Bi-Monthly Development Story Episode 3: Why is it EURUSD-only? — The reason for narrowing down currency pairs
In Episode 2, I discussed the contrarian idea that “what goes too far will return.” This time the theme is how to choose currency pairs. In the world, there are many tradable instruments like yen, pounds, and gold. Among them, Double Moon hasnarrowed down to EURUSD onlyWhy just one? And why EURUSD in particular? I’ll honestly share what I’ve seen through testing as well.
When creating an EA, I also yearn for a universal model that can be used with any currency pair. If one logic works for yen, pound, and gold, that would be strong. But the more tests I run, the more I feel that view is an illusion.
Each currency pair has its own “quirk.” Some move roughly, some move gradually; some tend to trend in one direction, others oscillate. Forcing a single setting to fit all of them often yields a mediocre EA that fits nowhere. Therefore, I made the main “Shôkinryû” dedicated to gold. Double Moon follows the same approach —focus on one playing field and refine thereand choose this policy.
As discussed previously, contrarian trades on the premise that “overextended markets tend to revert to the mean.” This meansmarkets that oscillate (range/mean reversion)are favorable, whilemarkets that extend in one direction (strong trends/rapid changes)are unfavorable—the obvious conclusion.
In other words, for contrarian EAs, choosing assets that revert easily is crucial. If you miss this, no amount of fine-tuning will prevent being trapped in markets that don’t revert. The figure below organizes contrarian suitability along two axes.
※ Image for reference. Positioning is relative to my testing and varies with market conditions.
Among major currencies, there are three main reasons I chose EURUSD as my contrarian partner.
This isn’t just theory. I tested the same contrarian logic on currency pairs involving gold and yen. The results were clear.Only EURUSD remained stable; others were knocked down by strong trends or abrupt moves. Gold especially tended to not revert once it started moving, causing contrarian drawdowns to grow.
You might wonder, “Are you not the Gold developer, Double Moon not gold?” It’s actually the opposite: having watched gold closely, I realized its roughness isn’t suited for contrarian methods. Gold fits well with buy-the-d dips (trend-following bias) for Shôkinryû. For contrarian trading, EURUSD suits best. Each method has its ideal arena.
I understand the feeling that “more currencies mean more opportunities.” However, I chose to focus deeply on EURUSD rather than broaden the set and dilute performance. With a dedicated pair, you can fine-tune distance and thresholds to match its quirks. Testing becomes simpler and weaknesses more visible.
Narrowing to a single arena, EURUSD, and refining contrarian trading there — that is Double Moon’s design philosophy. Of course, EURUSD can experience rapid moves too. Being dedicated doesn’t guarantee safety; I will discuss how to protect against losses in future installments.
- Currency pairs have intrinsic quirks — refine them through specialization rather than seeking a universal solution
- Contrarian trading pairs well with assets that revert easily and have mild rapid changes
- Reasons for choosing EURUSD — ① narrow spreads ② not prone to one-way surges ③ rapid changes relatively mild
- Even in testing, gold and yen were knocked down by contrarian strategies, only EURUSD stayed stable
Next, we will cover “Why hold long and short separately — ‘Two Moons’ and Hedging Accounts”. The origin of the Double Moon name also lies in the design of holding long and short positions independently, and why a hedging account is necessary. I’d be glad if you stay with me until the end.
※This article aims to provide information and is not an investment solicitation. The performance results shown are past results and do not guarantee future profits. FX/CFD trading involves risks. Please make investment decisions at your own responsibility.