English translation (keeping HTML format, without code blocks or line breaks changed): 1/19★EA developers openly share the insights gained from developing the EA—Part 2
FX Automated Trading, the EA developersReiwa’s Double-E.
EA developers are, needless to say, those who develop EAs.
Therefore, they should have more knowledge than users,
and even EA developers often started as just an EA trader.
And I started as a discretionary trader.
Mainly, my development method is to convert discretionary trading methods into EAs, but
within that, there is the “knowledge gained for the first time” when becoming an EA developer,
so I would like to share such stories.
【Risk management is completely different from discretionary trading】
In discretionary trading, when entering,
you decide each time, such as “place the take-profit line here, and the stop-loss …”
However, typical EAs do not care about such things
and most have fixed TP and SL in pips!
The difference here is a big one.
Even the proper risk management method differs.
For example,
“Setting lot size based on what percentage of funds the stop loss will consume” is common for discretionary trading risk management, but
such risk management can lead to a margin call.
【Concrete Example】
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（EA backtest example）
Currency pair: USD/JPY
Starting capital: 100,000 yen
EA stop loss value: 100 pips
Backtest maximum drawdown: 400 pips
Leverage: 25x
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① When the amount hit by the stop loss becomes 5% of capital
→ 5% of 100,000 = 50,000 = with a 100-pip stop loss, the lot size is 0.05 lots.
② When the amount hit by the stop loss becomes 10% of capital
→ 10% of 100,000 = 10,000 = with a 100-pip stop loss, the lot size is 0.1 lots.
③ When the amount hit by the stop loss becomes 15% of capital
→ 15% of 100,000 = 15,000 = with a 100-pip stop loss, the lot size is 0.15 lots.
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Now, looking at case ③,
0.15 lots requires 90,000 yen margin, and
with a 0.15 lot and a 100-pip stop loss, the amount is 15,000 yen.
Adding the 90,000 yen margin and 15,000 yen stop loss equals 105,000 yen.
At the first stop loss, capital already exceeds the starting 100,000 yen,
leading to a margin call and ruin before the stop loss is reached.
Therefore,
you must consider the required margin,
and rather than asking how many SLs are in the EA, you must consider the maximum drawdown that could be expected,
and even running only on the maximum drawdown funds is not acceptable,
For risk management calculations, it is good to refer to the following article.
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■ About calculating EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/64703
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Well then!
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【Reiwa’s Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically, categorized Reiwa’s Double-E EAs into genres
https://www.gogojungle.co.jp/finance/navi/articles/67162
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【Serial articles of Reiwa’s Double-E】
■EA Beginner Course
https://www.gogojungle.co.jp/finance/navi/series/1700
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About calculating EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/64703
【Portfolio version】Calculating EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/65978
Tips to easily spot fraudulent products (for EAs)
https://www.gogojungle.co.jp/finance/navi/articles/64738
Where to check first when you have questions about EA
https://www.gogojungle.co.jp/finance/navi/articles/65619
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■How to find winning EAs from backtests
https://www.gogojungle.co.jp/finance/navi/series/1714
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■No bias! GoGoJungle raises questions!
https://www.gogojungle.co.jp/finance/navi/series/1701
Where is GoGoJungle’s inquiry form?
https://www.gogojungle.co.jp/finance/navi/articles/64723
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■Reiwa’s Double-E “Pushing buys and pullbacks” release unlocked!!
https://www.gogojungle.co.jp/finance/navi/articles/65010
■Double-E FX talk
https://www.gogojungle.co.jp/finance/navi/series/610
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【Reiwa’s Double-E Beliefs】
Develop EAs with proper methods,
to gain more support from many people,
and maintain a long-lasting WIN-WIN relationship,
with the aim of revitalizing the EA market and improving literacy.
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