Occasionally I’ll borrow the power of ChatGPT 177【Decide the lot size by how much risk you’re willing to tolerate】
FX Auto Trading, the developer of EA Reiwa’s Double-E.
This serialization has been written with the goal of posting every day since last year.
I think I’ve been able to continue for about a year and a half now!
If you read what I’ve written so far,
I’m confident you’ll move closer to better EA management.
Also, since I’d like to take a short break,
I’d like to continue posting with the help of ChatGPT.
Occasionally, I will post irregularly as I have done before.
Decide the lot size by the level of risk you can tolerate
The formula I explained yesterday
is“Minimum: this capital can operate this lot size”as a benchmark value.
For example, in this case the ratio was 0.1 lots for 100,000 yen capital.
If you operate at this ratio, the backtest shows you won’t bankrupt,
but the question is whether you can tolerate the maximum drawdown at that time.
Concretely imagining the risk
In this example, the maximum drawdown is 40,000 yen.
That means if the drawdown occurs soon after starting, you would lose 40,000 yen out of 100,000, a 40% loss of your funds.
Many people would feel that 40% is too large.
Mitigate risk by adjusting the lot size
So, what should you do?
The answer is simple: either lower the lot size or increase the capital.
For example, if you reduce the lot to half, 0.05 lots, the maximum drawdown halves as well.
In this case, the maximum drawdown would be 20,000 yen, and the loss would be 20% of the 100,000 yen capital.
Some people may still feel that 20% is acceptable.
There is no recommended lot size
As you can see from this idea, there is no concept of a “recommended lot size” provided by sellers in the first place.
Because “how much loss you can tolerate” differs from person to person.
Therefore, what matters is setting a lot size that you personally can accept.
Otherwise, when you suffer larger-than-expected losses, you might think, “I can’t continue.”
From Reiwa’s Double-E
“The key to continuing EA operation is to determine the lot size within the range of risk you can tolerate!”
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■ About “EA risk management calculations”
https://www.gogojungle.co.jp/finance/navi/articles/64703
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【Flow from starting EA to intermediate level】
First, it is important to master “installing the EA.”
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MT4 EA (Expert Advisor) and Indicator installation steps
https://www.gogojungle.co.jp/post/1/8212
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※ GoGoJungle Video Version ※
Even at first, not everything can be understood at once, and some people will stumble.
I also stumbled many times at first, so don’t rush and 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 think you can operate an EA,
you might worry, “I don’t know which EA will win… I don’t want to lose….”
Therefore, Reiwa’s Double-E has published articles so that you can judge the quality to some extent through backtesting.
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■ How to find winning EA from backtesting
https://www.gogojungle.co.jp/finance/navi/series/1714
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【How to manage EA risk!?】
And no matter how excellent an EA you obtain,
how should risk management be done?
The following article answers that.
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■ About “EA risk management calculations”
https://www.gogojungle.co.jp/finance/navi/articles/64703
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【EA operation mindset is also important】
And, to continue EA operation for a long time, “EA operation mindset” is also important.
Regarding those articles,
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12/30★ Year-end and New Year SP!! EA Completely Explained Course Part 3
https://www.gogojungle.co.jp/finance/navi/articles/80551
8/12【Obon holiday special!】 This will make you an EA master! “EA operation mindset”
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17【Obon holiday special!】 This will make you an EA master! “Notes during EA operation”
https://www.gogojungle.co.jp/finance/navi/articles/73797
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So,
the content is substantial and quite important,
even if you can’t understand it right away, please make sure to read it!
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【Reiwa’s Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically, I categorized Reiwa’s Double-E EA by genre
https://www.gogojungle.co.jp/finance/navi/articles/67162
(Portfolio diversification by genre is essential)
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【Reiwa’s Double-E serialized articles】
https://www.gogojungle.co.jp/finance/navi/series/1700
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“About the EA risk management calculations”
https://www.gogojungle.co.jp/finance/navi/articles/64703
【Portfolio version】 EA risk management calculations
https://www.gogojungle.co.jp/finance/navi/articles/65978
https://www.gogojungle.co.jp/finance/navi/articles/64738
Where to check first when you have questions about EA
https://www.gogojungle.co.jp/finance/navi/articles/65619
■ How to find winning EA from backtesting
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-E: “Push-buy/ Pull-sell” logic now released!!
https://www.gogojungle.co.jp/finance/navi/articles/65010
https://www.gogojungle.co.jp/finance/navi/series/610
【Reiwa’s Double-E’s Philosophy】
Develop EA by solid methods,
seek broad support from people,
and maintain a long-term WIN-WIN relationship,
aiming to revitalize the EA market and raise literacy.
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