3/15【Backtest Evaluation Method】We explain all items of the backtest image14

This is the Reiwa-era Double-I-E by EA developer.

To begin with

EA developers gauge the quality of an EA through

“backtests.”

Therefore, as a user

to “discern the quality of an EA,”

you need the skill to evaluate backtests.

With that in mind, this series

will describe “how to find profitable EAs from backtests.”

【Regarding Net Profit】

This explanation is quite important.

Now, this section should not be read in isolation.

For example

even if net profit is high, if the maximum drawdown is also high,

the required margin will be correspondingly large.

Even with a small net profit,

if the maximum drawdown is much smaller,

the required margin can be smaller, and the capital efficiency improves.

EA A

・Net profit = 1,000,000 yen, max DD = 100,000 yen

EA B

・Net profit = 500,000 yen, max DD = 25,000 yen

(Assuming the same period and same lot size)

Between A and B,

A, with a net profit of 1,000,000 yen, seems to have earning power, but

let us double the lot size for B.

EA A

・Net profit = 1,000,000 yen, max DD = 100,000 yen

EA B

・Net profit = 1,000,000 yen, max DD = 50,000 yen

Therefore,

B can earn with less risk.

This balance of net profit and max DD is called

“Recovery Factor.”

GoGoJungle’s sales page uses

“Risk-Return Ratio”which is the same concept.

The recovery factor is calculated as

“Net Profit ÷ Max DD”.

In MT5, it is standard to see this in backtest items.

By being mindful of the height of this recovery factor,

it is important to incorporate it into a portfolio.

Also, in another post I think I explained in detail,

when comparing,it is essential to standardize everything except the items being compared, and

the recovery factor period should be standardized when comparing.

Well then.

【Reiwa-era Double-I-E Product List】

https://www.gogojungle.co.jp/users/112481/products

【Reiwa-era Double-I-E Series Articles】

https://www.gogojungle.co.jp/finance/navi/series/1700

https://www.gogojungle.co.jp/finance/navi/articles/64703

https://www.gogojungle.co.jp/finance/navi/articles/64738

https://www.gogojungle.co.jp/finance/navi/articles/65619

https://www.gogojungle.co.jp/finance/navi/series/1701

https://www.gogojungle.co.jp/finance/navi/articles/64723

https://www.gogojungle.co.jp/finance/navi/series/610

【Reiwa-era Double-I-E’s Beliefs】