To Predict the Contents of EA

There are countless EAs around the world.

The exact number is unknown, but there are about 800 just in MT4 libraries.

Choosing a favorite from those innumerable EAs requires inspecting each Strategy Tester report, which is very labor-intensive.

Shape of the balance chartIf you can intuitively imagine the EA's future by looking at it,it becomes easier to screen and you can predict the content in advance when reading reports.

This time, we will look at the shape of the balance chart, its trends, and content.

Focus on the graphs under the Strategy Tester report.

Type without Stop Loss

This EA is a typical type without a stop loss.

It has many trades and the balance rises linearly to the right,but sometimes it dips like a liquid and then recoversagain.

In this chart the balance (blue) is dipping, but many have active margin (green) also sagging.

Because there is no stop losspositions opened just before or after sharp market changes cannot be closed and accumulate.

Thatthe losses on those positions accelerate anddrive the balance to zero at once.

Such EAs dream of earning a little every day and suddenly having the balance drop to zero,

and I do not recommend using them.

If you must use them,perform a backtest over the maximum data period you have, prepare initial margin at least ten times the maximum amount drained during the past liquid dip, and challenge it.

Even then the risk will not be zero...

Martingale with a relatively large stop loss

The quantity is displayed in green below. If the entry lot size changes, it will be shown.

The initial balance chart holds a fixed number of lots for positions, but if multiple positions are held and the lot size does not change, it will not be displayed.

We will look at the features of this balance chart.

Where the balancefalls sharplythe quantity increases. If you look closely, you can see it growing exponentially.

Losing and multiplying the stakes is a characteristic of the Martingale.

A certain number of averaging or Martingale steps are repeated, showing stop loss as a method.

A style that steadily earns and suddenly incurs a big loss"steadily then big loss"is repeated, and while it ends up profitable,you never know when and how big the next big loss will be.

Mentally, such big losses are not good, right?

Such charts' EAs can reduce big losses by avoiding major news releases.

Although the term averaging/Martingale is often described as universally bad,adding limitations on positions and lot sizesandavoiding sudden market moves,with proper operation and managementit can be stabilized to some extent.

This time we introduced an EA without stop loss and an EA with a wide stop loss.

Next time: overly optimized ones, psychologically painful EAs, and ways to make hard-to-read balance charts easier to read.