3/8★Sometimes I borrow the power of ChatGPT, part 38
FX automated trading, the EA developerReiwa's Double E here.
Since last year, I have been writing this series aiming for daily posts.
Probably we have continued for almost a year now!
If you read what I have written so far,
I believe you will come closer to better EA management.
Also, since I want to take a short break,
I will continue posting with the help of ChatGPT.
From time to time, I will post irregularly as before.
The Importance of Compound Growth and Long-Term EA Management – Developing a Keen Eye for EA Selection
Hello, I am Reiwa's Double E, an EA developer.
Today I would like to talk about “compound growth” and “long-term EA management.”
There is in the world a very excellent system called “compound growth.”
This system, said to have been praised by Einstein,
reinvests the profits as assets grow,
and the lot size increases, accelerating asset growth.
There are many EAs that enable compound growth in EA trading as well.
However, how many people have truly practiced compound growth for 10 years?
The Charm of Compound Growth and Actual Operating Periods
Most likely many people feel it is difficult to continue using the same EA for one or two years.
Backtests can show dreamy calculations like “If you operate 1 million yen for 10 years, you’ll have hundreds of millions,” but
actually, continuing to use the same EA for 10 years is not easy.
That’s why,
I think it is important to first set a goal to use the same EA for one year, two years, or even longer.
However, to realize this, you need to find an EA that can be used over a long period.
What becomes important here is to develop a keen eye for EAs.
The Importance of Forward Testing and Backtesting
When choosing an EA, you often look at forward testing (real operating data), but
in reality, few EAs have more than 5 years of forward history.
Furthermore, markets can change drastically over five years.
In such a situation,
relying solely on forward testing data may make it hard to judge long-term viability.
That’s where backtesting becomes important.
Backtesting is not real trading, but it allows testing over 10, 15, 20 years long periods.
Thus, you can verify results across various market conditions and key economic indicators.
If an EA performs well despite those rough seas, future stable management may be expected.
Strengths of Using Backtests in EA Selection
When choosing an EA, understanding how to evaluate backtests is a strong advantage.
Of course, blindly trusting backtests is not good, but
if you view both forward and backtests and can identify an EA that can be used long-term, that’s a great advantage.
Also, the EA developers themselves verify the logic via backtests.
Considering that good-performing EAs are released in that context,
I think having the skill to evaluate EAs with backtests is beneficial.
Summary – Aiming for Long-Term and Compound Growth
Compound growth is a wonderful system, but in reality it’s hard to maintain for a long period.
Therefore, first find an EA you can use for one year, two years, five years.
And to achieve that, you need the ability to evaluate not only forward tests but also backtests.
I have written about backtest evaluation methods in various media so far.
If you find an EA you can use long-term and then enable compound growth, the rate of asset growth will accelerate.
Please acquire the skill of backtest-based EA selection and aim for a better asset management life!
The article on backtest evaluation methods is below, so if you’re interested, please take a look.
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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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Well then, please continue to have a great trading life!
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【EA Beginnings to Intermediate—Flow Summary】
First, it is important to “master the installation of EAs.”
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MT4 EA (Expert Advisor) and Indicator Installation Procedures
https://www.gogojungle.co.jp/post/1/8212
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※GoGoJungle Video Edition※
At first, none of this may be understood all at once, and you’ll surely stumble.
I also stumbled many times at first, so don’t rush—you’ll be fine!
If you have questions, there is a “Contact Form,” so please use it!
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https://www.gogojungle.co.jp/inquiry
【How to Choose an 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 has published the following articles to help assess suitability through backtests.
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https://www.gogojungle.co.jp/finance/navi/series/1714
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Usually, the backtest period is longer than the forward period, and
whether you happen to win in forward testing can be estimated to some extent by mastering backtest evaluation methods.
【How should FX risk management be done!?】
And no matter how excellent an EA you obtain,
if you neglect risk management, FX will fail.
Therefore in EA, how should risk management be done?
An article answering that is below.
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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】
And, to sustain EA operation long-term, the “EA operation mindset” is also important.
For articles on those topics, see:
12/30★ Year-end and New Year SP!! All about EA Part 3
https://www.gogojungle.co.jp/finance/navi/articles/80551
8/12【Obon Holiday Special!】 Now you too can become an EA master! “EA Operation Mindset”
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17【Obon Holiday Special!】 Now you too can become an EA master! “Notes during EA operation”
https://www.gogojungle.co.jp/finance/navi/articles/73797
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That said,
the content is quite substantial and important,
so even if you don’t understand it immediately, please make a point to review it!
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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 by genre
https://www.gogojungle.co.jp/finance/navi/articles/67162
(Portfolio diversification by genre is essential)
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【Reiwa's Double E Series Articles】
■ EA Beginner Course
https://www.gogojungle.co.jp/finance/navi/series/1700
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About “How to calculate EA risk management”
https://www.gogojungle.co.jp/finance/navi/articles/64703
【Portfolio Edition】How to calculate EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/65978
Tips to spot shady 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 about 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-Holds-Barred! GoGoJungle raises questions!
https://www.gogojungle.co.jp/finance/navi/series/1701
https://www.gogojungle.co.jp/finance/navi/articles/64723
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■Reiwa's Double E “Pullback Buying/Returning Selling” now公開！
https://www.gogojungle.co.jp/finance/navi/articles/65010
■ Double E FX miscellaneous talk
https://www.gogojungle.co.jp/finance/navi/series/610
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【Reiwa's Double E Beliefs】
Develop EA with proper methods,
and gain the trust of more people,
maintain a long-term WIN-WIN relationship,
and aim to revitalize the EA market and improve literacy.
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