EA trading is logic-led! The mechanism and types of FX automated trading programs

No matter how excellent your broker or VPS is, if the internal trading decision logic of the EA is not appropriate, stable profits cannot be expected.

This time, we will explain the mechanism of the EA and the key points of logic design that professional EA developers emphasize.

An EA is an automated trading program that runs on MetaTrader 4/5.

Based on pre-set rules, it automatically performs chart analysis, entry decisions, and exits.

It monitors the market 24 hours a day in place of the trader, enabling mechanical trading that is not influenced by emotions.

A superior EA avoids entries when spreads widen abnormally.

If spreads widen more than expected during early morning or during major news releases, it is necessary to skip trades even if entry conditions are met.

This prevents executions at unfavorable prices and protects profitability.

The timing of entry decisions is also a crucial element.

Ideally, judgments are made at regular intervals corresponding to the time frame, such as once every hour for an hourly chart or once every 30 minutes for a 30-minute chart.

This approach makes it easier to verify performance in backtests, which in turn makes it easier to improve the EA’s logic, and as a result, enhances the capital growth effect.

All EAs I develop and use in real trading follow this principle.

Stop-loss and take-profit settings are the lifeblood of EA operation.

Setting these appropriately helps prevent unexpected losses while reliably securing profits.

Furthermore, when the logic is favorable, I consider trailing stop as essential.

This is because, in long-term operation, it clearly yields a higher capital growth effect. It allows you to grow profits while managing risk appropriately.

Candlestick behavior differs for long (buy) and short (sell) positions.

In USD/JPY, longs tend to gradually follow the trend, while shorts tend to drop sharply.

Therefore, by applying separate logic adjustments for each direction, more accurate trading decisions become possible.

Rather than a uniform setting, applying direction-specific optimized parameters is the shortcut to stable profits.

There are statistically advantageous market behaviors such as day-of-week effects, movements at the start or end of the month, and Go-to dates (days ending in 5 or 0 in Japanese markets).

By analyzing these characteristics and reflecting them in the logic, further performance improvements can be expected.

What was introduced here are only some of the major adjustment items in EA construction.

In actual EA development, these elements are considered comprehensively to build logic, apply filters, and perform statistical adjustments.

In that sense, there are many things to think about and it can be a bit of a hassle.

That said, since you will be operating your own funds, you naturally want to reduce risk as much as possible and improve entry accuracy, which is the instinctive thinking of an EA trader.

EA performance is determined by its internal logic. Understanding not only superficial win rate or profit but also what kind of risk management and market adaptability features are built in is a key point when choosing an EA.

However, it is rare for sold EAs to disclose such details, and as developers, there is a tendency not to leak the core logic, so disclosures tend to be limited in reality. (I am sorry about this point. Nevertheless, since I want domestic Japanese users to benefit without the logic leaking overseas, I hope you understand to some extent.)

In conclusion, if you aim for stable profits with automated trading, choose a high-quality EA with a logic-focused approach.

That’s about what I wanted to write today.

See you again!