Trade type dispersion
This is Gecko.
This explains considerations for portfolio creation using multiple EAs.
- Distributed operation of automated trading and discretionary trading
- Diversification of trading accounts (brokers)
- Diversification of currency pairs
- Diversification of timeframes for trading
- Diversification of trading times
- Diversification of trade types
Now, we will consider the sixth item, “Diversification of trade types”.
When we say trade types, there are many different kinds.
In terms of position holding time, there are scalping, day trading, and swing types,
types that control time or date, such as morning scalping and anomalies,
and also whether they are trend-following or counter-trend types.
When incorporating into a portfolio, it is better to avoid overlapping the same types, as this helps with risk diversification when losses occur.
That said,
it would be easy to understand if each EA disclosed its respective type, but in general the core logic is not disclosed, so explanations can be vague.
As a rough guideline to classify EA trade types,
it is good to check the operating timeframe.
If the operating timeframe is large, like a 1-hour chart, it leans toward day trading or swing types,
and if it is small, like a 5-minute chart, it leans toward scalping or day trading types.
Also, as a rough viewpoint,
trend-following tends to have large profits with small losses, while contrarian (counter-trend) tends to small profits with large losses (not absolute).
There is some tendency to gauge success rates, but this is not definitive.
At minimum, I believe it is necessary to check position holding time using analysis software.
