How to Choose an FX Auto-Trading EA - Backtesting and Walk-Forward Testing
This time, I will explain how to view the characteristics of EA.
When you usually look at an automated trading EA, its performance is published.
Therefore, based on those figures, you judge from historical performance what kind of performance and trading characteristics the EA has.
As materials for judging, this time we will explain “backtesting” and “forward testing”.
First, backtesting is a representation of what the performance would be if the approach had been operated on past market data.
Anyone can use MT4 (MetaTrader 4) to conduct tests.
You can explore what kind of performance results when you apply the EA parameters to past market data.Although the developer tunes the parameters to be most optimal for the EA, the parameters change depending on what the developer prioritizes in performance.
Whether it is profit, win rate, or low drawdown.
The sales pages of EAs always show this backtest result, but in fact that alone is not enough.
In backtesting, parameters can be adjusted, so optimization allows achieving better performance.
Therefore, you may see various backtested EAs publicly available online as free giveaways for automated trading products,but I do not trust them very much.
Even though actual results are unknown,just because it’s free, if you jump in and incur large losses, it defeats the purpose.
＊Beatrice-07, which publishes results, originally was a paid EA, made free for a limited time through a broker’s account opening campaign.
Backtesting is used as a guide to judge what results you would get when adjusting parameters on your own EA; this is the usual way to use it.
For example, try adjusting the limits from 7 to 10, and the stops from 57 to 45 to see what results backtesting yields.
Backtesting shows how trades might perform on past markets, but future markets can change.In other words, results may not match backtesting.
The backtest performance of all sold EAs is, of course, not all good.
However, in real trading, many EAs may underperform; backtesting should be viewed merely as a reference.
What I want to emphasize here is the importance of “forward testing” because this is real-time results and cannot be deceived.
The figure above is a forward test, and is Beatrice-07, which is a consistently top-selling EA I also operate.
Upper right shows the trading period from August 2013 to January 2017, and the initial capital of 1.2 million yen grew to 3.1 million yen. (The vertical axis is displayed in dollars, using 1 USD = 120 JPY)
Forward testing is a performance that is continuously updated in real time. Therefore, an EA without forward testing is difficult to judge, and it becomes hard to determine whether the backtest results will truly materialize.＊When the product first launches, there are no actual results, so only backtesting judgments exist.
Therefore, it is generally recommended to judge based on trade data obtained from forward testing.
In addition, the actual performance when operated may occasionally differ significantly from the forward test results.
When selecting an EA, check the actual trades on the product page’s Q&A and reviews, and also pre-check which brokers are operable with the EA.
＊Because reviews can be influenced by the seller’s responses, it is recommended to rely on a broad set of reviews to form a holistic judgment.
http://sarari-man-inv esting-auto-trading.com/fx-beginner/backtest-fowardtest/
We send useful information via a free newsletter for FX automated trading beginners. ↓
⇒http://sarari-man-investment-auto-trading.com/landingpage/
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My site’s strongest EA “Beatrice-07”
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A site’s strongest EA that delivers results over the long term
Because it is a swing trade, it is less affected by market fluctuations,
and easy to operate.
Profit rate 250%; consistently high in the popular EA ranking
＊Currently available for free through a limited-time account opening campaign,
so I highly recommend it.
⇒http://sarari-man-investment-auto-trading.com/ea/beatrice-07/post-1365/
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Long-term operation maintaining a win rate over 90% “Break Scalp”
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Since starting in November 2014, this scalping EA has maintained a win rate above 90%.
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Long-term earning EA WhiteBearZ USDJPY
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All monthly results since operation began have been positive
This is the site’s most recommended EA.
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⇒http://sarari-man-investment-auto-trading.com/ea/white-bear-z-usdjpy/post-488/
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The recommended VPS I use is here
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