8/17★【Obon Holiday Plan!】【EA Risk Management & Case Study】Part 1

FX Automated Trading, the EA developers Reiwa's Double E.

From 8/11 for ten days,
【Obon Holiday Project!】,

we hope to be of help toward better EA operation!

【EA Risk Management • Case Study】

So,
this time, using a certain EA as an example,
「EA Risk Management • Case Study

【X Dollar/Yen】

https://www.gogojungle.co.jp/systemtrade/fx/28463/backtest

We will base the risk calculations on this.

【Backtest Assumptions】

■0.1 lot (10,000 currency units)
■ Leverage 25x
■ Maximum drawdown = about 55,000 yen
■ If 1 USD = 150 yen

In this case, first calculate the required margin.

With 1 USD = 150 yen, 10,000 units (＝ 10,000 USD) equals

150 × 10000 = 1500000 = 1,500,000 yen.

And with leverage 25x, divide by 25.

150 ÷ 25 = 60,000 yen

This is the required margin for 0.1 lot when 1 USD = 150 yen.

（1 USD）150（yen） ×（0.1 lot・10,000 currency＝10,000 USD）10,000 ÷（Leverage）25 = 6

This is the calculation formula.

Therefore,
embed the formula in advance using a calculator like Excel (or OO),
and simulate by freely changing the rate, lot size, and maximum drawdown,

which would be effective, I think.
If you create it once, it’s convenient.

Now, the maximum drawdown per 0.1 lot was about 55,000 yen.

That is,
Required margin 60,000 yen + Maximum drawdown 55,000 yen = 115,000 yen

This is a risk estimate based on backtests, and
the required margin varies with the USD/JPY rate, but
as a minimum guideline, 115,000 yen was necessary.

If it were 0.01 lot, it would be 11,500 yen.

However,
you must also consider that the EA may suffer maximum drawdown soon after start.

In that case,
115,000 yen − 55,000 yen = 60,000 yen remains,

and capital would be running very tight.
Moreover, the margin would be just at the limit.

In this case, the risk is too high, and you would need to increase funds or reduce the lot size.

Therefore,
if you reduce from 0.1 lot to 0.05 lot,
the required margin and maximum drawdown both halve.

The required margin becomes 30,000 yen,
the maximum drawdown becomes 27,500 yen.

Adding these gives 57,500 yen.

And if you kept the starting funds at 115,000 yen,
in case of immediate maximum drawdown after starting,

115,000 yen − 27,500 yen = 87,500 yen of funds would remain as a guideline.

Thus,
the question becomes,

“How much capital loss rate can you tolerate?”
In other words, how much risk can you tolerate?

This will vary by the person operating it.
Therefore,
based on the calculation, operate with a risk you are convinced of,this is the best approach, I think.

And now!

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【EA Beginnings to Intermediate Flow Summary】

First, it is important to “master installing EAs.”

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MT4 EA (Expert Advisor) and Indicator installation procedures

https://www.gogojungle.co.jp/post/1/8212

--------------------------------------------------------------------

※GoGoJungle Video Version※

Even then, at first you may not understand everything at once, and some may stumble.

I also stumbled many times at the start, so don’t rush—you’ll be fine!

If you have questions, there is a “Contact Form,” so use it!

----------------------------------

■ GoGoJungle “Contact Form”

https://www.gogojungle.co.jp/inquiry

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【How to Choose EA】

Now that you think you can operate an EA,

you might wonder, “Which EA will win? I don’t want to lose…”.

Hence, Reiwa’s Double I introduced articles so you can gauge through backtests to some extent.

The following articles are serialized.

--------------------------------

■ How to Find a Winning EA from Backtests

https://www.gogojungle.co.jp/finance/navi/series/1714

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but backtests support it.

Backtest periods are usually longer than forward periods, and

whether you happen to win in forward is partially determined by how well you mastered backtest evaluation.

【EA Risk Management How-To!?】

And no matter how excellent an EA seems,

if you neglect risk management, FX will collapse.

So with EA, what should be done for risk management?

An article answering that is below.

----------------------------------

■ “EA Risk Management Calculations”

https://www.gogojungle.co.jp/finance/navi/articles/64703

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【EA Operation Mindset is Also Important】

And, to sustain EA operation long-term, the mindset of EA operation is also important.

You can find articles about that,

----------------------------------

12/30★ Year-end & New Year SP!! EA Full Explanation Course Part 3

https://www.gogojungle.co.jp/finance/navi/articles/80551

8/12【Obon Holiday Special!】 Now you too can master EA! “Mindset for Improving EA Operation”

https://www.gogojungle.co.jp/finance/navi/articles/72829

8/17【Obon Holiday Special!】 Now you too can master EA! “Notes for EA Operation”

https://www.gogojungle.co.jp/finance/navi/articles/73797

----------------------------------

So,

the content is substantial and quite important,

so even if you cannot understand it right away, be sure to review it!

