9/24★ Sometimes I borrow the power of ChatGPT, its 164【How to read backtest data】
FX Automated Trading, Reiwa’s Double-I is.
This series has been written with the aim of posting every day since last year.
I think I have continued for about a year and a half now!
If you read what I’ve written so far,
I believe you’ll move closer to better EA management.
And, since I want to take a short break,
I’d like to continue posting with the help of ChatGPT.
Occasionally I will post irregularly, like before.
How to read backtest data
What’s important when choosing an EA is to judge by objective data.
Among them, backtesting is an indispensable criterion.
Here I will explain the points you should check at minimum when choosing an EA.
✅Whether it has a long-term upward trend
Backtesting should be conducted from before the Lehman crisis up to the most recent period,
and the equity curve must be upward-sloping, which is a fundamental premise.
An EA that only wins for a short period is likely unable to endure later operation, so beware.
✅Check the recovery factor
The recovery factor (= net profit ÷ maximum drawdown) is an important indicator of EA stability.
In practice, an ideal ratio is “tenfold or more in ten years.”
Also, confirm whether profits are stable year after year.
This can be checked with tools like Quant Analyzer or Rock Balancer.
✅Whether the spread setting is appropriate
Backtests are greatly affected by spread (transaction costs) settings.
Be sure to confirm that you are setting spreads close to actual trading conditions.
EA tested with unnaturally tight spreads should raise red flags.
✅Whether there is an expected return (edge)
Expected return means the “average profit or loss per trade.”
Having a positive expected return with a solid figure is essential for long-term wealth growth.
✅Whether it uses a start-of-day operation
Verify that the backtest uses a start-of-day operation (open price-based decision mode).
It’s important that tests are conducted under conditions close to real operation, not using unusual optimization with tick data.
✨Summary
EA that meet these points can be trusted as “EA worth choosing.”
Long-term upward trend
Recovery factor above the standard
Reasonable spread settings
Positive expected return
Verified by start-of-day operation
Also, win rate varies by EA type, so it is not a criterion for evaluation.
For example, scalping has a high win rate,trend-following has a low win rate but small losses and big profits.
What matters is not “win rate” but the stability of total profit.
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【Flow from starting an EA to intermediate level】
First, it’s important to master “installing an EA.”
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MT4 EA (Expert Advisor) / Indicator installation procedure
https://www.gogojungle.co.jp/post/1/8212
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※ Gogojungle video version ※
Even at the beginning, you may not understand everything at once, and some may stumble endlessly.
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!
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■ Gogojungle “Contact form”
https://www.gogojungle.co.jp/inquiry
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【How to choose an EA】
Now that you’re ready to operate an EA,
you might wonder, “I don’t know which EA will win… I don’t want to lose….”
So Reiwa’s Double-I uses
“backtesting” to give you a sense of the pros and cons,
and has published the following articles in a series.
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https://www.gogojungle.co.jp/finance/navi/series/1714
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backtests back that up more than the forward period in most cases,
and whether you randomly win in forward testing can be inferred by mastering backtest evaluation methods.
【How should EA risk management be managed!?】
And no matter how excellent an EA seems,
FX collapses if you neglect risk management.
what should risk management be!?
This is answered in the articles below.
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■“How to calculate 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.
Those articles are,
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12/30 Year-end and New Year SP!! EA Comprehensive Course Part 3
https://www.gogojungle.co.jp/finance/navi/articles/80551
8/12 [Obon Holiday Special! Now you too can master EA! “Mindset for Improving EA Operation”]
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17 [Obon Holiday Special! Now you too can master EA! “Notes during EA operation”]
https://www.gogojungle.co.jp/finance/navi/articles/73797
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That said,
this content is quite substantial and very important,
so even if you don’t understand it immediately, please make sure to read it!
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【Reiwa’s Double-I EAs Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically categorized Reiwa’s Double-I Ea by genre
https://www.gogojungle.co.jp/finance/navi/articles/67162
(Portfolio diversification by genre is essential)
【Reiwa’s Double-I Series Articles】
https://www.gogojungle.co.jp/finance/navi/series/1700
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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
■How to find winning EA 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’s Double-I “Push-buying methods and rebound-selling logic” released!!
https://www.gogojungle.co.jp/finance/navi/articles/65010
https://www.gogojungle.co.jp/finance/navi/series/610
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【Reiwa’s Double-I’s Beliefs】
Develop EA with proper methods,
gain more people’s support,
and maintain a long-term WIN-WIN relationship,
aiming to revitalize the EA market and improve literacy.
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