7. About trend following
EA developer Reiwa no Double-I is here.
Today
「Trend Following」is about.
Trend following can be summarized with MA and moving averages as
buy at a Golden Cross → close at a Dead Cross
sell at a Dead Cross → close at a Golden Cross
that is how it works.
We do not enter at the tops and bottoms,
and if the trend extends, profits are large.
For that reason, the win rate tends to around 40%.
However, because it is small losses and large profits, the net result is positive.
Perhaps due to the low win rate,
it may seem that relatively few people actually use it, but
it contrasts with the high-win-rate, small-loss small-gain of scalping EAs
and with the low win rate of trend-following, there is expectation that the drawbacks of both approaches cancel each other out
and it is highly valuable to run as part of a portfolio.
In compounding,
with scalping EAs alone, it is a series of small wins followed by a big win when lot sizes increase
which can lead to large losses, but
by incorporating trend following, the losses tend to be milder.
Now,
the challenges of Trend Following EAs include
“difficulty in closing at tops and bottoms.”
That is the issue.
In a buy entry,
you often buy after a significant price rise at a Golden Cross,
and while the position has large unrealized gains,
you end up closing at a Dead Cross after the price has fallen considerably,
which happens.
Looking at the profit/loss graph on the Gogojan sales page,
Trend Following always shows unrealized gains on the upper side.
To close at the point where unrealized gains were maximum,
you use take profit or trailing stop, but
they cannot adapt to all volatilities,
so you need to maximize with technicals,
and that is where the EA developer's skill shines.
Now, as the EA for Reiwa no Double-I,
this is it.
This fully embodies trend following.
And it includes a technique to capture the maximum point as well.
Having this makes a substantial difference for a portfolio.
Well then!
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【Reiwa no Double-I EA Listing】
https://www.gogojungle.co.jp/users/112481/products
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【Reiwa no Double-I Series Articles】
■ EA Beginner Course
https://www.gogojungle.co.jp/finance/navi/series/1700
■ No Excuses! Gogojungle Issue Raising!
https://www.gogojungle.co.jp/finance/navi/series/1701
■ Double-I FX Musings
https://www.gogojungle.co.jp/finance/navi/series/610
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【Reiwa no Double-I's Beliefs】
Develop EA through a proper approach,
carefully supported by more people,
and maintain a long-lasting WIN-WIN relationship,
aiming to revitalize the EA market and raise literacy.
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