Deep dive into stop-loss on 8/25
FX Automates Trading, the EA developerReiwa’s Double-E.
Most EAs haveStop Lossset.
For example, if the price moves against you by 100 pips from the entry price, it will cut loss,
in a preset manner.
Then,
a legitimate EA developer
analyzes vast historical data to
determine the most appropriate numbers and
set the stop loss.
In other words,
for long-term operation,
the stop loss is set at values with a higher probability of better performance.
That is,
and, personally,
Because,
What I mean is
even if you set lots so that stop loss is a certain percentage of account funds,
it is fine, but
EAs will inevitably have losing streaks,
and the maximum potential drawdown would be the worst-case drawdown in backtests.
In other words
if you raise returns by increasing percentage,
before accounting for the expected maximum drawdown,
you may already run out of funds and go bankrupt.
If you can perform your own backtest,
consider the expected maximum drawdown and
decide what percentage to use.
If not,
per-unit lot
the required margin plus the maximum drawdown,
that total is the minimum capital needed,
and from there, reduce to a lot size that does not feel too risky.
That is the prudent approach.
Therefore,
the stop loss as a percentage of account funds to determine the lot size is
not a concept I use for EA.
For risk calculation methods,
please read the links below.
See you!
【Reiwa no Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically, categorized EA by genre for Reiwa no Double-E
https://www.gogojungle.co.jp/finance/navi/articles/67162
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【Reiwa no Double-E Serial 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/65978
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/1714
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/articles/65010
https://www.gogojungle.co.jp/finance/navi/series/610
【Reiwa no Double-E’s Beliefs】
