If there were a 3/14★ Holy Grail EA, what would the backtest performance be? - EA Beginner Course - Navi+ - GogoJungle | Auto Trading - Market Analysis

FX automated trading, the Reiwa era Double-i is here.

If there is a Holy Grail EA, what would the backtest results look like?

“In this world, a Holy Grail EA is unlikely,” is the common belief, but

this time we will deliberately consider what the results would be if such a Holy Grail EA existed.

We will explain this.

Consider the recovery factor.

As a rough indicator to gauge the quality of backtests,

there is something called the “recovery factor.”

This can be calculated as “net profit ÷ maximum drawdown.”

In simple terms,

“How long does it take to recover after the maximum drawdown?”

This is an indicator, and the larger the value over a given period, the more excellent it is.

What is the recovery factor of a top-notch EA?

One benchmark says “10 years, 10x.”

This means that over 10 years, the net profit is 10 times the maximum drawdown.

If you base calculations on this, it translates to a recovery factor of 1x per year.

That is, in one year the net profit equals the drawdown.

In other words,

“There is a possibility that drawdown occurs in a year, but the net profit could be the same amount,”

so roughly it would take half a year to a year to recover the maximum drawdown.

What would be the recovery factor if the Holy Grail EA recovers?

Considering the Holy Grail EA,

for example, like a “magic hammer,”

assume that profits can be taken out daily and the capital never decreases!

and suppose that.

During the day the maximum drawdown occurs but ultimately the net result is positive,

(which is impossible in reality),

then

there exists an EA that can recover within a single day

What would its recovery factor be?

If we assume a recovery factor of 1x per day,

since there are about 250 trading days in a year in FX,

the annual recovery factor would be about 250x,

and over 10 years it would be about 2500x.

For example, over a 10-year backtest,

if net profit were 2.5 million yen,

the maximum drawdown at that time would be “only 1,000 yen.”

If it were 2.5 million yen, then only 100 yen...

while the profit remains in positive territory, the maximum loss or unrealized loss would be only about 100 yen at most.

With such performance, you might call it a Holy Grail, perhaps “to some extent.”

Moreover, this is only a rough backtest estimate.

I hope this sense comes across.

With that, goodbye!

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【Flow from starting an EA to intermediate class】

■First, mastering “how to install the EA” is essential.

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●MT4 EA (Expert Advisor), installation steps for indicators

https://www.gogojungle.co.jp/post/1/8212

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●GoGoJungle video version

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At first you may not understand everything at once, and some may 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 an EA】

Now that you think you can operate an EA,

you may worry, “I can’t identify a winning EA… I don’t want to lose money…”.

Therefore, Reiwa’s Double-i is

“to help you understand backtests to some extent,”

and has published the following articles in sequence.

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■How to find a winning EA from backtests

https://www.gogojungle.co.jp/finance/navi/series/1714

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The real question is whether it actually wins in live trading—the forward performance matters, but

backtesting supports that to some extent.

Backtesting periods are usually longer than forward periods, and

whether you happen to win in forward is often assessed by refining backtest evaluation methods.

【How should you manage EA risk?!】

And no matter how excellent an EA seems,

if you neglect risk management, the EA will fail.

Hence for EA,what should risk management be!?

the following article answers that.

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■About the calculation method of EA risk management

https://www.gogojungle.co.jp/finance/navi/articles/64703

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【EA operation mindset is also important】

And to sustain EA operation long-term, the “EA operation mindset” is also important.