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【Reiwa's Double I - EA Listing】

https://www.gogojungle.co.jp/users/112481/products

Specifically, Reiwa's Double I - EAs categorized by genre

https://www.gogojungle.co.jp/finance/navi/articles/67162

（Diversification by genre is essential when building a portfolio）

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【Reiwa's Double I Serialized Articles】

■ EA Beginner's Guide

https://www.gogojungle.co.jp/finance/navi/series/1700

“About EA Risk Management Calculations”

https://www.gogojungle.co.jp/finance/navi/articles/64703

https://www.gogojungle.co.jp/finance/navi/articles/65978

https://www.gogojungle.co.jp/finance/navi/articles/64738

https://www.gogojungle.co.jp/finance/navi/articles/65619

■ How to Find a Winning EA from Backtests

https://www.gogojungle.co.jp/finance/navi/series/1714

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 I - Beliefs】

Develop EAs by principled methods,

to gain the trust of more people,

maintain a long-term WIN-WIN relationship,

and aim to revitalize the FX market and raise literacy.

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8/17★【Obon Holiday Plan!】【EA Risk Management &amp; Case Study】Part 1

【EA Risk Management • Case Study】

﻿So,this time, using a certain EA as an example,「EA Risk Management • Case Study

【X Dollar/Yen】

https://www.gogojungle.co.jp/systemtrade/fx/28463/backtest

We will base the risk calculations on this.

【Backtest Assumptions】

■0.1 lot (10,000 currency units)■ Leverage 25x■ Maximum drawdown = about 55,000 yen■ If 1 USD = 150 yen

In this case, first calculate the required margin.

With 1 USD = 150 yen, 10,000 units (＝ 10,000 USD) equals

150 × 10000 = 1500000 = 1,500,000 yen.

And with leverage 25x, divide by 25.

150 ÷ 25 = 60,000 yen

This is the required margin for 0.1 lot when 1 USD = 150 yen.

（1 USD）150（yen） ×（0.1 lot・10,000 currency＝10,000 USD）10,000 ÷（Leverage）25 = 6

This is the calculation formula.

Therefore,embed the formula in advance using a calculator like Excel (or OO),and simulate by freely changing the rate, lot size, and maximum drawdown,

which would be effective, I think.If you create it once, it’s convenient.

Now, the maximum drawdown per 0.1 lot was about 55,000 yen.

That is,Required margin 60,000 yen + Maximum drawdown 55,000 yen = 115,000 yen

This is a risk estimate based on backtests, andthe required margin varies with the USD/JPY rate, butas a minimum guideline, 115,000 yen was necessary.

If it were 0.01 lot, it would be 11,500 yen.

However,you must also consider that the EA may suffer maximum drawdown soon after start.

In that case,115,000 yen − 55,000 yen = 60,000 yen remains,

and capital would be running very tight.Moreover, the margin would be just at the limit.

In this case, the risk is too high, and you would need to increase funds or reduce the lot size.

Therefore,if you reduce from 0.1 lot to 0.05 lot,the required margin and maximum drawdown both halve.

The required margin becomes 30,000 yen,the maximum drawdown becomes 27,500 yen.

Adding these gives 57,500 yen.

And if you kept the starting funds at 115,000 yen,in case of immediate maximum drawdown after starting,

115,000 yen − 27,500 yen = 87,500 yen of funds would remain as a guideline.

Thus,the question becomes,

“How much capital loss rate can you tolerate?”In other words, how much risk can you tolerate?

This will vary by the person operating it.Therefore,based on the calculation, operate with a risk you are convinced of,this is the best approach, I think.

And now!

So,
this time, using a certain EA as an example,
「EA Risk Management • Case Study

■0.1 lot (10,000 currency units)
■ Leverage 25x
■ Maximum drawdown = about 55,000 yen
■ If 1 USD = 150 yen

Therefore,
embed the formula in advance using a calculator like Excel (or OO),
and simulate by freely changing the rate, lot size, and maximum drawdown,

which would be effective, I think.
If you create it once, it’s convenient.

That is,
Required margin 60,000 yen + Maximum drawdown 55,000 yen = 115,000 yen

This is a risk estimate based on backtests, and
the required margin varies with the USD/JPY rate, but
as a minimum guideline, 115,000 yen was necessary.

However,
you must also consider that the EA may suffer maximum drawdown soon after start.

In that case,
115,000 yen − 55,000 yen = 60,000 yen remains,

and capital would be running very tight.
Moreover, the margin would be just at the limit.

Therefore,
if you reduce from 0.1 lot to 0.05 lot,
the required margin and maximum drawdown both halve.

The required margin becomes 30,000 yen,
the maximum drawdown becomes 27,500 yen.

And if you kept the starting funds at 115,000 yen,
in case of immediate maximum drawdown after starting,

Thus,
the question becomes,

“How much capital loss rate can you tolerate?”
In other words, how much risk can you tolerate?

This will vary by the person operating it.
Therefore,
based on the calculation, operate with a risk you are convinced of,this is the best approach, I think.