DAY 21: How to Identify a Superior EA—Practical Verification Case Explanations

Last time (DAY 20), we compiled a checklist to avoid purchasing and deploying suspicious or poor EAs.
This time, on the contrary,“What points should be checked to discern an excellent EA, and what examples should be imagined?”I would like to delve into this.
I will not present actual trading histories or charts; this is strictly a conceptual example explanation to help you form an image when choosing an EA.

1. Balancing stable backtesting and forward testing

• Demonstrates a stable profit curve over multiple periods
  One of the characteristics of an excellent EA is that it grows assets steadily over multiple periods with different market environments, without large drawdowns, not only in a single historical period.
  For example, compare backtests from the most recent year and the past two to three years (periods with different market environments) andcheck whether it maintains a similar upward trajectory.

• Does not diverge greatly in forward testing or live operation
  Backtesting involves some optimization on past data, so results are virtual. In contrast,whether forward test results differ little from backtestsis an important checkpoint.
  If, after operating for weeks to months, results stay within roughly the same range as the backtest drawdown, confidence increases.

2. No excessive drawdown and clear risk management

• Maximum drawdown (Max DD) does not exceed 30–40% of capital by a large margin
  Acceptable ranges vary by trader, but excellent EAs aim to keep risk disciplined.
  Over the long term, is there a mechanism that makes collapse less likely?Compare backtest and forward test drawdownsto assess this.

• Stop losses and filters are properly integrated
  An EA that piles up reverse trades without clearly setting stop losses can incur large losses on a single reversal.
  Safety measures appropriate to market conditions, such as refraining from trading around economic releases, are also key points.Are such safeguards in place?.

3. Not just numbers, but coherent logic overview

• There is an explanation of what market conditions the EA targets
  Developers or sellers of excellent EAs clearly outline the broad logic, such as whether it is a trend-following type, a range-reversal type, or a breakout target.
  This helps traders judge whether the current market situation suits the EA.

• Consistency in technical indicators and mechanisms
  For example, if the logic is “enter on moving average cross with a volatility filter and use a trailing stop of certain pips,” that consistency makes it easier to align with backtesting results.
  If the explanation of the logic is vague and the numbers look unusually good, you might suspect overfitting.

4. Public performance in live trading and support system

• Publicize live track record on trustworthy external sites like Myfxbook or FxBlue
  EA that updates real account performance using third-party monitoring services where data tampering is difficult tend to be more trustworthy.

• The developer provides ongoing updates and support
  As learned previously, markets keep changing, so EA updates are occasionally necessary.
  An EA with no ongoing maintenance or support may not be suitable for long-term operation.

5. Conceptual “Excellent EA” verification example

The following is purely a conceptual example; please imagine it.

1. Currency pairs

   • EUR/USD or USD/JPY, with tight spreads and high liquidity.

   • A type that supports multiple currencies and allows you to select currency pairs.

2. Logic type

   • A trend-following type that combines moving average crossovers with a volatility filter for entries.

   • Fixed stop-loss width with a trailing stop to extend profits.

3. Backtest and forward test

   • Three-year backtest with maximum drawdown around 15% and profit factor about 1.5.

   • Forward test in the most recent six months shows results similar to backtests, with no extreme anomalies in trading history.

4. User support and performance disclosure

   • Developers/sellers publicly monitor real accounts on Myfxbook and update monthly results.

   • When major economic events occur, updates or warnings are provided, showing proper follow-up.

If these conditions are in place, it is highly worthwhile to consider the EA as “excellent.”

Today’s summary and next preview

• An excellent EA not only has good backtest results but also stable forward test and live trading performance

In the next session (DAY 22), we will focus on “Concrete risk management rules in EA operation” and discuss more advanced rules to prevent unexpected drawdowns in actual trading. Even an excellent EA can lose big if the operator’s rule settings are lax.

Introduction of the EAs I sell

While considering the points to discern an “excellent EA,” please also take a look at the EAs I sell.
https://www.gogojungle.co.jp/users/147322/products

When choosing an EA, carefully review verification data and forward test results, and adopt a model you can be convinced by to aim for stable long-term trading.

In the next article, we will introduce more practical examples of risk management rules indispensable for EA operation.
Please click “Read more” to continue deepening your learning.