[System Trade] Create an EA for small profits and large gains

Hello. This is 2pay.

This time, we will reverse the previous logic and create an EA that profits from small losses and large gains.

Up until now, I have been repeatedly saying, “Limit losses and let profits grow as much as possible,” butunder environments that meet certain requirementsI think it is acceptable even if the risk-reward (RR) is inverted.

Specifically, the certain requirements are

・Secure enough margin to withstand large losses. (Based on factors like the bankruptcy probability described by Vasicek)

・High recovery ability. (Capital recovery after a large loss)

These are the two points.

Even if those two points are lacking, there are EAs that run without issue, but in actual operation it requires the resolve to bet a large sum.

Back to the main topic, this time I prepared a trend-following EA that has been brushed up from a random-walk EA.

It performs better than the BB breakout EA I created last time.

I have created many things in the past, but it seems that my EAs tend to perform worse when relying on indicators.

Perhaps it suits me better to blank my mind and simply chase prices.

Anyway, here are the data from the last five years.

Because it is a single trade with a large scale, the waveform is rough, but it still secures ample profit.

Net profit is 600,000, which is a fourfold increase from the initial capital with simple interest.

After watching the trading opportunities for about three hours, I realized that reversing the logic might still work.

I will verify by testing with the exact opposite trading conditions.

Of course, it does not apply to the same currency pair.

For the trend-following EA, I used GBPJPY. (Chosen because it seems highly liquid)

When GBP hits issues due to fundamentals, money flows into JPY as a safe haven asset (the reverse is also true).

Crosses involving the yen tend to exhibit similar phenomena, though the scale differs, since they are considered safe assets.

If I try currency pairs that do not have the property of large capital movements, there might be a chance.

What about USDCAD? Since it is a neighboring country, it feels geopolitically similar (biased).

For now, it turned positive. Net profit is about half of the trend-following result, but if you overlook the rough waveform, it’s not a bad result.

Being able to use more currencies by simply reversing the logic is very convenient for a lazy person like me.

These two have opposing natures: one is strong in trending markets and the other in ranging markets, so combining them could compensate each other’s weaknesses, perhaps?

What do you think? (I just added them as is)

Notably, the recovery factor increased from 3 to 5. It’s on a practical level now.

Average profit and average loss are exactly equal, achieving RR 1:1.

On top of that, the win rate is about 4% higher.

Personally, I like EAs with win rate and RR at least half or more.

Because they have good capital turnover efficiency when compounding is considered.

However, for this EA, since the profit and loss swing is large, implementing compounding at a low multiplier should stabilize it.

Finally, I will show the performance when seriously refining the contrarian logic.

The parameters are limited to Lot, not because I am hiding anything, but because there is no element to optimize.

Following the contents of my previous articles, I analyzed without random walking, did not use indicators, and built up small advantages steadily.

Rooted in market principles and mathematical rules, it remains effective as long as the forex market does not collapse.

If I create something like this, I might not be able to return to discretionary trading.

Who would sell if someone buys?

If someone wants to commercialize it, I’ll refine it a bit more and list it.

This time ends here.

With this, the superiority series has reached a conclusion for now.

From now on, I plan to cover backtesting perspectives from a production point of view, things to check when producing or purchasing an EA, and behind-the-scenes stories related to indicators.

Thank you for reading.