www.gogojungle.co.jp/finance/navi/series/1714

----------------------------------

the backing is backtesting.

Backtesting periods are usually longer than forward periods, and

whether you won by chance in forward testing can be gauged to some extent by mastering backtest evaluation methods.

【How should EA risk management be done?!】

And no matter how excellent an EA seems,

FX can fail if risk management is neglected.

So, for EAs, how should risk management be done?

An article answering this is below.

----------------------------------

■ About calculating EA risk management

https://www.gogojungle.co.jp/finance/navi/articles/64703

----------------------------------

【EA operation mindset is also important】

And, to continue EA operation for a long time, an “EA operation mindset” is also important.

Regarding these articles,

----------------------------------

12/30 Year-end and New Year SP!! A complete EA course Part 3

https://www.gogojungle.co.jp/finance/navi/articles/80551

8/12【Obon holiday special】 Now you too can become an EA master! “Mindset for improving EA operations”

https://www.gogojungle.co.jp/finance/navi/articles/72829

8/17【Obon holiday special】 Now you too can become an EA master! “ cautions during EA operation”

https://www.gogojungle.co.jp/finance/navi/articles/73797

----------------------------------

So,

the content is quite substantial and important,

even if you cannot understand it immediately, please make sure to read it!

━━━━━━━━━━━━━━━

【Reiwa no Double-E EA Listing】

https://www.gogojungle.co.jp/users/112481/products

Specifically categorized Reiwa no Double-E EAs

https://www.gogojungle.co.jp/finance/navi/articles/67162

(Genre diversification is essential when building a portfolio)

━━━━━━━━━━━━━━━

【Reiwa no Double-E serialized articles】

■ EA for Beginners

https://www.gogojungle.co.jp/finance/navi/series/1700

--------------------------------

About “How to calculate EA risk management”

https://www.gogojungle.co.jp/finance/navi/articles/64703

【Portfolio version】 About calculating EA risk management

https://www.gogojungle.co.jp/finance/navi/articles/65978

Tips for spotting fraudulent products (in the case of EAs)

https://www.gogojungle.co.jp/finance/navi/articles/64738

Where to check first when you have questions about EAs

https://www.gogojungle.co.jp/finance/navi/articles/65619

■ How to find winning EAs from backtests

https://www.gogojungle.co.jp/finance/navi/series/1714

--------------------------------

https://www.gogojungle.co.jp/finance/navi/series/1701

https://www.gogojungle.co.jp/finance/navi/articles/64723

■ Reiwa no Double-E “Push-Entry Buy / Pull-Back Sell” public release!!

https://www.gogojungle.co.jp/finance/navi/articles/65010

https://www.gogojungle.co.jp/finance/navi/series/610

━━━━━━━━━━━━━━━

【Reiwa no Double-E's Philosophy】

Develop EAs with proper methods,

gain more supporters,

and maintain a long-term WIN-WIN relationship,

aiming to revitalize the EA market and improve literacy.

━━━━━━━━━━━━━━━

【What is a Grid Doubling EA?】

This time I would like to explain about the “Grid Doubling EA.”

The basic mechanism of grid averaging

Grid averaging is a method where after the first position entry, if the market moves against you, you add positions to lower the average acquisition price.

The idea is that if the market recovers a little, you can close with an overall profitable position.

There is also a derivative called “Martingale.”

For example,

1st position: 0.01 lots

2nd position: 0.02 lots

3rd position: 0.04 lots

…in this way, by doubling the lot size to add entries, you rapidly lower the average cost.

Differences from other EAs

Difficult to form a portfolio with other EAs:Grid averaging assumes multiple positions, which is capital-inefficient and where risks tend to stack.

Whether there is a stop loss setting varies:Grid-averaging EAs with no stop loss have especially high “bankruptcy risk.”

Backtest tends to show an upward slope:Because there is no stop loss, the backtest graphs often look like a perfect rising curve.

However, this also means you are always carrying unrealized losses.

What happens when actually running it?

Assumes contrarian trading:Grid averaging adds positions when the market moves against you, thus it always becomes counter-trend trading.

Prone to unrealized losses:Until the market returns, you keep increasing positions and enduring losses.

Therefore, it is more of an EA for experienced users than for beginners.

Important points and risk management

Grid-averaging EAs have “high required margin with thin profits,” so capital efficiency is not good.

Guides from sellers like “run at this timing” or “stop now” fall under investment advisory, so it is important to obtain information only from companies registered for investment advisory services.

First priority is risk management to avoid bankruptcy, more than profit.

Summary

Grid-averaging EA lowers the average cost to aim for profit on market recovery

Visually it may look like a holy grail, but you will always bear unrealized losses

Not for beginners; an EA for advanced users

“Backtests are perfect, but real life leads to bankruptcy”… many EAs that are grid-averaging fall into this category. Therefore, it is important to use them with an understanding of the risks.

Grid-averaging EA listinghttps://www.gogojungle.co.jp/systemtrade/fx/22224

Difficult to form a portfolio with other EAs:
Grid averaging assumes multiple positions, which is capital-inefficient and where risks tend to stack.

Whether there is a stop loss setting varies:
Grid-averaging EAs with no stop loss have especially high “bankruptcy risk.”

Backtest tends to show an upward slope:
Because there is no stop loss, the backtest graphs often look like a perfect rising curve.

Assumes contrarian trading:
Grid averaging adds positions when the market moves against you, thus it always becomes counter-trend trading.

Prone to unrealized losses:
Until the market returns, you keep increasing positions and enduring losses.

Grid-averaging EA listing
https://www.gogojungle.co.jp/systemtrade/fx/22224