11/10☆ Sometimes I borrow the power of ChatGPT. Its 180【What is backtesting? The first indicators to look at when choosing an EA】
FX Auto Trading, the EA developer Reiwa’s Double-I (Double-E).
This serialized series has been written with the goal of posting almost every day since last year.
We have probably continued for nearly two years now!
If you read what I have written so far,
I’m confident you’ll get closer to better EA management.
Also, since I’d like to take a short break,
I will continue posting with the help of ChatGPT.
From time to time, I will post as before.
What is backtesting? Indicators to look at first when choosing an EA
When choosing an EA (automatic trading software), backtesting is the most important thing to focus on first.
So, what exactly is backtesting? And why is it important? Here is an explanation.
What is backtesting?
Backtesting means verifying an EA’s performance using historical price data.
“Back = past”, “Test = verification”
In other words, applying the EA to past market conditions, running it, and simulating the results.
A proper EA developer will always go through this process to confirm whether the logic has an edge.
Long-term data is used for this validation.
There, all kinds of market environments are included, such as strong/weak yen, Lehman Brothers’ collapse, interventions by the BOJ or the Fed, remarks by key figures, and major economic indicator releases.
And only EAs that could draw a steadily rising profit curve over that long period are displayed for sale.
This is the basic stance of orthodox EA developers.
Importance of Backtesting
Future market conditions will not necessarily be the same as the past.
However, one thing can be stated unequivocally:
“EA that cannot win in long backtests will not win in the future either.”
Because if you cannot confirm an edge based on the historical data foundation, there is no evidence it will win in the uncertain future market.
If you choose without basing on backtests—because it “looks like it will win” or “recent results are good”—the justification is extremely weak.
In that case, the long-term operation risk becomes very high.
Summary: If you choose an EA, always check the backtest
When selecting an EA, the method of viewing backtests is extremely important.
Is the verification period long enough?
Does it include major market fluctuation phases?
Is the profit/loss curve steadily rising?
By confirming these properly, you can identify an EA that can be operated safely over the long term.
Backtesting is only a verification of the past, but it is an important first step in predicting the EA’s future.
━━━━━━━━━━━━━━━
【Flow from starting an EA to intermediate level】
First, it is important to master installing the EA.
--------------------------------------------------------------------
MT4 EA (Expert Advisor) and Indicator installation steps
https://www.gogojungle.co.jp/post/1/8212
--------------------------------------------------------------------
※GoGoJungle video version※
Even at first, not everything can be understood all at once, and many may struggle.
I also stumbled many times at first, so take your time—it's okay!
If you have questions, there is a contact form, so please use it!
----------------------------------
https://www.gogojungle.co.jp/inquiry
【How to choose an EA】
Now that you feel you can operate an EA,
you might think, “I don’t know which EA to win with… I don’t want to lose….”
Therefore, Reiwa’s Double-E has published the following articles to help determine quality via backtesting.
--------------------------------
■ How to find winning EAs from backtesting
https://www.gogojungle.co.jp/finance/navi/series/1714
----------------------------------
Usually the backtest period is longer than the forward period, and
whether you happened to win in forward testing can be gauged to some extent by mastering backtest evaluation methods.
【How should EA risk management be handled!?】
And no matter how excellent an EA seems,
if you neglect risk management, FX will fail.
Therefore, in the case of EA, how to manage risk?
This is addressed in the following articles.
----------------------------------
■ “How to calculate EA risk management”
https://www.gogojungle.co.jp/finance/navi/articles/64703
【EA operation mindset is also important】
And, to sustain EA operation for the long term, the “EA operation mindset” is also important.
Those articles are here,
12/30 Year-End and New Year SP!! EA Complete 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
----------------------------------
That said,
the reading is substantial and extremely important,
so even if you cannot understand it immediately, please make sure to read it!
━━━━━━━━━━━━━━━
【Reiwa’s Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically, I categorized Reiwa’s Double-E EAs by genre
https://www.gogojungle.co.jp/finance/navi/articles/67162
(A diversified genre is essential when building a portfolio)
━━━━━━━━━━━━━━━
【List of Reiwa’s Double-E 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
■ How to find winning EAs from backtestinghttps://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/return-sell logic” released!!
https://www.gogojungle.co.jp/finance/navi/articles/65010
https://www.gogojungle.co.jp/finance/navi/series/610
【Reiwa’s Double-E’s Belief】
