3/20 [Backtest Evaluation Method] We explain all items in the backtest image 19 - How to find an EA that can win from backtesting - Navi+ - GogoJungle | Auto Trading - Market Analysis

EA developer Reiwa's Double-I-E

In the first place

EA developers assess the quality of an EA by

checking with “backtests”.

So as a user

to “discern the quality of an EA”,

you need the skill to judge backtests well.

With that in mind, this series

will write about “how to find winning EAs from backtests.”

【About Total Number of Trades】

“Law of Large Numbers”exists.

Having a larger test sample reduces variance and yields relatively correct data,

In EAs, a rule of thumb is that “over 1000 trades in 10 years” is desirable.

(This excludes multi-logic with a single EA.)

More trades are better, but it also depends on

how often the EA’s logic has an edge.

EAs with low-frequency events like divergences won’t have many trades.

If you extracts an edge from chart patterns to begin with,

you won’t be entering every day; maybe once every few days.

(Many in the past who used high-frequency trading EAs failed.)

And an EA that aggressively increases the number of trades tends to have issues.

In other words, it’s the broker who profits from high trade frequency, which often leads to account blowups.

Keep in mind that the emphasis should be on the “edge of the logic,” with “trade frequency coming naturally later.”,

so ideally no one develops an EA with trade frequency as the initial focus.

Therefore,

EA that is developed to have a high trade frequency is suspiciousas well.

Also, as a tendency,

EA with many trades tends to have a lower profitability factor,

EA with fewer trades tends to have a higher profitability factor.

If it were me, I’d choose the former or mix them in a portfolio.

Also,

EAs with many trades are common in scalping,

but as a result, costs such as spreads and external fees increase.

Conversely, trend-following and swing-type strategies

hold positions longer, so naturally trade frequency tends not to rise.

Thus the trade frequency is somewhat determined by the EA type.

Finally, I’ll share other URLs posted elsewhere on Investing Navi+ and wrap up.

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About Trade Frequency

https://www.gogojungle.co.jp/finance/navi/articles/64705

About “Trade Frequency”

https://www.gogojungle.co.jp/finance/navi/articles/64707

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【Reiwa’s Double-I-E Listing of Products】

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

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【Reiwa’s Double-I-E In-Progress Articles】

■EA Beginner Course

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

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“How to calculate EA risk management”

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

Simple tips to spot scam products (in EA cases)

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

Where to check first when you don’t understand something about EA

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

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■ Unbiased! Gogojan Problem Posing!

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

Where is Gogojan’s contact form?

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

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■ Double-I-E FX Tales

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

【Reiwa’s Double-I-E Beliefs】

Develop EA with a principled approach,

gain the trust of more people,

and maintain a long-lasting WIN-WIN relationship,

aiming to revive the EA market and improve literacy.

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