DAY 23: Understanding the EA creation process — Grasping the image of a logic design’s copy

Last time (DAY 22), we explained risk management rules when operating an EA with concrete examples.
Today, let’s change perspective a bit andconceptually understand how an EA is created
Even if you don’t program yourself, having a rough grasp of the logical design process will change how you feel about using EAs and how you can customize them.

A coarse understanding of the EA creation process

An EA (Expert Advisor) is a program written mainly in the MQL language for MT4/MT5.
Even those without trading experience can sometimes write code, but fundamentally the key is to clarify the “trading logic” and translate that into a program.

1. Idea generation

   • Ideas such as “I want to buy/sell when moving averages cross” or “I want to enter when the Bollinger Bands break,” derived from discretionary trading and past backtesting.

   • What’s important here isclear conditions and reproducibilitywhether they exist. It’s difficult to code vague discretionary judgments as-is, so we put the logic into words and translate them into numeric conditions.

2. Logic via programming

   • In MQL4/MQL5, describe the idea as a program.

   • “Which indicators, on what time frame, and under what conditions should we enter?”, “how to handle stop loss and take profit timing,” etc.,define all conditionsto the fullest.

3. Backtesting to confirm basic behavior

   • Run the completed EA in MT4/MT5 Strategy Tester and verify with historical data that the logic works as expected.

   • Check for unexpected behaviors(for example, stop loss not moving, entry conditions misfiring) and revise and retest as needed.

4. Final validation with forward testing or small live trading

   • Even if backtesting looks good, slippage and latency can occur in real markets.

   • By running the EA on a demo account or a small real account for a period,identify real-world issues(such as handling rapid market changes) and fine-tune further.

Specific perspectives in logical design

1. Entry conditions

   • Technical indicators(moving averages, MACD, RSI, etc.) values and cross situations

   • Price action(break of support/resistance, break of previous day high/low, etc.)

   • Time filters(trade only in certain times, avoid around indicator releases, etc.)

2. Stop loss and take profit design

   • Fixed values (stop loss / take profit in a certain number of pips)

3. Money management and lot sizing

   • Fixed lot or auto-adjusted lot based on account balance

4. Error handling and behavior on restart

   • How to manage existing positions if the EA stops or restarts

Benefits of understanding the creation process

• It’s easier to understand the strengths and weaknesses of EAs
  Even without coding yourself, if you conceptually understand when to enter and how to place stop losses, you can anticipate risks in sudden market moves and tougher market environments.

• You can grasp the purpose of setting changes and updates
  It becomes easier to understand what updates from EA sellers or developers aim to achieve and which parts were improved, enabling you to identify the rationale behind changes.

• Making discretionary experience easier to formalize
  If you verbalize and numeric-ify the sense that “in such situations entry and winning is easier,” you can systematically review your own trading and use it as a trigger for improvements.to review your systematized trading

Common points and cautions in EA development

• Beware of overfitting
  If it fits too closely to past data, it may not work in future markets. Besides backtesting, perform forward testing and validate on data from different periods to ensure the logic is robust and generalizable.

• Too complex logic may lead to unstable behavior
  Overloading with many indicators and conditions can make the program complex, complicating maintenance and bug fixing. A simpler approach can reduce bugs and unexpected behavior.There is some truth to simpler being less prone to bugs

• Version differences in development languages
  MQL4 (for MT4) and MQL5 (for MT5) have different coding styles and structures. When buying an EA, check which environment it runs on.

Today’s summary and a teaser for next time

• EA is built through the process of “conceptualizing the logic → programming → testing → revisions.”

• Knowing the creation process, even roughly, helps you understand why settings and updates are as they are, making it easier to comprehend changes.

• By hearing how developers or sellers created the EA and understanding it conceptually, you’re more likely to generate ideas for modifications based on your discretionary experience.

Next time (DAY 24), we’ll revisit the future trading image that EAs can bring—security, stability, and freedom—and imagine what lifestyle and goals could be realized in the future by using EAs. Introducing an EA is just a means, but used correctly it may greatly broaden trading possibilities.

Introducing the EAs I sell

If you conceptually understand how the trading logic moves, you’ll be more convinced when reading explanations of the buy/sell logic and see the intent clearly.
Please also check out the EAs I sell from the link if you’re interested.
https://www.gogojungle.co.jp/users/147322/products

If you keep the EA creation process in mind, you’ll be able to identify improvements with a sense of assurance even during operation.

In the next article, we’ll think about a future trading style that incorporates EAs.
Please click “Read more” and continue learning.