Last time, I shared points to be careful about to minimize the gap between backtesting and real trading, such as spreads and slippage.
From here, let's broaden our perspective to more practical operations.
Today, from the viewpoint of “portfolio management of multiple EAs,” we will explore methods to pursue risk diversification and earnings stability.

Why combine multiple EAs

If you entrust all of your funds to a single EA, when market conditions challenge that EA’s logic, there is a risk that drawdowns will concentrate.
On the other hand, by combining multiple EAs (portfolio management), they can complement each other’s strengths and weaknesses, increasing the likelihood of stabilizing the overall growth curve.

Combine EAs with different timeframes and methods
For example, blending trend-following EAs with range-reversal EAs, or short-term scalping EAs with medium-to-long-term breakout EAs, can allow one to support the other when one is underperforming.
Diversification across currency pairs
Even with the same method, running multiple EAs that handle different currency pairs may help cover drawdowns when a particular pair experiences volatility.

Portfolio construction with awareness of correlations

In stocks and mutual funds, we often hear the term “correlation coefficient,” and in the FX world as well, in the combination of currency pairs and logics there ishigh or low correlationto consider.

High correlation: wins and losses tend to skew in the same direction at the same time
For instance, even if two EAs trade the same currency pair with almost the same logic, broadly speaking, diversification may be hard to achieve.
Low correlation: contributes to stabilizing returns
If one EA underperforms, another EA with a different logic or currency pair can profit, leading to a smoother overall equity curve.

Quantifying correlation precisely can be tricky, but just being mindful of whether the EAs use the same type of logic or rely on the same currency pair can improve diversification effects.

How to allocate capital among multiple EAs

When running multiple EAs simultaneously, you need to consider each EA’s lot sizing and capital allocation.

Understand the maximum drawdown each EA is expected to experience
- For example, refer to themaximum DDidentified in backtests or forward tests, and expected DDas a reference.
- Since EAs may draw down at the same time, ensure robust risk-off capital preparation.
Sometimes risk-weighting is preferable to equal distribution
- By allocating slightly more funds to more stable EAs and less to those with larger drawdowns, you may smooth overall performance.
Rules for stopping operation
- If a particular EA experiences a large drawdown, set criteria to pause temporarily to prevent further losses.
- If the portfolio drawdown exceeds a certain threshold, you can pause all EAs and re-evaluate.

Regular performance review and rebalancing

Having multiple EAs does not mean you can leave things idle and expect stability forever. Regularly check position history, drawdown status, and changes in market conditions, and adjust as needed.

Review every 3–6 months
Market volatility and economic policies continuously change; it’s advisable to review the EAs in the portfolio at least every few months.
Watch for changes in correlation
EAs that were once low-correlated may start entering positions similarly due to shifts in market outlook. Recheck correlation periodically for peace of mind.

Today’s summary and next time preview

By combining multiple EAs, you can diversify the logic with differing strengths and weaknesses to aim for more stable profitsand mitigate riskthrough diversification
The more you diversify across low-correlation EAs or different currency pairs, the more you can expect to reduce drawdown risk
Allocate funds appropriately to each EA and implement regular rebalancing and review to pursue long-term stability

Next time (DAY 12), the theme will be “Criteria for selecting multiple EAs — identifying logic overlap and compatibility,” delving further into concrete combinations.
Think about which logics pair well together and which combinations to avoid.

Introduction to the EAs I sell

When considering portfolio management with multiple EAs, I hope you will also consider the EAs I sell as candidates.
https://www.gogojungle.co.jp/users/147322/products

I hope you will compare various types of EAs and aim for a strategy that emphasizes mutual complementation.

In the next article, I will introduce concrete points for selecting multiple EAs.
Please click “Read more” and learn together in greater depth.