8/18★ [Obon holiday企画！]* [EA risk management・case study] Part 2

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

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

we hope to be of help toward better EA operations!

【EA Risk Management & Case Study】

So,
this time, using a certain EA as an example,
“We will conduct an EA Risk Management · Case Study.

【Copernicus Point Make】

https://www.gogojungle.co.jp/systemtrade/fx/19447/backtest

We will base risk calculations on this.

【Backtest Assumptions】

■0.1 lot (10,000 currency units)
■Leverage 25x
■Maximum drawdown ≈ 30,000 yen
■If 1 USD = 150 yen

At this time, first calculate the necessary margin.

With 1 USD at 150 yen, 10,000 units (＝10,000 USD) equates to

150 × 10,000 = 1,500,000 = 1,500,000 yen.

Then, since the leverage is 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 a calculation formula in a tool like Excel beforehand,
and simulate by adjusting the rate, lot size, and maximum drawdown as needed,

which seems effective.
It’s convenient to prepare it once.

Now, the maximum drawdown per 0.1 lot was about 30,000 yen.

That is,
Required margin 60,000 yen + Maximum drawdown 30,000 yen = 90,000 yen

This is a projected risk from backtesting,
and the required margin will vary with the USD/JPY rate,
but as a minimal guideline, 90,000 yen was needed.

If 0.01 lot, it would be 9,000 yen.

However,
you must also consider that the maximum drawdown may occur soon after the EA starts running.

In that case,
90,000 yen − 30,000 yen = 60,000 yen,

and you may lose roughly half of your starting capital.
Furthermore, the margin becomes tight.

In this case, the risk is too high, and you would either increase funds or lower the lot size.

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

Margin becomes 60,000 yen to 30,000 yen,
maximum drawdown becomes 30,000 yen to 15,000 yen.

Adding these two gives 45,000 yen.

And if you keep a starting fund of 90,000 yen,
immediately after activation, if maximum drawdown occurs,

you would have about 75,000 yen left (90,000 − 15,000).

In this way,
“How much capital decline rate can you tolerate?”

That is, how much risk can you tolerate?
This varies per user.

Therefore,
based on the calculation, operate at a risk level you are convinced by,
this seems to be the best approach.

Well then!

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【Flow Summary from Starting an EA to Intermediate】

First, mastering the installation of the EA is essential.

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MT4 EA (Expert Advisor) & Indicator Installation Procedure

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

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※GogoJungle Video Version※

Even this may not be understood all at once, and some may stumble initially.

I also stumbled many times at first, so don’t rush—take it easy!

If you have questions, use the “Contact Form”!

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

【How to Choose an EA】

Now that you think you can operate an EA!

You may wonder, “Which EA can win… I don’t want to lose…”

So, Reiwa’s Double-E has published articles so that you can gauge the quality through backtests.

The following articles were serialized.

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

【How Should EA Risk Management Be?】

And, no matter how excellent an EA you obtain,

if you neglect risk management, FX will collapse.

So for EAs, how should risk management be handled?

The following articles answer this.

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■ “How to Calculate EA Risk Management”

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 operation is also important.

Those articles are as follows,

12/30★ Year-end and New Year SP!! All-In EA Course Part 3

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

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

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

8/17【Obon Holiday Special!】 Now you too can be an EA Master! “Precautions During EA Operation”

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

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The content is substantial and quite important,

so even if you don’t grasp it immediately, please make sure to read it!

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【Reiwa’s Double-E EA Listing】

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

Specifically categorized Reiwa’s Double-E’s EAs 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-E Serialized Articles】

■ EA Beginner Course

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

“About How to Calculate EA Risk Management”

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

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

https://www.gogojungle.co.jp/finance/navi/articles/65010

https://www.gogojungle.co.jp/finance/navi/series/610

【Reiwa's Double-E's Belief】

Develop EA with a proper method,

and gain more fans,

to maintain a long-lasting WIN-WIN relationship,

aiming to invigorate the EA market and raise literacy.

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【EA Risk Management & Case Study】

﻿So,this time, using a certain EA as an example,“We will conduct an EA Risk Management · Case Study.

【Copernicus Point Make】

https://www.gogojungle.co.jp/systemtrade/fx/19447/backtest

We will base risk calculations on this.

【Backtest Assumptions】

■0.1 lot (10,000 currency units)■Leverage 25x■Maximum drawdown ≈ 30,000 yen■If 1 USD = 150 yen

At this time, first calculate the necessary margin.

With 1 USD at 150 yen, 10,000 units (＝10,000 USD) equates to

150 × 10,000 = 1,500,000 = 1,500,000 yen.

Then, since the leverage is 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 a calculation formula in a tool like Excel beforehand,and simulate by adjusting the rate, lot size, and maximum drawdown as needed,

which seems effective.It’s convenient to prepare it once.

Now, the maximum drawdown per 0.1 lot was about 30,000 yen.

That is,Required margin 60,000 yen + Maximum drawdown 30,000 yen = 90,000 yen

This is a projected risk from backtesting,and the required margin will vary with the USD/JPY rate,but as a minimal guideline, 90,000 yen was needed.

If 0.01 lot, it would be 9,000 yen.

However,you must also consider that the maximum drawdown may occur soon after the EA starts running.

In that case,90,000 yen − 30,000 yen = 60,000 yen,

and you may lose roughly half of your starting capital.Furthermore, the margin becomes tight.

In this case, the risk is too high, and you would either increase funds or lower the lot size.

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

Margin becomes 60,000 yen to 30,000 yen,maximum drawdown becomes 30,000 yen to 15,000 yen.

Adding these two gives 45,000 yen.

And if you keep a starting fund of 90,000 yen,immediately after activation, if maximum drawdown occurs,

you would have about 75,000 yen left (90,000 − 15,000).

In this way,“How much capital decline rate can you tolerate?”

That is, how much risk can you tolerate?This varies per user.

Therefore,based on the calculation, operate at a risk level you are convinced by,this seems to be the best approach.

Well then!

So,
this time, using a certain EA as an example,
“We will conduct an EA Risk Management · Case Study.

■0.1 lot (10,000 currency units)
■Leverage 25x
■Maximum drawdown ≈ 30,000 yen
■If 1 USD = 150 yen

Therefore,
embed a calculation formula in a tool like Excel beforehand,
and simulate by adjusting the rate, lot size, and maximum drawdown as needed,

which seems effective.
It’s convenient to prepare it once.

That is,
Required margin 60,000 yen + Maximum drawdown 30,000 yen = 90,000 yen

This is a projected risk from backtesting,
and the required margin will vary with the USD/JPY rate,
but as a minimal guideline, 90,000 yen was needed.

However,
you must also consider that the maximum drawdown may occur soon after the EA starts running.

In that case,
90,000 yen − 30,000 yen = 60,000 yen,

and you may lose roughly half of your starting capital.
Furthermore, the margin becomes tight.

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

Margin becomes 60,000 yen to 30,000 yen,
maximum drawdown becomes 30,000 yen to 15,000 yen.

And if you keep a starting fund of 90,000 yen,
immediately after activation, if maximum drawdown occurs,

In this way,
“How much capital decline rate can you tolerate?”

That is, how much risk can you tolerate?
This varies per user.

Therefore,
based on the calculation, operate at a risk level you are convinced by,
this seems to be the best approach.