Occasionally I’ll borrow the power of ChatGPT. Its 142【In EA development, is "trend following" alone not enough? The truth seen from the difference with discretionary trading】

FX Automated Trading, the Reiwa’s Double-I is.

This series has been written with the aim of posting every day since last year.

It has probably continued for about a year and a half now!

If you read what I’ve written so far,

I believe you’ll be closer to better EA operation.

And since I’d like to take a short break,

I’d like to continue posting with the help of ChatGPT.

From time to time, I will post irregularly as before.

【In EA development, is "trend-following" enough? Revealing truths from differences with discretionary trading】

I am Reiwa’s Double-I, an FX automated trading EA developer.

Today's topic may sound a little difficult, but
it's a story about what would logically happen.

■Discretionary trading is fundamentally “trend-following”

First, the basic of discretionary trading is “trend-following”—

in other words, taking positions without fighting the trend.

The direction of the trend is often influenced by each country’s monetary policy.

The flow is like, “rate hikes will strengthen the currency.”

In this kind of trend-following method,

you may incur a drawdown right after entry, but

by riding the trend over time, unrealized gains can turn into realized profits,

and ultimately aim for “small losses, big gains.”

I think discretionary trading is a very rational and sound method.

■But, in the world of EA (automatic trading), things are different

In the world of EAs, the conditions are somewhat different.

EA tests whether a logic works through long-term past market data.

And it is not always the case that only trend-following (trend following) is correct.

In fact,

scalping (short-term small profits)

range breakout (entering in the opposite direction within a defined range)

and other logics can also show good backtest results.

■EA and discretionary trading have completely different approaches

What’s important here is

that the method approaches differ fundamentally between EA and discretionary trading

and thus, the trend-following method that is acceptable in discretionary trading

is not automatically valid in the world of EAs.

■“Trend-following EA is the only right approach” is dangerous

Among some EA developers,

there are people who insist, “Only trend-following EA is correct.”

However, that may simply be justifying “I can only make that.”

Think carefully.

The market consists of both trend followers and contrarians; only then does it work.

If all market participants were trend followers, there would be no opportunity for contrarian profits.

■The approach is “opposite” so it works

Trend-following (low win rate but lets profits run)

Contrarian/scalping (high win rate aiming for short-term profits)

Because these opposing methods exist,

each method can function with a balanced interaction.

■Where EA developers diverge

With these in mind,

it’s not about “I can only make a trend-following EA.”

but about whether you can design diverse logics including contrarian and scalping.

This becomes a major turning point in your level as an EA developer.

The world of FX is truly deep.

Therefore,

it’s not a simple story that “discretionary trading was good, so do the same for EA.”

To master automated trading,

you need a corresponding broad perspective, and that’s what I wanted to convey today.

Well then, see you again!

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【Flow from starting EA to intermediate level】

First, mastering the installation of the EA is important.

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MT4 EA (Expert Advisor) and Indicator installation steps

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

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※GoGoJungle video version*

Even then, initially you may not understand everything at once, and you’ll stumble quite a bit.

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

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

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

■GoGoJungle “Contact form”

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

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

【How to choose an EA】

Now that you feel you can operate an EA,

you might think, “I can’t tell which EA will win… I don’t want to lose money…”

So Reiwa’s Double-I is publishing articles so you can judge to some extent based on backtests.

The following articles were serialized for that purpose.

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

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

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

Backtest periods are usually longer than forward periods, and

【How to manage EA risk?】

And no matter how excellent an EA seems,

if you neglect risk management, FX can collapse.

So for EA, how should risk management be done?The following article answers this.

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

■“How to calculate EA risk management”

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

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

【EA operation mindset matters too】

And,to sustain EA operation for a long time, the “EA operation mindset” is also important.

Articles about those can be found here,

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

12/30★ Year-end and New Year Special!! EA Full Understanding Course Part 3

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

8/12【Obon holiday special】Now you too can master EA! “Mindset to improve EA operation”

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

8/17【Obon holiday special】Now you too can master EA! “Notes during EA operation”

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

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

That’s what it is,

the reading experience is substantial but this content is quite important,

even if you don’t understand it right away, be sure to review it!

━━━━━━━━━━━━━━━

【Reiwa’s Double-I EA Listing】

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

Specifically, categorized EA by genre of Reiwa’s Double-I

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

(Diversifying your portfolio by genre is essential)

━━━━━━━━━━━━━━━

【List of serialized articles by Reiwa’s Double-I】

■EA Beginner Course

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

“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

■How to find winning EAs from backtests

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

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

■No-nonsense! GoGoJungle raises an issue!

https://www.gogojungle.co.jp/finance/navi/series/1701

https://www.gogojungle.co.jp/finance/navi/articles/64723

■Reiwa’s Double-I Reveals and Opens the “Push-buying and Rallies” Logic!!

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

■Double-I FX Tales

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

━━━━━━━━━━━━━━━

【Reiwa’s Double-I’s Beliefs】

【In EA development, is "trend-following" enough? Revealing truths from differences with discretionary trading】

I am Reiwa’s Double-I, an FX automated trading EA developer.

Today's topic may sound a little difficult, butit's a story about what would logically happen.

■Discretionary trading is fundamentally “trend-following”

First, the basic of discretionary trading is “trend-following”—

in other words, taking positions without fighting the trend.

The direction of the trend is often influenced by each country’s monetary policy.

The flow is like, “rate hikes will strengthen the currency.”

In this kind of trend-following method,

you may incur a drawdown right after entry, but

by riding the trend over time, unrealized gains can turn into realized profits,

and ultimately aim for “small losses, big gains.”

I think discretionary trading is a very rational and sound method.

■But, in the world of EA (automatic trading), things are different

In the world of EAs, the conditions are somewhat different.

EA tests whether a logic works through long-term past market data.

And it is not always the case that only trend-following (trend following) is correct.

In fact,

scalping (short-term small profits)

range breakout (entering in the opposite direction within a defined range)

and other logics can also show good backtest results.

■EA and discretionary trading have completely different approaches

What’s important here is

that the method approaches differ fundamentally between EA and discretionary trading

and thus, the trend-following method that is acceptable in discretionary trading

is not automatically valid in the world of EAs.

■“Trend-following EA is the only right approach” is dangerous

Among some EA developers,

there are people who insist, “Only trend-following EA is correct.”

However, that may simply be justifying “I can only make that.”

Think carefully.

The market consists of both trend followers and contrarians; only then does it work.

If all market participants were trend followers, there would be no opportunity for contrarian profits.

■The approach is “opposite” so it works

Trend-following (low win rate but lets profits run)

Contrarian/scalping (high win rate aiming for short-term profits)

Because these opposing methods exist,

each method can function with a balanced interaction.

■Where EA developers diverge

With these in mind,

it’s not about “I can only make a trend-following EA.”

but about whether you can design diverse logics including contrarian and scalping.

This becomes a major turning point in your level as an EA developer.

The world of FX is truly deep.

Therefore,

it’s not a simple story that “discretionary trading was good, so do the same for EA.”

To master automated trading,

you need a corresponding broad perspective, and that’s what I wanted to convey today.

Well then, see you again!

Today's topic may sound a little difficult, but
it's a story about what would logically happen.