Unnecessary items in the EA ranking category
This is Reiwa's Double-Eye (da-buru-ii) from the EA developer.
This series is
“No Taboos! Gogojan Issue Raising!”,
Regarding the issues I feel with Gogojan,
(Of course, I have already obtained permission from the sales staff)
From my position as the Reiwa-era double-i developer of EA,
the three parties — users, Gogojan, and EA developers —
should continue in a WIN-WIN mannerin order to,
I feel there is a need to “see the whole picture and act accordingly.”
This is obviously my own view, but
as objective as possible,
and with the aim that the overall WIN-WIN continues,
I plan to speak frankly and without bias.
With that in mind, I’ll move on to today's topic.
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Unnecessary items in EA ranking
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In Gogojan’s EA ranking,
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・Best-seller ranking
・Profitability ranking
・Profit amount ranking
・Profit factor ranking
・Risk-return ranking
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these exist.
Now I will explain each.
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【Best-seller Ranking】
I think this is acceptable, but
the Japanese tendency of“Because everyone is buying, I’ll buy too”
if that is the reason for purchases, I think that’s not good.
Ideally,
“carefully assess the EA and determine whether it suits me before buying”
should be the basis for purchasing decisions.
If you bought because “everyone else is buying,”
but it doesn’t suit you and you end up not using it,
that would be a great waste.
“Not suiting you” means things like
too deep a stop loss,
not following your ideal trading,
too many positions making you afraid,
trading only while asleep and thus not sleeping well.
In short,
“Do not judge by number of users for an EA.”
“Judge EA by objective data.”
That is the point.
*General methods to evaluate EAs are covered in the “EA Beginner Course” series.
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【Profitability Ranking】
This is somewhat okay, but you must be careful.
This profitability is
“Profit” ÷ “Recommended Margin” × 100.
However,
after release, if forward performance is good, the figure rises, but
during drawdown periods the “recommended margin” rises sharply,
and the “profitability” plunges.
Therefore, if there is a reproducible EA with solid methodology,
its backtest performance should converge.
In other words, it can vary greatly depending on the measurement period.
Later in the “EA Beginner Course,”
the ideal is to view it after more than one year has passed,
and it should not be treated as a single lump without regard to period.
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【Profit Amount Ranking】
Frankly, I think this is unnecessary.
Because
lot sizes vary by EA and are not standardized.
In Gogojan’s demo account forward testing,
it is calculated with 1,000,000 yen and 25x leverage.
Some EAs are submitted with
the maximum performance possible within 1,000,000 yen,
with an almost minimal lot settingas some do,
(for single-position EAs, 1 lot might be based on 1,000,000 yen, etc.)
some submit 0.1 lots.
Even if the revenue is high with the tightest lot setting,
if the maximum drawdown is large,
you cannot place such high lots.For details, see the “Risk Management Calculation Method” in the “EA Beginner Course,” but
this too,
even if you lump it under “profit amount” for ranking, it isn’t comparable.
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【Profit Factor Ranking】
I also think this isn’t necessary.
Generally, averaging that doesn’t cut losses would have a higher value,
and the value varies with EA type,
and
・High PF but few trades
・Low PF but many trades
might have higher earning power per time for the latter.
Also,
EAs with few trades in backtesting raise concerns about reproducibility.
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【Risk-Return Ranking】
This is the only ranking that I’d like to keep.
It is also known as the “Recovery Factor.”
This risk-return ratio is
“Profit” ÷ “Maximum Drawdown”.
In short,
the larger the value, the better the performance, but
as mentioned in the profit ranking,
even if profit is large with big lots,
the maximum drawdown is also large, so
you cannot take such high lots.
What matters is
the balance between
“Profit” and the “Maximum Drawdown.”
The higher this value,
the less you lose when increasing lots,
and the more profit you can make.
In other words, capital efficiency improves.
However,
this metric also must be compared with a unified time period.
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Well, what I’ve described so far depends on whether you want to earn a lot in the short term or operate stably over the long term,
and there are various operating styles, so it isn’t one-size-fits-all, but
by thinking about it and establishing your own operating style,
the method of choosing EAs is very important,
so for now, let’s thoroughly establish your framework!
Well then!
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【Reiwa's Double-E inspired EA listing】
https://www.gogojungle.co.jp/users/112481/products
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【Reiwa's Double-E series articles】
■EA Beginner Course
https://www.gogojungle.co.jp/finance/navi/series/1700
■No Taboos! Gogojan Issue Raising!
https://www.gogojungle.co.jp/finance/navi/series/1701
■ Double-E FX Musings
https://www.gogojungle.co.jp/finance/navi/series/610
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【Reiwa's Doub-e-a's Beliefs】
Develop EA using proper methods, and
gaining the trust of more people,
maintaining a long-lasting WIN-WIN relationship,
and aiming to invigorate the EA market and raise literacy.
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