Every once in a while I borrow ChatGPT’s power, part 6 - EA Beginner Course - Navi+ - GogoJungle | Auto Trading - Market Analysis

FX automated trading, the double-e e developer of Reiwa era, is here.

Sometimes I’ll borrow the power of ChatGPT too (laugh).

It’s by no means that I’m running out of ideas at all,

There are many notes and rough drafts,

and since整理するのが面倒くさいので丸投げしました(笑)

N-averaged EA also says “There is a use for everything” – The importance of risk management

For those new to FX or interested in automated trading,

some may have experienced large losses using averaging (grid) EAs.

Many may think, “I don’t want to use averaging EAs anymore…”, right?

In reality, averaging EAs are a method for steadily accumulating small profits, and at first glance can seem very attractive.

They can be very reassuring when they continuously generate “chirin-chirin” profits on a daily basis.

However, when the market moves drastically, that allure can instantly collapse, and account funds can melt away in no time.

Risks of averaging EAs – The “boom” during market sudden moves

Averaging EAs operate on a principle of “not closing losses, holding multiple positions, and closing out only when overall is positive.”

This strategy aims to end up in profit despite temporary drawdowns.

Therefore, in normal market conditions, there is a possibility of functioning without issue.

Backtests may show a profit chart that rises steadily to the right, looking very attractive.

Seeing every trade succeed and profits accumulate in the account can even give a sense of安心感.

Nevertheless, averaging EAs carry a significant risk: their net profit can be accompanied by a much larger maximum drawdown (the maximum drop in funds).

When the market moves rapidly, losses can continue to grow, and eventually be realized all at once,

potentially wiping out the gains accumulated so far in an instant.

This is one of the main reasons many traders feel uneasy about averaging EAs.

Still, averaging EAs are “useful if used correctly”

So, are averaging EAs too risky and should be avoided?

The answer is not necessarily. What matters is “how you use them.”

To minimize the risks of averaging EAs, proper risk management is essential.

Here are a few key points.

1. Adjusting lot sizes

Since averaging EAs spread positions across multiple entries, it’s important to manage each position’s lot size appropriately.

Trading with unrealistically large lot sizes increases the risk of enormous unrealized losses during sudden moves.

Start with small lots and gradually adjust them to pursue profits while keeping risk under control.

2. Assessing market conditions

Rather than running averaging EAs unconditionally, operate after assessing market conditions.

In particular, during releases of key economic indicators or heightened geopolitical risk where sudden market moves are possible, it is advisable to temporarily stop averaging EAs.

By anticipating periods with high volatility in advance, you can significantly reduce loss risk.

(Note: stopping operation recommended by the seller or author may be investment advice; please be careful)

3. Capital management considering maximum drawdown

Since averaging EAs are always near drawdown, capital management is extremely important.

Calculate the maximum drawdown and ensure you have enough surplus funds to withstand that risk.

This is an effective risk-hedging strategy that helps you endure unfavorable market phases.

Future of averaging EAs – Aiming for long-term profits

Averaging EAs are a difficult risk-method, but if used properly, they can yield long-term profitability.

To avoid losses, you must understand market fluctuations and your own risk tolerance, and adjust the system accordingly.

Averaging EAs can become a powerful tool to build profits while controlling risk, depending on how you use them.

By practicing proper risk management and funds management and continuously monitoring the market cautiously, averaging EAs can become a reliable partner for traders.

Summary

Averaging EAs carry risks, but by understanding them and enforcing risk management, it is quite possible to profit in the long term.

While aiming for steady, incremental profits, do not neglect measures for sudden market moves, and proceed with careful operation.

Averaging EAs are also “tools to be used properly.” Master the appropriate usage and maximize profits.

And now!

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【Reiwa no Double-Ee EA Listing】

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

X Dollar-Yen EA real account performance

https://real-trade.tech/accounts/73791?via=users_realtrade

Specifically, categorized Reiwa no Double-Ee EA

https://www.gogojungle.co.jp/finance/navi/articles/67162