Automated trading system (EA) operation requires funds

This is Geko.

Among those who reached this column,

some may say

“This is my first time with an automated trading system (EA)~”

So I’m planning to write a few-part article with EA trivia that even beginners can understand.

This time, about the funds required for EA operation.

First, not only for EA operation but in trading in general, there is no concept of “recommended margin.”

Individual traders use different amounts of funds, and additionally the amount of loss they can tolerate varies.

So here I will explain how to calculate the minimum funds needed for trading.

I’ll use my EA 【Swingboarder_GBPJPY_M30】 as an example.

First, I will introduce the calculation method listed on each Gogojungle EA introduction page.

https://www.gogojungle.co.jp/systemtrade/fx/52727

The items are listed at the top of the EA introduction page.

My view may differ, but there is an item called “Recommended Margin,” so let’s check that.

If you click the “?” mark, you will see the following explanatory text.

This calculation seems to be based on forward performance.

Next, I will calculate the minimum required funds from the backtest results.

For a 0.1 lot operation, the required margin is calculated as [Trade quantity × the rate of the corresponding JPY pair ÷ Leverage].

0.1 lot = 10,000 units, GBP/JPY rate 205, leverage 25x, so the required margin is about 80,000 yen.

From the backtest of 【Swingboarder_GBPJPY_M30】, the results show:

• Backtest on GBP/JPY 30-minute chart (fixed 0.1 lot)

These are the data recorded (or rather, I wrote the summary of the backtest results...).

Adding the required margin for GBP/JPY per 0.1 lot and the maximum drawdown per 0.1 lot gives about 210,000 yen as the minimum funds derived from the backtest.

Also, depending on the backtest, calculations may be in dollars or yen, so please standardize the currency unit.

Also, with this calculation method, results will differ depending on the JPY rate, so be careful.