Expected Profit and Total Trades from EA

l Expected payoff

Average profit per trade

l Total trades

Number of trades

Net profit isExpected payoff　×　Total trades.

Even if the expected payoff is high, if the total number of trades is small, net profit does not increase.

Also, in cases where the expected payoff is extremely high or the total number of trades is small, reliability comes into question.

Similarly, if the number of trades is large but the expected payoff is small, net profit cannot be expected.

When the number of trades is large, the spread difference and fees increase.

When using such an EA, choose a broker with low spreads and fees.

In the case of compounding, the later period has a stronger impact, so the expected payoff is not very informative.

Drawdown Can Be Controlled!

Next is the drawdown.

A GOOD EA is ≤ 20%was spoken of with conviction.

Is that true? I would like to confirm.

Drawdown does not become zero even for an EA without stop-loss. Because unrealized losses are also calculated.

l Absolute drawdown

The amount decreased the most from the initial margin

The large negative impact right after the start date means it is not necessarily important.

l Maximum drawdown

The drop from the peak assets to the trough assets

Since it shows the maximum decline in terms of amount, it is not useful as a reference except in simple interest cases.

l Relative drawdown

The drop rate from the time of greatest asset increase to the time of greatest decrease.

Relative drawdown (amount) is the amount when relative drawdown % is at its maximum.

Therefore, relative drawdown (amount) is not important.

• In amount terms, Maximum Drawdown Amount ≧ Relative Drawdown (Amount)
• In percentage terms, Relative Drawdown % ≧ Maximum Drawdown (%)

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Relative drawdown % is a ratio, so the location may differ from the maximum drawdown.

If the maximum drawdown and relative drawdown amount or % differ, it indicates it is not simple interest.

Conversely, just because they are the same does not mean it is simple interest.

And now, here is the shocking trick.

Please compare the top tester report and this one below.
↓↓↓

With the same EA over the same period, the drawdown % below is lower.

Many people may know, but if you increase the initial margin, both maximum drawdown and relative drawdown percentages decrease.

For EAs where it is clearly simple interest, the maximum drawdown amount can be used as a reference, but

when it is not clear or in cases of compounding or variable lot sizes, it is difficult to determine the quality of the EA from drawdown alone.

Relative drawdown % is a reference when deciding the initial margin, but it is only for reference.

If you do not understand the characteristics of the EA entry lot, drawdown is not helpful.

  Drawdown is

• Used for optimization and checking drawdown amounts under simple interest
• Reference when setting the initial margin

Use it for these purposes.