3/26★Sometimes I borrow the power of ChatGPT, part 56
FX Automated Trading, EA developersReiwa's Double-E is.
Since last year, I have been writing this series aiming for a daily post.
Probably I have continued for almost a full year now!
If you read what I have written so far,
I believe you will approach better EA operation.
And, since I also want to take a short break,
I will continue posting with the help of ChatGPT.
Occasionally, I will post irregularly, as in the past posts.
Hello, FX automated trading, EA developer, Reiwa's Double-E here.
Today I will talk about “Leverage.”
Many people may think that “the higher the leverage, the better,” but
what is actually the case?From the perspective of a professional EA developer, I will explain.
As the title suggests,you don’t need very high leverage.
Is high leverage really necessary?
Everyone, don’t you have the image that higher leverage means more profit?
- Margins can be smaller!
- You can take larger lots!
- Therefore, profits also increase!
Thinking that way,some people have experienced margin calls.
However,don’t worry! In EA operation, you don’t need such high leverage.
In fact, by not setting high leverage, stable operation is possible, and as a result, the possibility of high income also increases.
High leverage does not guarantee safety
For example, in domestic FX accounts, the maximum leverage is up to 25x, and for corporate accounts, it can be 50x or more.
Looking at this difference, you might think, “If leverage is high, you can increase the lot and earn more!”
But that isa big mistake.
Because,even if leverage doubles, the maximum drawdown does not become half.
Explained with concrete examples
Now, I will explain using concrete examples.
- Dollar/Yen rate: 150 yen
- Lot size: 0.1 lots (10,000 units)
- Maximum drawdown: 40,000 yen (400 pips)
- Leverage: 25x
In this case, the required margin is,
Maximum drawdown is 40,000 yen, so adding the required margin 60,000 yen and maximum drawdown 40,000 yen gives the minimum funds required are 100,000 yen.
Now, what happens if leverage is 50x?
The required margin becomes half, 30,000 yen, but the maximum drawdown of 40,000 yen remains unchanged. Therefore,
Even if you double leverage, the necessary funds go from 100,000 yen to 70,000 yen.
It does not drop to half of 50,000 yen.This is the big pitfall.
Moderation in leverage
Many people understand the desire to “make a lot of money.”
However,the more you chase large profits, the higher the risk of large losses or ruin.
Furthermore, high leverage does not directly translate into profit.
Even with high leverage, efficiency is not guaranteed, and
the risk to safety of operation increases.
Rather,operating safely with an appropriate leverage such as 25x will reduce the risk of ruin in the future and improve the chance of steady asset growth
.
I hope this discussion is helpful!
Then!
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【Summary: The path from starting EA to intermediate】
First, mastering “how to install the EA” is important.
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MT4 EA (Expert Advisor), installation procedure for indicators
https://www.gogojungle.co.jp/post/1/8212
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※GoGoJungle video version※
Even at first, it is not possible to understand everything at once, and many may stumble.
I also stumbled many times at the beginning, so just take your time and you’ll be fine!
If you have questions, there is an “inquiry form” to use!
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https://www.gogojungle.co.jp/inquiry
【How to choose EA】
Now that you think you can operate EA,
you may think, “I don’t know which EA will win… I don’t want to lose…”
Therefore, Reiwa's Double-E has published the following articles to help with backtesting to gauge quality.
Below are the posts.
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https://www.gogojungle.co.jp/finance/navi/series/1714
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backtesting supports it.
Backtesting periods are usually longer than forward periods, and
whether you happened to win in forward testing can be inferred by mastering backtest evaluation methods.
【How to manage EA risk?!】
And no matter how excellent an EA is,
if you neglect risk management, FX will fail.
Therefore, for EA,how should risk management be handled?
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■“How to calculate EA risk management”
https://www.gogojungle.co.jp/finance/navi/articles/64703
【EA operation mindset is also important】
And,
For those articles,
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12/30★ Year-End and New Year SP!! EA fully explained course Part 3
https://www.gogojungle.co.jp/finance/navi/articles/80551
8/12 [Obon Holiday Special]! This will make you an EA master! “EA operation mindset”
https://www.gogojungle.co.jp/finance/navi/articles/72829
8/17 [Obon Holiday Special]! This will make you an EA master! “Notes during EA operation”
https://www.gogojungle.co.jp/finance/navi/articles/73797
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So,
the content is substantial and quite important,
even if you don’t understand it immediately, be sure to read it!
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【Reiwa's Double-E EA Listing】
https://www.gogojungle.co.jp/users/112481/products
Specifically categorized EA from Reiwa's Double-E
https://www.gogojungle.co.jp/finance/navi/articles/67162
(Diversification by genre is essential when building a portfolio)
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【Series articles by 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】About calculating EA risk management
https://www.gogojungle.co.jp/finance/navi/articles/65978
Tips to distinguish illegitimate products (in the case of EA)
https://www.gogojungle.co.jp/finance/navi/articles/64738
First place to check when you have questions about EA
https://www.gogojungle.co.jp/finance/navi/articles/65619
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https://www.gogojungle.co.jp/finance/navi/series/1714
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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 Creed】
