Why is execution power crucial in EA operations? Part 1

Have you already read Saxo Bank's 2020 Bold Predictions article? It was published by Saxo Bank's trading desk at the end of 2019 and includes many forecasts ranging from ones that could heavily impact the FX market, such as “ECB to raise interest rates,” to intriguing ideas like “Asia to announce a new reserve currency not dependent on the U.S. dollar.”

https://www.home.saxo/ja-jp/insights/news-and-research/thought-leadership/outrageous-predictions

In the February 21, 2020 issue of Monthly FX Strategies FX攻略.com, there is a detailed article about Saxo Bank Securities. Titled “A Large Gap Appears When the Market Makes a Sudden Move – If You Use MT4 Automatic Trading, Saxo Bank Securities Has Superior Order Execution!,” the article focuses on Saxo Bank Securities' strong order execution.

For details, please read the magazine and the forthcoming転載 article on the official FX攻略.com site, but here we provide a brief additional explanation from a different angle about “why order execution is extremely important for MT4 EA trading.”

Before running an EA with real funds, the theory is to check performance via backtests, and in some cases to test how it behaves on a demo account. In particular, backtest results are given very high importance and are used by many as a key factor in deciding whether to purchase an EA.

Of course, backtest results are important. However, please keep in mind that these results represent trading in a virtual world.

In MT4 backtests, the shortest time frame is 1 minute, and movements in sub-second timeframes are simulated using the four price points of the 1-minute bar (open, close, high, low) to create the internal movements (pseudo ticks). Therefore, some aspects may diverge from real price movements.

Additionally, backtests do not reproduce price jumps caused by sharp changes in supply and demand, sudden widening of spreads, or order execution delays. This is why discrepancies between actual trading results and backtest results occur, and such discrepancies often work unfavorably for traders.

As a result, a backtested EA that performs well may not perform as well in actual market conditions.

Operate EA with Saxo Bank Securities, Known for Strong Order Execution

In other words, backtest results are informative but differ from real market price movements.

If so, you should use an MT4 account that can execute orders stably even during rapid market moves, so that price movements do not work unfavorably against investors.

FX攻略.com’s April 2020 issue explains in detail that Saxo Bank Securities opened its MT4 institutional accounts to general traders from 2020. With this account, even during rapid market moves, the impact on order execution is minimized, and orders are executed as stably as possible, which has been highly regarded.

Saxo Bank Securities has, in the past, twice compared order execution with other companies using its live accounts during the U.S. Non-Farm Payrolls (NFP), a well-known indicator of substantial market movement.

・First Survey

First Survey Overview：https://www.home.saxo/ja-jp/campaigns/whatsnew/may-15052018

・Second Survey

Second Survey Overview：https://www.home.saxo/ja-jp/campaigns/whatsnew/nov-20191112

In both surveys, order execution was 100%, the spread was narrow, and the effective spread after slippage was the narrowest for Saxo Bank Securities.

Under normal conditions, differences in order execution between accounts are small, but when employment statistics or other major moves occur, these differences become more pronounced.

In the next article, we will discuss in more depth what kinds of disadvantages occur when order execution is poor, including the so-called “dollar-cost averaging gone wrong.”

[Important Notes]

■ Foreign exchange margin trading is not guaranteed to protect principal, and losses may occur due to movements in exchange rates.

■ Foreign exchange margin trading is a leveraged product, and losses may exceed the deposited margin.

■ Swap points may switch from receiving to paying due to changes in interest rates for the currencies being traded.

■ The selling price and buying price offered by our company include a spread (price difference), and the price at which customers buy may be higher than the price at which they sell.

■ When trading, please read the product disclosure statement and trading terms carefully and fully understand the mechanism and risks, and trade at your own risk.

Saxo Bank Securities Co., Ltd.

Financial Instruments Business Operator, Kanto Local Finance Bureau Director (Financial Instruments Business Operator) No. 239; Member of Japan Securities Dealers Association, Japan Financial Futures Association, Japan Investors Protection Fund, and Japan Commodity Futures Association