The Value of EA and How to Choose a Good EA

Hope you are well, this is Doctor Neko.

Currently on Gogojan,
I believe that many EAs are being sold.

Regarding this "EA,"
my belief is that the value of an EA is variable.

What I mean is that the value of the [EA being sold] is almost concentrated on
“how much profits that EA seems likely to generate in the future.”

Therefore, depending on the forward results,

For example,

[EAs that recently suffered a large drawdown] are
difficult to deny doubts about their future prospects, so at that point,
the “value of the EA” drops significantly.

(→ because the potential to profit in the future looks low)

In other words, for someone purchasing an EA,
it is a matter of whether the EA will win from here on out
that mainly determines the EA's value. I would not be mistaken to say so.

Therefore,
even an EA that has won a lot in the past
is purchased and then starts losing,
it could be said that it has little value to the buyer.
(If you only value it as a research material,
then that may be fine, but I think there are few people who think that way.)

From the above,

for someone considering purchasing an EA, the [EA’s value] is

the EA’s future prospects (expected value),

to put it differently,

(1) The EA’s backtest performance
(2) The EA’s forward test performance
(3) The seller’s past track record and level of support

and other factors,

to some extent,the EA’s future prospects (the expected value)can be anticipated,

in our view.

For example,

(2) is good, but (1) is marginal,

(2) is good, but (3) is marginal,

for EAs with “points of contention,”

their future prospects become harder to expect.

(For instance, if the backtest period is too short,

the past performance of EAs is generally poor,

or there are no other EAs released, etc.

When no other EAs are released, it may be that the EA was just started,

which happens quite often, I think.)

In this sense, at least checking whether (1)(2)(3) are properly cleared

to avoid poor EAs is a meaningful way to proceed.

'By the time you have cleared all of (1)(2)(3)

the future expected value is already quite high, but even so,

EAs inevitably have a “shelf life” and periods of hardship,

so depending on timing, losses can occur, which is the reason.

Since an EA’s operation is also a form of investment,
it is natural that a certain amount of risk accompanies the return, so
please accept that and,

while considering the above crucial points like backtests, forward tests, and the seller’s capability,

determine which EA to implement by properly judging its future prospects.

This is the best course of action the EA user can take,
in my view.

And,
people with high “EA selection ability”
tend to have a lower probability of choosing a “bad EA,”
and a higher probability of choosing a “good EA,”
which leads to a state where losses are less likely in the end.

If you are unlucky and end up selecting a bad EA,
you can apply that experience next time you choose an EA,
and your ability to select good EAs will surely improve,
so please investigate carefully, and improve your ability to choose better EAs.

Dr. Neko