9/21 Sometimes I borrow the power of ChatGPT, Part 161 【EA Type Explanation and Portfolio Management Thinking】
FX Automated Trading, the Reiwa-era Double-E of EA developers.
This serialized series has been written with the goal of posting every day since last year.
I think it has now continued for about a year and a half!
If you read what I’ve written so far,
I believe you’ll get closer to better EA operation.
And since I’d like to take a short break,
I will continue posting by borrowing the power of ChatGPT.
From time to time, I will post irregularly as before.
[Complete Edition] Explanation of EA Types and Portfolio Management
This time, we summarize what kinds of FX automatic trading (EA) exist,
and how to combine and operate them as a complete edition.
If you’re wondering “which EA should I choose?”
I believe reading this article will give you major hints.
Six representative EA genres
1. Anomaly EA
EA that enters and exits at predetermined dates and times.
Known examples include money-spot trades (Go-To-day, buy USD at 9:55), etc.
Since entry times are predetermined, it's beginner-friendly
Win rate is roughly around 50%
Many people build portfolios with multiple anomaly EAs
2. Scalping EA
A short-term type that aims for small pips on small timeframes (1 minute to 15 minutes).
The classic entries are pullbacks buying, pullbacks selling, or breakouts at highs and lows.
Win rate around 70%
Tends to be “small losses, small profits, big drawdowns”
There is a period of drawdown, but high win rate compensates
3. Trend-following EA
A type that does not go against the trend and enlarges profits.
It’s easy to imagine “Golden Cross buy” and “Dead Cross sell” with moving averages.
Win rate around 40%
Profit grows with small losses and large gains
Pairs well with scalping
4. Swing EA
Aims to turn after a trend overshoots and switches.
Once a new trend begins, maximize profits as much as possible.
Win rate around 40% like trend-following
Big profit range with small losses
5. Averaging Down (Martingale) EA
Adds positions as the market moves against you to lower average cost, aiming to exit with some profit when it returns.
Backtests often show a rising equity curve
However, there is a risk of always holding a drawdown
Handling is essential and not beginner-friendly
Capital efficiency is poor and risk of ruin relatively high
6. Multi-Logic EA
An EA that carries multiple logics to complement risk.
The image is that this alone forms a portfolio.
High trading frequency
Sometimes both buy and sell positions open simultaneously like hedging
High stability and easy for beginners
Unique logic not belonging to any one category
In my own experience, there are EAs that do not fit into the six genres above.
Representative examples include,
Utility Player (all-around type)
Copernicus Basic USDJPY version (special specification where entries do not overlap)
Trend End Scalp (an original type aiming at the end of a trend)
Divergence EA (application of technical divergences)
These are unique logics not widely circulated in the market,
and whether you can develop an EA that goes beyond 6 genres is, I think, the mark of an EA developer.
Portfolio management philosophy
There is no inherent superiority among the EA types introduced here.
Each has strengths and weaknesses, so it is important to combine multiple types to complement risk.
? The key is“mixing EAs with different win rates”.
If you combine a scalping EA with around 70% win rate and a trend-following EA with around 40% win rate, they tend to complement each other.
Furthermore, combining anomaly EAs will yield a more stable portfolio.
Conclusion
EA has
“Six major genres: anomaly, scalping, trend-following, swing, averaging down, multi-logic”
and also there are “independent logic EAs” that do not belong to any genre
No single genre is perfect; balancing them in a portfolio is key to stable operation
Even mixing EAs with different win rates naturally achieves balance
✨ As a complete edition, this article consolidates the basics of EA operation and approach.
If you are unsure about choosing EA or constructing a portfolio, please use this as a reference!
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【Flow from starting EA to intermediate level】
First, it is essential to “master installing EAs.”
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MT4 EA (Expert Advisor) and indicator installation procedure
https://www.gogojungle.co.jp/post/1/8212
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※ GoGoJungle video version ※
At first, not everything can be understood all at once, and some will stumble more than others.
I also stumbled many times at first, so take your time and you’ll be okay!
If you have questions, there is a “Contact form,” so please use it!
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https://www.gogojungle.co.jp/inquiry
【How to choose EA】
Now that you’re ready to operate an EA,
you might think, “I don’t know which EA will win… I don’t want to lose…”.
Therefore, Reiwa-era Double-EI has,
to some extent, a way to judge quality via backtesting,
and the following articles are serialized for that purpose.
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■ How to find winning EAs from backtests
https://www.gogojungle.co.jp/finance/navi/series/1714
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backtesting provides the backing for it.
Backtesting durations are usually longer than forward periods,
whether you are winning in forward testing can be inferred by refining backtest evaluation.
【How should EA risk management be done!?】
And no matter how excellent an EA seems,
FX collapses if risk management is neglected.
So for EAs, how to manage risk?
This is answered in the following article.
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■ About calculating EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/64703
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【EA operation mindset is also important】
And,to sustain EA operation for a long time, the "EA operation mindset" is also important.
For those articles,
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12/30 Year-end and New Year SP!! EA Comprehensive Lecture Part 3
https://www.gogojungle.co.jp/finance/navi/articles/80551
8/12 [Obon holiday special! ] You too can master EA! “Mindset for improving EA operation”
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17 [Obon holiday special!] You too can master EA! “Notes during EA operation”
https://www.gogojungle.co.jp/finance/navi/articles/73797
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That said,
the content is substantial and quite important,
so even if you don’t understand it immediately, please make sure to review it!
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【Reiwa-era Double-EI EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically categorized Reiwa-era Double-EI EAs by genre
https://www.gogojungle.co.jp/finance/navi/articles/67162
(Genre diversification is essential when building a portfolio)
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【Reiwa-era Double-EI serialized articles】
https://www.gogojungle.co.jp/finance/navi/series/1700
https://www.gogojungle.co.jp/finance/navi/articles/64703
https://www.gogojungle.co.jp/finance/navi/articles/65978
https://www.gogojungle.co.jp/finance/navi/articles/64738
https://www.gogojungle.co.jp/finance/navi/articles/65619
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-era Double-EI “Push-buying and pullback-selling logic” now released!!
https://www.gogojungle.co.jp/finance/navi/articles/65010
https://www.gogojungle.co.jp/finance/navi/series/610
【Reiwa-era Double-EI’s Belief】
Develop EA by proper methods,
gain more followers,
maintain a long-lasting WIN-WIN relationship,
and aim to revitalize the EA market and raise literacy.
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