Should we run the EA during periods of large price movements?
FX Auto Trading, EA developerReiwa’s Double-E.
This April 29 of this year saw a large price movement.
Remarkably, USD/JPY rapidly broke through 160,
intervention? pushed it down to the 154 area…
When such large moves occur,
the volatility can continue for a while.
In such times, one might wonder
whether it is better to run an EA?
This is something many people are curious about.
As the EA developer,
I consider what kind of EA to run and when to pause it.
I have such ideas,
so this time I would like to explain them.
First, in short, the conclusion is
・EA with many TP/SL settlements
・EA without backtests from the 2008 Lehman Shock
・Pause all when past interventions differ from current conditions
are among the ideas.
An EA with many TP/SL settlements often clearly fits some market environments but not others.
This reflects the variety of volatility regimes,
for example, a market where a 10 pips TP works and one where it does not.
From EA development experience,
there are many logics that still produce a clean downward slope even with a 3 pips TP.
Thus,
in a market with various volatilities,
not a technical indicator-based approach,
and when most settlements occur via TP, SL,
the fit to market environment tends to be clear.
Next,
an EA without backtests from the Lehman era,
also requires caution.
In Lehman period, price moves were extremely large.
How did the EA perform then?
That is a concern,
but without data you cannot know.
Perhaps,
“unfavorable to publish”
could be the reason.
Such EAs are worrying, so I wouldn’t want to use them.
Also,
ideas to pause all when past interventions differ from current conditions exist as well.
On a large scale,
whether it is a dollar-buying intervention or a yen-buying intervention.
whether multiple banks intervene at once,
or one by one with time gaps.
whether intervention happens in the morning,
around the fix,
in European/U.S. hours,
whether it drops by more than 3 yen at once,
or gradually.
whether it intervenes with decisive actions,
or intervenes while withholding comments.
There are many patterns of interventions.
In these various patterns,
what kind of price movement occurred?
keeping that analysis in mind may also be important.
Well then!
