We have introduced how to understand EA in the form of a balance chart.

This time, we will look at the data accompanying the chart as well.

 

How to Read a Welfare-Type EA

 Please look at the memory on the right. Assets have increased fourfold. It’s a wonderful profit.

Next, look at the quantities below. The entry quantity is continually increasing. It can be inferred as compounded interest-based.

Since a compounding system draws a curve,it is easier to see by connecting the lower parts of the graph rather than drawing a straight line.

Compared to the balance increase in the first 400 trades, the increase in the latter 100 trades is astonishing.

Similarly, for the compounding system, the decline in the latter half also becomes larger in monetary terms.

There are many times when the profits from the first few hundred trades disappear in one hit when the balance is small.

When you’ve steadily earned something and it decreases in one go, it’s discouraging, but to avoid thatwhen using a compounding EA, train yourself to think in terms of percentage changes rather than balance.

The balance chart shows a pattern of making a large profit in one go, then gradually decreasing little by little.

It becomes a graph with extremely low win rate but large profit per win, and conversely, small loss per loss, resulting in this kind of chart.

It is a type aimed at a big payoff in one shot; unless you are highly confident in your mental state, we cannot recommend it.

 

We’ll also look at this in the same way as before.

The balance swells to four times, and the quantity also increases neatly. It is clearly a solid compounding system.

Since the trading quantity is about three times that of before, the graph’s distortion disappears, and this one can be considered more reliable.

In the latter half of the graph there are coarse fluctuations, but in the first half it is relatively smooth.

It looks that way because of the scale difference, but it is solid evidence that the balance is increasing.

Conversely, a drawback is that the fluctuations in the early period are hard to discern.

We would like to check a balance graph only for the early, short period, but it is often difficult to obtain.

Let’s add auxiliary lines. With the auxiliary line, you can see that it dropped a bit after around 210 trades.

It recovers around the 411th trade, but you should probably expect about a month of losses.Until you become accustomed to the balance graph, actively use auxiliary lines and rulers.

Even with compounding-type EAs, using auxiliary lines and rulers makes things that were invisible visible.

 

Evaluate EAs with the balance chart

 

When evaluating an EA, first check the balance chart.

Develop a habit of carefully observing the shape of the graph, which will dramatically shorten the time needed to evaluate an EA.

This makes it possible to instantly identify EAs that do not fit your style.

I confirm things like this on the balance chart.

 

• That a stop loss is set
• That the stop loss is not excessively large
• That there is a certain number of trades
• That the direction is defined
• That there is not extreme optimization
• That there isn't a long period of continuous losses
• That it is compounding
• And that it yields solid profits

 

EAs that meet all of these criteria are surprisingly rare, but they are important for managing your assets.

Let’s search steadily!