11/14★Sometimes we borrow the power of ChatGPT: Its 184th installment [Important points in choosing EA: it must be order/entrance price movement]
FX Auto Trading, the EA developer Reiwa’s double-I.
Since last year, I’ve aimed to post almost daily in this series.
We’ve probably continued for almost two years now!
If you read what I’ve written so far,
I’m confident you’ll get closer to better EA operation.
And, since I’d like to take a short break,
I’ll continue posting by borrowing the power of ChatGPT.
Occasionally I will post irregularly, like before.
Important points when choosing an EA: It should be based on the opening price action
When looking at backtests, the one thing you must confirm is whether it uses “Opening Price Only” price action.
Because an EA not based on opening price action may have uncertain reproducibility between backtest and forward test.
The mechanism of opening price action and tick generation
The tick data used in backtests is basically built from the four price points of a 1-minute bar (open, high, low, close).
The issue here is,which comes first, the high of the bar or the low of the bar?In real markets, there is only one correct order.
In MT4 backtests, this is provisioned with “pseudo-generated ticks.”
Therefore, an EA that does not use opening price action may enter/exit in a way that’s convenient in backtests,
and may not fully reflect real market movements.
（Otherwise MT4/5 would have no commercial use）
Why is opening price action important?
EA based on opening price action
→High reproducibility between backtest and real trading.
EA not based on opening price action
→Relying on pseudo tick generation risks large differences between backtest and forward.
This difference is enormous and affects the reliability of backtests.
In other words, an EA not based on opening price action has a high risk of “it used to win in the past, but cannot win in real trading.”
Modeling quality and opening price action
In MT4 backtests, the modeling quality only reaches up to 90% and never 100%, for this reason.
Because of the uncertain elements introduced by pseudo tick generation, a perfect match simulation is impossible.
Therefore, when choosing EA:
Is the EA built on opening price action?
And, are the long-term backtest results good?
By confirming these two points, you can choose an EA that has high reproducibility in forward operation.
Summary
Checkpoints when choosing an EA are as follows:
Long-term uptrend including the Lehman shock
Recovery factor over 10 years of more than 10x
Appropriate spread settings
Sufficient expected gains
Opening price action
Whether these five criteria are all met will significantly affect EA reliability.
In particular, “opening price action” is the final shield guaranteeing backtest reliability, so be sure to check.
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【Flow from Starting to Intermediate: EA Beginning to Intermediate】
First, it is important to master installing the EA.
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MT4 EA (Expert Advisor) and Indicator installation procedures
https://www.gogojungle.co.jp/post/1/8212
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※ゴゴジャン video version※
Even at first, not everything can be understood all at once, and some will stumble.
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 EA】
Now that you feel you can operate an EA,
you might think, “I don’t know which EA will win… I don’t want to lose…”
Therefore, Reiwa’s Double I
has published the following to determine some quality from backtesting.
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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 is,
The following article answers this.
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■ About “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 continue EA operation for a long time, the “EA operation mindset” is also important.
Those articles are here:
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12/30★ Year-end and New Year SP!! EA All-In-One Course Part 3
https://www.gogojungle.co.jp/finance/navi/articles/80551
8/12 [Obon Holiday Special]! Now you too can be an EA Master! “EA Operation Mindset”
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17 [Obon Holiday Special]! Now you too can be 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 don’t understand it immediately, please make sure to read it!
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【Reiwa’s Double I EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically categorized Reiwa’s Double I EAs by genre
https://www.gogojungle.co.jp/finance/navi/articles/67162
（Diversification by genre is essential when building a portfolio）
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【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 backtest
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: Public Release of “Push-Up Buy / Retrace Sell” Logic!!】
https://www.gogojungle.co.jp/finance/navi/articles/65010
https://www.gogojungle.co.jp/finance/navi/series/610
【Reiwa’s Double I’s Philosophy】
