Do you have risk management for EA? Important things before aiming for profit

When you operate an EA (automatic trading),

“I want to increase profits more”
“Wouldn’t profits increase if I raise the lot size?”

I think many people have thought this.

Of course, the desire to increase profits is natural.

However, in EA operation, what is truly important is,

not maximizing profit, but preventing bankruptcy

I believe.

Why is risk management important

For example, no matter how excellent an EA is,

Changed market conditions
Unexpected price movements
Long periods of underperformance

cannot be completely avoided.

The market is always changing.

Therefore,

not a “lose-proof EA,”

but

an EA designed with the assumption that it can lose

is more realistic.

Aren’t you only looking at EA performance?

When choosing an EA,

Profit amount
Win rate
Monthly return

are often looked at by many people.

However, what should be looked at is

Maximum drawdown
Maximum consecutive losses
Recovery factor
Lot settings
Required margin

and so on.

It’s like when buying a car, you don’t only look at its top speed.

Braking performance and safety features are also important, right?

The same applies to EA.

What to think about before profit

What I think is important in EA operation is

the perspective of whether you can continue this operation for 10 years.

For example,

an operation aiming for 50% monthly profit and

an operation aiming for 5% monthly profit.

At first glance, the former may seem more attractive.

However,

the higher the profit sought,

the larger the lot
the greater the drawdown
the greater the mental burden

is often the case.

As a result,

many people become anxious and stop the EA.

Common mistakes in EA operation

From what I have seen with many users,

the common cause of failure is not the quality of the EA itself,

taking too much risk

is.

For example,

operating with more than the recommended lot
setting a lot large relative to capital
concentrating multiple EAs on the same currency pair

and so on.

I understand the urge to pursue profits.

However,

if increasing profits by raising risk leads to not being able to continue for long, that defeats the purpose.

Sustainability in asset formation

I have long held the view

“Asset formation > Asset management”

as an important principle.

If you seek large profits without sufficient assets,

you inevitably approach gambling.

First, build assets through your main job or side jobs,

and allocate a portion to investment.

Then,

keep lot sizes restrained
diversify holdings
think long-term

is important, I think.

Summary

EA is not a magic tool.

However,

used correctly, it is an excellent tool that supports asset formation.

For that,

before pursuing profits,

consider, “Will this operation fail?”

in EA operation, what is truly important is,

not temporary profits, but

sustained continuation.

Profits will come after that, I believe.

If you are currently operating an EA,

please take a moment to

review your operation from the perspective of “risk management” rather than “profit.”

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【Flow from getting started with EA to Intermediate】

■First, it is important to master “installing EA.”

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●MT4 EA (Expert Advisor) and Indicator installation procedures

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 may stumble,

but don’t rush—you’ll be fine if you take your time!

If you have questions, use the “Contact form” available!

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■ GogoJungle “Contact Form”

https://www.gogojungle.co.jp/inquiry

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【How to choose EA】

Now that you’re ready to operate an EA!

you might think, “I can’t tell which EA will win… I don’t want to lose…”.

Therefore, in the Age of Reiwa, Double-E, we published articles so that you can tell good from bad through

backtests to some extent.

The following articles were serialized.

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■ How to find winning EAs from backtests

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

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The real performance of profitability is in forward testing, but

backtesting supports that.

Forward periods are often shorter than backtest periods,

whether you win in forward testing by chance can be gauged by mastering backtest evaluation methods.

【How should EA risk management be done!?】

And, no matter how excellent an EA you obtain,

if you neglect risk management, it will fail—EA is like that.

Therefore in EA,how to manage risk?

The following article answers this.

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■ About “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,And,to sustain EA operation long-term, the “EA operation mindset” is important as well.

Those articles areThose articles are,

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12/30 Year-end and New Year SP!! EA Make-it-Easy Course Part 312/30 Year-end and New Year SP!! EA Full Understanding Course Part 3

https://www.gogojungle.co.jp/finance/navi/articles/80551">https://www.gogojungle.co.jp/finance/navi/articles/80551">https://www.gogojungle.co.jp/finance/navi/articles/80551https://www.gogojungle.co.jp/finance/navi/articles/80551

8/12 [Obon Holiday Special]! This makes you an EA Master! “Mindset for Improving EA Operation”8/12 [Obon Holiday Special!] Now you too can be an EA Master! “Mindset for Improving EA Operation”

https://www.gogojungle.co.jp/finance/navi/articles/72829">https://www.gogojungle.co.jp/finance/navi/articles/72829">https://www.gogojungle.co.jp/finance/navi/articles/72829https://www.gogojungle.co.jp/finance/navi/articles/72829

8/17 [Obon Holiday Special]! This makes you an EA Master! “Notes during EA operation”8/17 [Obon Holiday Special!] Now you too can be an EA Master! “Notes during EA operation”

https://www.gogojungle.co.jp/finance/navi/articles/73797">https://www.gogojungle.co.jp/finance/navi/articles/73797">https://www.gogojungle.co.jp/finance/navi/articles/73797https://www.gogojungle.co.jp/finance/navi/articles/73797

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So,With that said,

the reading material is substantial and quite important,the content is substantial and quite important, so even if you can’t understand it immediately, please make sure to read it!

even if you don’t understand it right away, please make sure to read it!

Well then!Well then!

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【Reiwa’s Double-Ea Listing of Offerings】【Reiwa’s Double-Ea Beliefs】

https://www.gogojungle.co.jp/users/112481/products

Specifically categorized Reiwa’s Double-E’s EAs

https://www.gogojungle.co.jp/finance/navi/articles/67162

(Genre diversification is essential when building a portfolio)

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【Reiwa’s Double-E serialized articles】

■ EA Beginner Course

https://www.gogojungle.co.jp/finance/navi/series/1700