2/15★Sometimes I borrow the power of ChatGPT, this is part 25
FX Auto Trading, the EA developerReiwa’s Double-E.
This series has been written with the aim of posting every day since last year.
I think we have managed to continue for nearly a year now!
If you read what I have written so far,
you can be sure you’ll move closer to better EA operation.
And now, since I’d like to take a short break as well,
I will continue posting with the help of ChatGPT.
Occasionally, I will post irregularly as before.
Simple ideas for parameter selection!
Let's respond to the recent market with compounding ON
Hello, I’m the EA developer Reiwa’s Double-E.
This time, I’d like to share a simple idea about the unavoidable task of parameter selection when operating an EA. Many people struggle with parameter optimization. When choosing parameters based on past data, you may end up biased toward certain periods or find the optimization direction unclear.
In particular,during extreme market fluctuations like the Lehman Brothers crisis, it’s common for pure profit to rise only during that period and then stall later.
Therefore, I’ll introduce a simple idea for selecting parameters that can also handle the most recent market conditions.
Simple parameter selection idea – optimize with compounding ON!
If you find parameter selection difficult, I recommend the simple method of **“optimize with compounding ON.”** This method isone idea to find parameters that can respond to the latest market conditions.
Specifically, please follow these steps:
- Set to compounding operation..
- Perform optimizationand select the parameter with the highest net profit.
That’s all!Benefits of compounding operationallow you to adopt the parameter that best responds to the most recent market.
Why is compounding ON effective?
In compounding operation,if the backtest shows an upward trend,the weight on the most recent market becomes large. This means, because of the nature of compounding, as the assets increase, the lot size also increases. Therefore,in the final stages of the backtest, i.e., in the most recent market, trades are executed with larger lot sizes.
As a result,parameters that adapt to the most recent market environment become more significant within the overall backtest. Consequently, you can identify parameters that can also respond to current market conditions without being overly biased by events like Lehman, and can choose ones suited to the latest market.
There are drawbacks – risk of over-reliance on the latest market
Of course, this method hasa drawback. It is the risk ofoverreliance on the latest market.
For example,changes in interest rate policies or shifts in market trendsmay cause market conditions to change rapidly, and parameters tuned too tightly to the latest market may not cope. A parameter that performed well in a short period may not be viable in a longer-term market environment.
Don’t forget risk management! Proper lot sizing is key
Anyway, no matter which parameters you choose, the most important thing isrisk management. In EA trading, no matter how good a parameter is, if you don’t set an appropriate lot size, a sudden market move can cause large losses.
- Set an appropriate lot size relative to your funds and trade with a margin of safety..
- Always ensure the parameter matches the risk you’re taking..
If you do these well, stable operation is possible.
Conclusion – parameter selection is easy with compounding ON!
If you’re unsure about choosing EA parameters, please try the optimization with compounding ON that I introduced here. It makes it easier to find parameters that properly respond to the current market, so you can easily tailor settings to fit the market.strongly fits the market.
However,remember risk management and adjusting lot sizes, and operate with a long-term view.
Now, please continue to have a good trading life!
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【Flow from starting EA to intermediate level】
First, it’s important to “master installing the EA.”
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MT4 EA (Expert Advisor) and Indicator installation steps
https://www.gogojungle.co.jp/post/1/8212
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※GoGoJungle video version※
At first, you may not understand everything all at once, and you’ll definitely struggle.
I also stumbled many times at first, so don’t rush—you’ll be fine!
If you have questions, there is a “Contact form” you can use!
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■ GoGoJungle “Contact Form”
https://www.gogojungle.co.jp/inquiry
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【How to choose EA】
Now that you feel you can operate an EA,
you might think, “I don’t know which EA will win… I don’t want to lose…”.
So Reiwa’s Double-E introduces
to a degree, you can judge by backtesting,
the following articles in a series.
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■ How to find a winning EA from backtests
https://www.gogojungle.co.jp/finance/navi/series/1714
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backtests underpin it.
Backtest periods are usually longer than forward periods,
and whether you happen to win in forward testing depends on backtest evaluation methods to some extent.
【How should EA risk management be done!?】
And no matter how excellent an EA is,
if you neglect risk management, FX will collapse.
So for EA,what should risk management be!?
This article answers that.
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■ “How to calculate EA risk management”
https://www.gogojungle.co.jp/finance/navi/articles/64703
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【EA operation mindset is also important】
Then, to continue operating EA long-term, the “EA operation mindset” is also important.
Regarding those articles,
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12/30★ Year-end and New Year SP!! EA Comprehensive Course Part 3
https://www.gogojungle.co.jp/finance/navi/articles/80551
8/12 [Obon Holiday Special]! This will also make you an EA Master! “EA Operation Mindset”
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17 [Obon Holiday Special]! This will also make you an EA Master! “Notes for EA operation”
https://www.gogojungle.co.jp/finance/navi/articles/73797
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So,
it’s quite substantial and important,
so even if you don’t understand it immediately, please be sure to skim through!
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【Reiwa’s Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically categorized EA by genre for Reiwa’s Double-E
https://www.gogojungle.co.jp/finance/navi/articles/67162
(Genre diversification is essential when building a portfolio)
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【Reiwa’s Double-E serialized articles】
■ EA Beginner’s Course
https://www.gogojungle.co.jp/finance/navi/series/1700
“About the calculation method for EA risk management”
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
■ How to find a winning EA from backtests
https://www.gogojungle.co.jp/finance/navi/series/1714
■ No-nonsense! GoGoJungle problem posing!
https://www.gogojungle.co.jp/finance/navi/series/1701
https://www.gogojungle.co.jp/finance/navi/articles/64723
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https://www.gogojungle.co.jp/finance/navi/articles/65010
https://www.gogojungle.co.jp/finance/navi/series/610
【Reiwa’s Double-E’s Beliefs】
Develop EA with proper methods,
gain more people’s love and trust,
and maintain a long-term WIN-WIN relationship,
aiming to revitalize the EA market and raise literacy.
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