2/18★Sometimes I borrow the power of ChatGPT, this is 28
FX Auto Trading, EA developersReiwa’s Double-Eis here.
This serialization, which has been written aiming for daily posts since last year.
Probably we’ve maintained it for almost a year now!
If you read what has been written so far,
I’m confident you’ll come closer to better EA operation.
And, since I’d like to take a brief break,
I plan to continue posting by leveraging ChatGPT’s power.
Occasionally, I will post irregularly as before.
Trading Frequency vs Net Profit – How to Evaluate EA Performance?
Hello, I’m the EA developer Reiwa’s Double-E.
This time, I’d like to discuss “Trading Frequency and Net Profit.” This topic is highly important and fascinating in EA operation. In particular, questions like “Is more trading frequency better?” or “If the net profit is high with fewer trades, is that okay?” are concerns you may have wrestled with.
Based on the exchanges between Mr. T and Mr. K, I’d like to dig deeper into this issue.
① 1000 trades with $5000 net profit vs ② 2500 trades with $5000 net profit
First, let’s return to the original question.
① 1000 trades with $5000 net profit
② 2500 trades with $5000 net profit
When you look at these alone, you might be torn which is better. It would seem that option ①, with fewer trades achieving the same net profit, is preferable. However, in EA evaluation, the number of trades and the number of losses are also important factors.
Trading Frequency and Reproducibility
As Mr. K says, whether “1000 trades” has sufficient reproducibility is a crucial point for an EA developer. For example, according to the law of large numbers, without a certain number of trades, win rate and expected return may not stabilize.
If you can determine that “1000 trades provide sufficient reproducibility,” you could opt for ① with fewer trades and the same net profit. But depending on whether the EA is swing-style, scalping, or which time frame is used, a smaller number of trades can become a risk factor, so caution is needed.
Losses and Reproducibility
As Mr. T emphasizes, it’s extremely important to pay attention to the number of losses as well.
For example, with the same win rate of 70%,
① 1000 trades with net $5000 (300 losses)
② 2500 trades with net $5000 (750 losses)
In this case, Mr. T would choose ②, reasoning that more trades yield higher reproducibility based on the law of large numbers. This is a sensible view, as more trades tend to stabilize results.
Also, with more losses, money management and drawdown risk management become more important. For example, scalping EAs involve more trades and more losses, thus requiring stronger risk controls.
Turnover Rate and Time Frame
Furthermore, turnover rate (trade frequency) is also an important factor. As Mr. K notes, for 4-hour or daily timeframe EAs, 1000 trades can still represent a very high turnover rate. Therefore, having fewer trades is not inherently bad; it depends on which timeframe is used and how often entries occur.
On the other hand, for scalping EAs, having few trades may lead to insufficient repetition of trades, making backtests and forward tests more vulnerable to randomness. In scalping, more trades generally increase the reliability of performance.
Which should you choose?
Ultimately, the choice depends on the nature and goal of the EA and your own risk tolerance.
If you have enough stability with 1000 trades and reproducibility is confirmed, choosing ① is one option. In particular, longer time-frame EAs can still achieve good results with fewer trades.
On the other hand, for higher reproducibility and risk diversification, choosing ② could be better. With more losses, you must manage funds carefully, but more trades can lead to more stable performance.
Conclusion
The balance between number of trades and net profit depends on the EA’s nature and operating style. In scalping, high turnover may be required; in swing trading, fewer trades with sufficient reproducibility can suffice.
Most importantly, understand the logic and characteristics of the EA you operate, and base your assessment of trade frequency and net profit on that.
Don’t focus solely on the number of trades or net profit; consider losses, win rate, and drawdown risk management comprehensively when choosing an EA!
With that, please continue to have a great trading life!
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【Flow from starting EA to intermediate level】
First, mastering the installation of the EA is essential.
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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※
Initially, you won’t understand everything at once, and you may stumble.
I too stumbled many times at first, so don’t rush—you’ll be fine!
If something isn’t clear, there is a “contact form,” so please use it!
https://www.gogojungle.co.jp/inquiry
【How to choose an EA】
Now that you think you can operate an EA,
you might wonder, “I can’t tell which EA will win… I don’t want to lose…”
So Reiwa’s Double-E will provide some guidance through
“Backtesting” to gauge good or bad to some extent,
and has serialized the following articles.
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https://www.gogojungle.co.jp/finance/navi/series/1714
【How should EA risk management be done!?】
And no matter how excellent an EA you obtain,
FX collapses if risk management is neglected.
Therefore for EA, how to do risk management?
This is answered in the following articles.
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■ About the calculation method for EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/64703
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【EA operation mindset is also important】
And, to sustain EA operation for the long term, the “EA operation mindset” is also important.
Regarding those articles,
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!] Now you can become an EA Master! “EA Operation Mindset”
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17 [Obon Holiday Special!] Now you can become an EA Master! “Notes during EA operation”
https://www.gogojungle.co.jp/finance/navi/articles/73797
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That said,
it’s a substantial and important read,
even if you don’t understand it right away, please make sure to review it!
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【Reiwa’s Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically, a genre-based organization of Reiwa’s Double-E EAs
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 Course
https://www.gogojungle.co.jp/finance/navi/series/1700
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“About the calculation method for EA risk management”
https://www.gogojungle.co.jp/finance/navi/articles/64703
【Portfolio version】About the calculation method for EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/65978
Tips to spot counterfeit products (in the case of EA)
https://www.gogojungle.co.jp/finance/navi/articles/64738
Where to check first when you don’t understand something in EA
https://www.gogojungle.co.jp/finance/navi/articles/65619
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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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■ No concessions! 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 Buy/Dip Buy and Rebound Sell” now publicly released!!
https://www.gogojungle.co.jp/finance/navi/articles/65010
■ Doubled-E FX Talk
https://www.gogojungle.co.jp/finance/navi/series/610
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【Reiwa’s Double-E’s Beliefs】
Develop EA with a proper approach,
seek the support of as many people as possible,
and maintain a long-term WIN-WIN relationship,
aiming to revitalize the FX market and improve literacy.
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