Occasionally I’ll borrow the power of ChatGPT, Part 7
FX automated trading, the double-EA developer of Reiwa era here.
Occasionally I’ll borrow some of ChatGPT’s power too (laugh).
It’s not a matter of running out of ideas at all,
I have plenty of notes and drafts,
and since整理するのが面倒くさいので丸投げしました(笑)
Nanshin EA and Single-Position Compounding – A New Idea to Mitigate Bankruptcy Risk
This time, I’d like to talk about an interesting idea from our community customers.
It is a new approach that combines “nanshin (averaging down) with simple position compounding”
This concept is a very interesting way to reduce the bankruptcy risk of Nanpin EA while also gaining compounding effects.
Problems of Nanpin EA – Bankruptcy Risk
First, for those unfamiliar with Nanpin EA, here’s a quick explanation:
Nanshin is a method where additional positions are opened when the price moves against the current position, lowering the average acquisition price and making it easier to profit when a reversal occurs.
This strategy is very effective in ranging markets where trends don’t last long, but in situations where a one-way trend continues for a long time, unrealized losses can balloon and eventually incur large losses.
This is known as the “bankruptcy risk” of Nanpin EA.
Mitigating risk by combining with a single-position strategy
Hence, a proposal from community customers to combine Nanpin EA with a single-position strategy.
Single-position EA holds only one position at all times, thereby limiting risk, but it does not perform position averaging like Nanpin.
By combining these two strategies, there is a possibility to reduce Nanpin EA’s bankruptcy risk.
Specifically, even in markets where Nanpin has a risk of holding multiple positions, a Single-Position EA could help limit the risk.
For example, if Nanpin EA holds an excessive number of positions, the single-position system could compensate, minimizing losses while still pursuing stable profits.
This is a very interesting approach as a new strategy to avoid bankruptcy risk.
Combination of Nanpin EA without Martingale and Single-Position EA
An even more interesting proposal is to mix “Martingale-free Nanpin” into the Single-Position EA.
Martingale is a method that doubles the bet size (lot size) each time a loss occurs, but it is considered to have high bankruptcy risk.
Here, the idea is to remove Martingale and incorporate the characteristics of “Nanpin” that holds multiple positions into the Single-Position EA.
In this approach, while using Nanpin, you don’t increase the lot size aggressively, but you increase positions in a way that controls risk,
maintaining the stability of the Single-Position EA while aiming to maximize the profits from Nanpin with multiple positions.
By moderately diversifying risk, it may be possible to accumulate profits over the long term.
Single-Position EA’s Compounding Effect – Accelerating Asset Growth
Additionally, utilizing the Single-Position EA’s characteristics to operate with compounding is part of this idea.
The Single-Position EA requires less margin than Nanpin EA and can set an appropriate lot size, tending to profit steadily, and using that profit in a compounding manner is also an intriguing aim to accelerate asset growth.
Compounding refers to reinvesting profits into the next trade to snowball asset growth.
Nanpin EA can generate profits at a relatively fast pace when the market is stable, but
combining Single-Position EA with compounding increases the potential to grow assets over the long term while controlling risk.
Summary: A New Strategy by Combining Nanpin EA and Single-Position
Nanpin EA carries bankruptcy risk while being a powerful method to pursue profits.
However, to mitigate this risk and secure long-term profits,
it is very interesting to combine with Single-Position EA and compounding.
By combining Nanpin EA, Single-Position EA, and even a Martingale-free Nanpin strategy,
you can optimize the balance of risk and profit and aim to grow assets over the long term.
Thus, even if a strategy is high-risk on its own, new possibilities open up when combined with other strategies.
As the saying goes, “There’s a use for everything,”
adopting various methods flexibly and balancing risk management with profit pursuit will be the key to success.
Well then!
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【Reiwa’s Double-EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Real account performance of the USD/JPY EA
https://real-trade.tech/accounts/73791?via=users_realtrade
Specifically, categorized the Reiwa’s Double-EA
https://www.gogojungle.co.jp/finance/navi/articles/67162
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【Reiwa’s Double-EA Serialized 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’s Double-Ea’s Beliefs】
