2/19 (Mon) Even with a low profit factor, is it still a non-no?!
Reiwa Double I-E is here.
Everyone,
do you think a higher Profit Factor is better?
Indeed, you’d rather have a higher one than a lower one, right?
Then, here is an EA that exists,
it’s rising but the Profit Factor is 1.16.
If it’s above 1, you have a net profit, but
many of you would think, “Oh, it’s low～,”
and even if this is on sale,
you’d think, “Surely no one will buy it～.”
However,
the Recovery Factor is 15 for 15 years,
so it isn’t that bad.
Now, what I want to say is,
backtest over 15 years with more than 7,000 trades
(and it’s a 1-hour timeframe EA)
that is what it is.
That’s quite a lot.
Generally, with many trades (excluding multi-logic EAs),
Profit Factor tends to decrease.
During development, this had the highest Recovery Factor
and after optimization, this is the result,
that’s what happened.
No matter how high the Profit Factor is,
if the number of trades is small, you can’t increase profits much.
On the other hand, even if the Profit Factor is low,
if the number of trades is high, profits accumulate more.
The Law of Large Numbers also increases reproducibility.
So,
we do not consider the Profit Factor to be the most important during development.
If there are many trades, with suitable spread settings and expected gain, and a favorable recovery factor,
even if the Profit Factor is low,
(even if the total profit minus total loss is small),
it becomes one of the elements that maintain reproducibility, and you’d select those parameters.
A higher Profit Factor is a good indicator of efficient earnings, but
if there are few trades, it takes longer to recover from a single large loss. Some people might stop trading at that point.
And this EA’s trading looks like this
(red is sell, blue is buy)
This explains why the Profit Factor is low～
It’s always in a hedged state.
That means as the long position’s unrealized gains increase,
the short position’s unrealized losses also increase,
so they offset each other, leaving only a small profit.
So a low Profit Factor is natural.
Well,
you might think, can’t you improve it if you understand this?
“The market isn’t that forgiving,”
so when improved, it will be improved!
Well then, see you again!
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【Reiwa Double I-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
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【Reiwa Double I-E Serialized Articles】
■EA Beginner’s Course
https://www.gogojungle.co.jp/finance/navi/series/1700
■No Nonsense! Gogojungle Issue Posing!
https://www.gogojungle.co.jp/finance/navi/series/1701
■Double I-E FX Rambling
https://www.gogojungle.co.jp/finance/navi/series/610
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【Reiwa Double I-E’s Beliefs】
Develop EA with proper methods,
serve more people’s needs,
maintain a long-term WIN-WIN relationship,
and aim to revitalize the EA market and improve literacy.
